Choosing an Agency Based on a Rate Card Is a Big Mistake

Last week the 4A’s released a survey on agency billing rates that stirred up some controversy. Among other things, the study suggested smaller agencies are a bargain — with labor billing rates one half or one third of their larger brethren. As someone who started a small agency, you might expect me to be thrilled to see that in print.

I’m not.

Shopping for agencies on the basis of price is a big mistake. After 23 years of working at agencies large and small, one thing that’s become clear is how important it is for clients to find an agency that is the perfect fit. Truth be told, many clients need the services a large agency offers — and for those clients, looking for a smaller agency on the basis of cost-savings isn’t likely to deliver the results they want. That’s simply fishing in the wrong pond.

Yes, large agencies can get pretty expensive. But there are often good reasons for that. First, they have some incredible talent that needs to be paid well. Resources? They have them. Technical experts, support people, field teams, global oversight groups, strategic planners, proprietary and secondary research. You need a contact in Kuala Lampur tomorrow? An entertainment unit, direct marketing people, PR, full scale in-house production support? An on-the-ground person in Cleveland — yesterday?

They’re on it. Not to mention one-degree-of-separation-away-from-anything-you-could-possibly-need. Particularly if you’re a large marketer–grappling with things like multiple brand levels, different geographies — a big agency can often match all of those points of contact and service requirements. I think of it like this: When you select a large agency, in many ways you are buying a system. And all of that costs money. That’s a lot of what you see in the rates they charge.

Now, small shops, they are a very different breed of agency. Instead of a system, you are usually buying into specific people. You are buying talent, and usually, it’s the senior kind.

That makes each agency a slightly different beast. You’ll find that every small agency has a unique proposition — a vision built around the particular talents of that team.

They also have strong cultures that are a direct reflection of the agency founders. Their skills, their track record, their tenacity and their ability to get things done.

So, in many ways, instead of buying into a system, hiring a small agency is much more like hiring an actual employee — a member of your team — than it is like hiring a vendor.

When it comes to selecting their marketing partners, clients have become far savvier about their options and the kinds of structures that can help them get the best value for their money. That means a departure from a “one-size-fits-all” model, selecting both large and small agencies for their roster. It’s becoming more the norm for my agency to find itself sharing clients with some of the biggest agencies around.

So, a bit of common-sense-but-worth-keeping-top-of-mind advice to any clients thinking about an agency search: do not start with a rate sheet.

Saving money is the worst reason to look to a smaller agency. Instead, spend time examining your needs and seek an agency that’s the best match. If you need to rely on the full resources and capabilities of a larger shop — and you commit to making use of all those resources — go for it and be prepared to pay for it. But if you are focused primarily on the idea and creative execution, and need a solution that is nimble and flexible, a smaller agency could be the right answer.

After all, the way to ensure getting the most out of any creative resource is to pick the right partner and pay them what they are worth. Then, once you have your resource, show them that you trust them to do their job.

Because the dirty little secret in the agency business is that all agencies, no matter the size, model or location, are passionate pleasers, wired to solve problems creatively. You will get your best value for money not by comparing rate cards, but by finding an agency that’s best for you and treating them like a true partner. If you do, you’ll be “that client.” The one that gets the best people, the best work, and a team that will never want to leave you disappointed.

Posted by Anne Bologna on 10.08.09 @ 03:11 PM

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