Factors to Help Choose Between Ad Agencies
Over the course of the last couple months, we have been discussing various issues regarding ad agencies. We’ve looked at 11 Reasons To Hire An Advertising Agency Instead Of Going Direct, we discussed the question Should You Hire A Marketing Director Full-Time? (as opposed to outsourcing to an agency), and even delved into How Marketing Agencies Get Paid. The next logical question if you are considering working with an advertising agency is “how do you choose between ad agencies?” How do you decide which agency is best for you?
There are many factors which go into the decision, and some of these factors will be common across most situations and some not-so-obvious. The more common factors include:
- Price – if one agency’s fees are significantly higher than another agency’s fees but they have not given you any compelling reason for the difference, that would be a major factor to consider.
- Experience in and out of your industry – while experience in your industry is important to some extent, often it is better to consider an agency that can bring in some best-practices from other industries. Agencies which focus primarily on single-category niches may tend to use the same strategies that all of your competitors are using. Thinking outside the box may go a long way to helping you distinguish yourself from the rest of your competitors.
- Understanding your company goals – Is the agency clear on what you’re trying to accomplish and are they custom-tailoring a plan to help you achieve those goals within the budget you’ve set? Or are they selling a cookie-cutter approach to marketing that is pretty much the same for all their clients?
However I think there are 3 criteria that may not be obvious that will help make a significant difference in choosing the right agency. Those 3 areas are the Client Experience, Transparency, and Educational Approach.
Client Experience
People like to do business with people they like. Companies like to do business with companies they like. An important factor to consider is whether or not you will enjoy working with a particular marketing agency. One must ask: what is it like to work with the ad agency? Do the agency’s current and former clients enjoy working with them? Did the agency’s clients have a good experience with them? What are the agency’s testimonials?
Most companies can provide a list of testimonials. However, there are other indications that a business owner should look at to determine whether or not clients like working with a particular agency. How long do the agency’s clients stay with them on average? Has the agency had clients that stay with them for years? Or are they constantly having client turnover? Client turnover may be a better indication of the client experience than the nice testimonials the agency put on their website.
Another aspect of client experience has to do with the location of the agency. Is the agency locally-based and have representatives that can meet with the client on site? Or are they based out of state or even out of country? While some clients may not need a local advertising agency, other clients may want to have occasional personal interaction with the agency. Also if the agency has local personnel in your area, they may have a better handle on the needs of the local market. As I mentioned before, advertising in Los Angeles is different than advertising in Chicago or New York or Dallas. Familiarity with the local markets can make a significant difference in the success of an advertising campaign.
Communication also plays an important role in client experience. Is the client happy with the way the agency communicated with them? Was the agency quick to respond? Were they available on short notice when emergencies came up? Do the clients feel like the agency was keeping them well-informed or did the agency seem more aloof? Did the agency act as a vendor? Or did the agency come in as a partner?
I heard a fascinating story about client experience from a client of mine who was the general manager of a car dealership. His particular manufacturer hired a big national advertising agency to take over the advertising for the brand in the US. One of the dealerships here in the Los Angeles area is the largest and most successful dealership for that brand in the entire country. The owner of that dealership met with representatives of the advertising agency to discuss some of the unique needs of the Los Angeles market. This owner explained what type of features he felt were important to emphasize and what approaches he thought the LA market may respond to best. In response, the representative from the ad agency looked at the dealer and said “You just worry about selling cars and let the experts worry about the marketing”.1 Unfortunately, stories like this are not uncommon in the advertising world. Clearly, this is not a good client experience and these types of agencies should be avoided.
Transparency
In a previous post about how agencies get paid, I touched on the fact that some agencies have not necessarily been completely straightforward with how they make their money. This has resulted in advertising agencies getting somewhat of a bad reputation in the past. Therefore, the 2nd of the not-so-obvious factor when deciding whether or not an agency is a good fit is how transparent the agency is with the way they generating revenue.
Full disclosure: I will admit, as an agency owner, it may sometimes be uncomfortable to discuss where we make our profits. However I believe it is more important to be transparent and have everything on the table in order to have a better relationship with the client than it is to keep all of my revenue sources secret. That way, there are far fewer misunderstandings, misconceptions or avenues of suspicion between me and the client.
If the agency is charging a retainer fee, are they also getting commissions from the media outlets for your campaign? Or are they waiving those commissions as part of their retainer fee? If the agency is charging a management fee on their advertising (common with pay-per-click and other Internet advertising), are they also receiving a percentage as a commission from the vendor?
Now I’m not suggesting that the agency should show their exact numbers. Few businesses are going to show their exact profit margins to their customer. However having an upfront, open discussion about each of the marketing channels and where the agency’s compensation comes from can go a long way to building trust between the client and the agency. It also goes a long way toward keeping the agency accountable for the performance of their campaign.
Educational Approach
The 3rd not-so-obvious consideration that a client should take is whether or not the agency takes an educational approach to their marketing or not. Does the agency make an effort to educate the client on how to do what they’re doing? Does the agency help the client grow toward self-sufficiency? Or is the agency remaining aloof and keeping all of their methodology and techniques protected in order to keep the client dependent upon them?
The idea behind the agency having an educational approach is to help the client grow as a marketing partner. If the client is eventually able to take over some of the less advanced marketing activities in-house, then the agency can spend more time doing more advanced marketing techniques. The ad agency and the client can continually increase their combined effectiveness at reaching the target market.
Personally, I see this is a very good thing, not something that threatens my future relationship with the client. I’m not worried about my client growing out of their need for my services. I suppose this could happen, but my philosophy is that if a business owner or marketing director is learning a great deal from my agency and is growing in their ability to do marketing on their own, then they’re going to be grateful and want to see how I can help then even more.
Consider Not-So-Obvious Factors To Help Choose Between Ad Agencies
In summary, the best way to choose between ad agencies is to look at a few not-so-obvious factors such as Client Experience, Transparency, and Educational Approach in addition to more the obvious factors such as price and experience, etc. Though it may require more due diligence on the part of the business owner, the resulting agency partnership should lead to significantly increase sales and market growth.
1. The ad agency lost the contract after a few years because the brand continuously lost sales and market share. The following year, that same agency aired a Super Bowl ad (for a different client) that was considered highly offensive and ill-conceived. The controversial ad was considered by industry experts as one of the worst Super Bowl ads ever and the client’s stock actually went down on the Monday following the game!
