Finding The Right Ad Agency Is Like Getting A Haircut (Part II)

Terry Young

Last month, we discussed the first steps in selecting an advertising agency: Plan and evaluate. Now you’re ready for the next two steps: Estimate and proceed.

Advertising isn’t cheap, but it’s relative. For example, $10,000 is a lot of money to waste, but $50,000 can be a tremendous investment if it pulls in a couple million dollars in business.

Quite simply, advertising must be an investment, not an expense. The only way to determine if it’s indeed an investment is if it leads to desired results. Advertising must help deliver the goods, and an advertising agency must help create advertising that makes it happen.

Advertising agencies, depending on their size and your campaign, assess fees and charges in a variety of ways. Most charge a percentage (or commission) on media placement. But that’s rarely an issue with credit unions, because few make major television or radio buys. Agencies also may charge by the project or by the hour. They also will pass on to you all the expenses they incur, usually with a mark-up to cover their administrative involvement. There’s some variety on this point, so it’s best to come to an understanding regarding the financial arrangements before the work starts.

During the selection phase, you can count on advertising agencies to make a visit or two and pitch your business without charging you for their time. This is a vague area—like dancing with someone the first time. Take the lead and let the hopefuls know how and when you’ll settle on the finalist—and that once contracts are signed, the billing can begin.

Pay attention to the money part, but keep your eyes focused on the objective.

As Rick Carnes, creative director of Holt Design in Dallas, points out: “One of the most common mistakes we see in the selection process is a focus on costs vs. an agency’s ability to produce results. Cost always will be a factor, but remember the most important reason for hiring an agency is to help you achieve desired results.”

An agency that’s results-oriented should remain high on your list of candidates. And, generally avoid agencies that bill by the hour. Leave that method to lawyers and therapists.

“We don't bill by the hour,” notes Rob Allyn, president of Allyn & Co., a Dallas-based advertising agency. “We just keep working until the client is pleased with the result. That puts you and the agency on the same team: trying to get the right results, not just rack up billings.”

Nevertheless, “sticker shock” often can accompany the work of an advertising agency. It’s best for all concerned to have an idea what Project X or Campaign Y will cost before embarking down the path. By working with you on your plans and your expectations, an advertising agency should be able to provide an estimate or a quote. If it can’t, you’re driving down a blind alley.

Author Jay Conrad Levinson advises clients to consider these points: “Will the agency be compensated solely by the commission it earns on the media purchases and the added commission it earns on production, or will you pay a flat fee that includes all services? Watch out for hourly fees. Agencies often nearly bankrupt companies with these, and not on purpose. I recommend getting a monthly estimate of what the hourly fees will be. Or I’d try to avoid them entirely by means of a flat fee covering specific projects.”

Get in writing the scope of the services to be provided, deadlines, goals, objectives, activity reports, and financial terms. Do that upfront so there are fewer potential downsides.

Proceed: Ready, Aim, Hire!

Okay. Enough about prep. At this point, you’re ready to engage.

Hire. But don’t hide. Stay involved without micro-managing.

One thing to remember when dealing with an ad agency: No matter how clever these folks are, no matter how many awards they have stacked in the office next to the ping pong table, no matter how many colors the art director has in her hair, you’re the leader of this team. You must provide direction and expectations. Without those, an agency might gallop off in the direction of Never-Never Land.

At the same time, don’t lead with your eyes and ears closed. You hired these people for their expertise, so pay attention to what they’re saying as well.

“Please give us a single point of contact within your organization--someone with the skill, authority, and time to corral all of your internal decision-makers. And have a single front of guidance and approval,” says Allyn.

Look for ways to maintain good communication. Success is found in good communications. And, of course, that requires a two-way process. “At the outset, I tell clients that we'll always tell you the truth—once,” Allyn says. “My view is that we owe clients one honest answer. Then, if they disagree and want it done their way, we'll explain why we think we're right—once. If they still persist in going in a different direction, we do it your way. It's your money, it's your business, and you just may know what you're doing!”

Creativity and success are elusive elements. If they were commonplace, there'd be no need for marketing directors to try and bring these elements together.

So do your part, and cross your fingers. It’s always about hope.

Terry Young is the director of marketing and communications for Southwest Corporate Federal Credit Union, Dallas, a $6 billion asset institution serving the financial needs of 1,200 member credit unions. He frequently hires and works with advertising agencies to promote Southwest Corporate’s image, products, and services. During his tenure with the Texas Credit Union League, he worked with Allyn & Co. to develop the award-winning "Stand Tall for Texas Credit Unions" campaign. He was a feature writer and reporter for the Los Angeles Daily News, the Dallas Times Herald, and the Cincinnati Post. During the last Ice Age, he wrote copy for an advertising agency that tried to sell toys and Buicks to cavemen. Contact him at youngt@swcorp.org.