Are you paying too much for your marketing agency?

Companies looking to hire a digital production partner will undoubtedly be paying attention to their budget—and so they should. But how do you know when their fees are too high? Is there such a thing as “too” high or low?

It can be hard to find a match that fits all of your criteria, including your approach, specialty, values and budget. That’s why today’s digital agencies should be prepared to have their fees on the table. 

Here are some things to consider when evaluating your agency and considering the best investment. 

I have years of experience facilitating the search and partnership process between clients and agencies. Contact me for help understanding how to get the most value from your marketing agency.  

Step Away from the “Hourly Fee” Mindset 

You probably pay some of your employees hourly, so why wouldn’t you pay an agency hourly too? This may work with an agency relationship if you only hire them to do small or one-off jobs. While some agencies may have this as an option, if you are working on a full-scale marketing contract involving multiple levels, you’ll want to leave the idea of hourly rates behind. 

The reason why is that you are not paying for time. You are paying for: 

  • Specific and unique skills and sector experience 
  • Innovative problem-solving Activities that grow your business  
  • Assets that bring value into the future 
  • Solutions to one or more specific marketing problems 

When looking to hire a new agency, remember that you are hiring an entire company committed to working on your behalf to help you grow your business. In addition, some people simply work faster than others, and some types of projects take more time by default.  

If, at first, you think you may be paying too much, remember that the marketing assets the agency creates could just be invaluable. 

Never Lose Sight of the People Behind the Products 

There’s always going to be a group of highly talented people working behind the scenes of the ad agency. You may only interact with a handful of them. Whether freelancing or salaried, you can expect that most people will be earning the equivalent of $35-$150  hourly for their work, and some of these people are probably freelancers.

A lot of this is contract work, and those fees are built to reflect their talent and skill and compensate for the fact that it is not standard employment. Then the agency itself also has overhead costs, just like any other business. So when you are considering whether a fee or pricing structure is fair, don’t forget that you are essentially investing in the agency’s business as well.  

Don’t Forget Contract Negotiations

The ad agency’s responsibility is to set transparent pricing for services and make possible fee fluctuations clear in the initial contract. While ad agency fees and pricing structure will be presented up-front, don’t forget to include a contract negotiation plan in your initial contract setup. Your contract can consist of clauses that point to specific benchmarks and goals, which you can use to help measure performance. If you are unsatisfied with their performance after a certain period, you can always move on instead of paying too much. 

But unless the red flags are obvious, I suggest you don’t make rash decisions.  Some marketing activity revenue can take some time to build. If you have concerns with your ad agency, bring them up as quickly as possible, and be sure to have sincere conversations when it’s time to negotiate your contract.

Focus On Value

Sometimes there are gaps between what the agency feels is fair and what the client wants to pay. Although not everyone is directly motivated by dollar signs, most people feel better about their work when they know they get paid fairly for their services and products. The same goes for an agency that encompasses skilled workers with diverse skill sets. 

In addition to monetary support, ensure that the agency has enough time to complete all the project requirements listed in the statement of work.

I have seen firsthand how clients inspire great agency work, and clients can have a huge impact on the partnership itself.

When the client and agency are entirely on the same page, when expectations are completely clear from the start, there’s a better chance that you’ll earn consistent returns on your investment and less of a chance that you’ll feel that you’re paying too much.   

Consider Performance-Driven Compensation 

All of the points listed above point to the fact that results are most important. And you can’t expect great results unless you support the agency to perform at its best. On the flip side, they should give you great results when they feel heard and have plenty of space to present and move forward with innovative ideas.  

Developing a contract model based on performance is one way to ensure that both parties are motivated to meet specific goals and perform at a certain level. This also encourages us to step away from the idea of “hourly” fees and into something that allows more space for creativity. 

Get Help With Your Next Ad Agency Partnership 

It can be so hard to tell what you’re getting into when you first hire a new ad agency, and the question of whether you are paying too much will undoubtedly run through your mind. Getting a sense of current fees and pricing structures first can help ease your mind, as can handling your contract development. 

As an Agency Search Consultant, I’ve had plenty of experience sourcing and matching partner companies. If you need assistance finding the best ad agency for your needs, contracts, performance evaluations, or anything else related to your client-agency partnership, contact me for help. 

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