Advertising Agencies and Your Business: Make Sure You are In Charge!

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

At some point in your life as a business owner, hiring an advertising agency will seem like a great step to take. It usually happens as you plan to introduce a new product, service or business having great potential for a large audience. Along with this clear business need, you will probably catch the publicity fever of seeing your company’s name in lights. As you would with any big decision, you should ask other owners and your advisors to tell you which agencies they like. Because, just like many of your key business relationships, you can tell that hiring an advertising agency is a huge commitment, not just in terms of your money but your time and energy as well. But unlike your other big investments, such as building construction, capital expenditures, or hiring executives, you have little advertising experience and a healthy fear of the unknown. And to make matters worse, you start hearing horror stories of agencies that have cost companies plenty and have actually taken them down paths that owners never wanted! On the other hand some owners rave about the creativity of their agency and the big role it had in generating awareness, leads and sales. So how can you be sure you make the right moves? Here is the single most important rule:

First set business strategy and objectives and then direct your advertising agency to clearly understand, creatively communicate, and tightly execute your plan. Next, manage and evaluate your agency’s performance towards reaching your quantitative sales and marketing results.

Since this is easier said then done, lets understand more.

Why is the agency relationship so challenging and why does it fail so often?

  1. Agencies have one best and highest use but get paid for something else. An agency is ultimately a creative think tank and cost center surrounded by revenue-generating production services. In other words, while clients should fully pay for breakthrough ideas, they are more likely to be up-charged later when these ideas are turned into tangible advertisements, direct mail and web sites.
  2. Controlling strategy is the best way for an agency to reap the profits of executing advertising tactics. For an advertising agency to move up from single project work and become an owner’s “agency of record” they must often invade the world of business strategy. While an agency should provide input as to how a firm’s strategy can be explained to its audiences, if you give most agencies an inch, they will naturally take a mile. To often making a business strategy more agency-friendly translates into added production challenges, higher product costs and complex marketing efforts. It is the agency’s job to explain the firm’s strategy creatively, not the firm’s responsibility to come up with a strategy that is easiest to tell.
  3. Small-to-mid-sized company business is not too profitable for agencies. Unless a large communication program featuring many space ad placements, large-scale mailings or complex Internet websites, agencies are hard-pressed to recoup the upfront expense of developing creative ideas.

Five steps to staying friends with your advertising agency and growing your business profitably.

While good advertising agency relationships with smaller businesses are harder to find, the good ones have taken the following steps:

  1. You, the owner has tightly defined what you needs in your agency. To do this determine what kind of advertising you are buying and pick an agency that does this kind best. It is usually one of the following:

i. Institutional (promotes the company)

ii. Product or service (sells what you make)

iii. Market or segment (addresses narrow customer needs)

And as you learn what methods and tools are best suited to your challenge, pick or change your agency to one that is strong in which tools you need. For example:

i. Direct Mail

ii. Broadcast

iii. Sales Support

iv. Internet

  1. Link your sales and marketing goals to those of your advertising agency’s objectives as follows: Any agency effort should and can be tied to quantifiable goals in terms of one of the following:

i. Finding customers

ii. Keeping and winning back customers

iii. Growing customers

  1. Understand your reasons for hiring an agency versus doing it yourself. Agencies can do all of the following at a high cost. Which of the following are so routine and costly that they should be done in-house?

a. Creative Development. The development of concepts, copy and design is best purchased from the experts: the advertising agency.

b. Execution. Where the ideas are turned into production-ready storyboards, schedules and proofs, mailings, an in-house person can share some of the burden and reduce the cost to your firm.

c. Production of the advertising campaigns. If your firm foresees a recurring need to place ads, print materials and develop web sites, bringing this function in-house will save you time and money. Good project and outside vendor management is a commodity and you should require this function be performed in-house.

  1. Choose your agency after you have defined your advertising needs. Too often owners choose agencies with their hearts instead of their heads. To make a good decision:

a. Ask to evaluate the agency, instead of asking them to pitch your business. They should get paid to do this after you have chosen the firm that best meets your business objectives.

b. Ask the agency’s other clients how well they defined the advertising objectives for their agency and how, in the eyes of the client, these objectives were met in terms of price quality and timeliness. In fairness to the agency, if the objectives were not clearly defined, then there is no way that the agency could have been successful.

  1. Manage your agency, their projects and your objectives very closely.

a. Understand the old adage that in advertising you can only get two of the following three criteria: low price, high quality and fast turnaround. Decide what you need and make sure they know it.

b. Be a good client and respond immediately to your agency’s need for input, feedback and approvals. They are only trying to help you.

c. Demand regular meetings where your objectives are tied to actual results.

As you can see, if you don’t manage your agency, it will manage you! They have too much at risk to let critical business decisions impacting advertising go unmade. So manage your agency’s objectives and performance just as you would any in-house function. And if advertising is a key success factor to your business then manage it in house and only go outside for the creative ideas. This is the best and highest use of any good agency. Regardless of how you split the work, if you stay on top of your job, you just might end up raving about your agency!

Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at  (412) 973-2080, by email at abirol@andybirol.com, or on the web at www.andybirol.com.


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