Save Money When Hiring Ad Agencies
October 6th, 2009 by Bob Bly
If you want to save money when hiring ad agencies, use a small agency (50 or fewer employees) instead of a big agency (over 500 employees).
According to an article in Avertising Age (10/5/09, p. 26), chief creative directors at big agencies bill at $964 an hour — almost 4X more than the $271 an hour chief creative directors at small agencies bill on average.
Somehow, I don’t think that the creative director at the big agency is 4X more creative than her counterpart at the small ad agency.
And I seriously doubt the big agency’s campaigns generate 4X the sales of the small agency’s work…..
This entry was posted on Tuesday, October 6th, 2009 at 6:24 am and is filed under Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
October 6th, 2009 at 10:12 am
It actually makes sense for the very best folks to be, say, 10% better than the next best person, and 500% more expensive. Think of it this way: when Coca-Cola comes up with a new campaign, what fraction of the cost is represented by the creative directory’s salary? .1%? .05%? If that goes from .1% to .5%, and the returns for the campaign as a whole go up 5%, that’s a gigantic return on the extra investment.
This is also why hedge fund managers tend to be so overpaid, compared to smaller asset managers. Sure, you can economize by by hiring someone for $100K instead of $150K to manage a $5 million account — but when it’s $5 billion, it turns pretty much any skill premium into a rounding error.
October 6th, 2009 at 10:43 am
Well, someone has to pay for the fancy office and other perks! 🙂
October 6th, 2009 at 10:55 am
Yeah, come on, Coke, I’ll direct your campaign for $50/hr. You like clip art, right?
October 6th, 2009 at 11:21 am
Spencer: I have worked with big agency and small agency people for 30 years. I can assure you that the big agencies have no monopoly on talent, and that many smaller agencies and specialists do a BETTER job than the Madison Avenue giants — often at significantly lower cost.
October 6th, 2009 at 1:43 pm
I know with our small agency, we use freelancers for web design, graphic design, etc; who have worked in a corporate setting so we can provide the same level of quality minus the ridiculous prices.
It seems that many small agencies also adhere to a more direct response type style of marketing which doesn’t hurt results either.
October 6th, 2009 at 1:46 pm
Or, don’t use an advertising agency at all. They’re all about smoke and mirrors no matter what size they are. http://www.famefoundry.com/935/put-away-the-smoke-and-mirrors
October 6th, 2009 at 3:29 pm
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October 6th, 2009 at 4:35 pm
The Copywriter’s Council of America (comprised of the top freelance direct response advertising copywriters, marketing/pr communications specialists, graphic artists and talent from A—Z) has been backing up small to large agencies since 1968. Agencies outsource to CCA because we have the best creative freelance talent on the planet and we can deliver bankable, measurable results within their budgets.
We found, the larger the agency, the more they would mark up our fees. While some bigger agencies found it necessary to place a 10X mark up, smaller shops were happy to double it or mark it up by 50%. Unless you have a few million dollars to ‘invest’ with a major dr agency, it’s best to go to a boutique shop who will give you the attention you deserve at a price you can afford.
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Well said,
When you go for a bigger company, you might have to pay a huge amount for all the workers down there. Instead we can better opt for a smaller agency.
November 5th, 2009 at 12:49 pm
Go for the best freelance consulting services available. Before I accept any assignment selling a product I analyze its marketability based on a P&L calculation. I always use minimum response as a determining factor. When dealing direct with a client, my fee is usually one third of what an agency charges (NOTE: I am a favored copy source for some of the more renowned agencies specializing in Direct Marketing. Therefore, never resort to an agency before checking recommendations for top freelance talent. If they are willing to accept the job, obtain their estimate and then compare it to what an agency would require. Then prepare for a SHOCK.
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– Performance-Based Contracts: Consider performance-based contracts where the agency’s compensation is tied to specific outcomes or KPIs. This aligns the agency’s incentives with your business objectives.
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– Streamline Processes: Streamline approval processes and minimize revisions to avoid unnecessary delays and expenses.
– Provide Resources: Provide the agency with all necessary resources, information, and assets upfront to prevent additional charges for last-minute requests or changes.
6. Utilize In-House Resources
– Collaborate Internally: Leverage your in-house team’s expertise and resources to complement the agency’s efforts. This can help reduce reliance on external services and streamline workflows.
– DIY Content Creation: Consider creating some content or marketing materials in-house, such as social media posts or blog articles, to reduce outsourcing costs.
7. Monitor and Measure ROI
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– Optimize Campaigns: Use data and analytics to identify areas for improvement and optimize your advertising strategies for better results and cost-effectiveness over time.
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– Define Clear Objectives: Clearly outline your campaign goals, target audience, and budget constraints.
– Shop Around: Reach out to multiple agencies for proposals and compare quotes to find the best value for your budget.
-Negotiate Rates: Negotiate with the selected agency to secure competitive rates and explore options for cost-saving measures.
– Maximize Efficiency: Maintain clear communication, streamline approval processes, and provide necessary resources to ensure the campaign stays on budget and timeline.
Conclusion
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Negotiate Wisely: Don’t accept the first proposal at face value. Discuss your budget constraints openly and negotiate terms that are favorable to both parties. Agencies often have flexibility and can adjust their services to meet your financial needs.
Leverage Technology: Utilize project management and communication tools to streamline collaboration. Efficient processes can reduce billable hours and enhance productivity.
Monitor Performance: Regularly review the performance of your campaigns. By closely tracking results, you can identify which strategies are working and which are not, allowing you to reallocate resources more effectively.
Prakash Machineries believes in smart, strategic spending to achieve optimal results. By following these tips, you can make the most of your advertising investment and drive your business forward without breaking the bank.
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