by John Howlett

Hiring an ad agency can be a scary thought. Who wants to deal with all those egos? Or even scarier, who wants to see that agency invoice?
O.K. You can stop covering your eyes.
Outside of price gouging, the trauma at invoice time is often a function of a poor fit with the agency and your needs. Shockingly, an agency that “fits” can often save you money.
Historically, advertising people were “brokers of media space” who got paid a commission from the advertising media they placed in newspapers, magazines, etc. These media outlets, in turn, awarded the ad people a 15% discount for their agencies. Agencies not only placed the media with the 15%, but also made the ad itself. Clients won because they only paid for the cost of the media space (placement of the ad).
“Those were the days,” to quote our friend Archie Bunker. Life and business were simple. Too bad that advertising model is over 100 years old.
Since then, advertising has moved away from the commission only structure (unless you are a behemoth client and spend about a gazillion dollars in advertising media for your brand). Agencies now charge not only for media; but also ad production (referenced as creative services on the scary invoice).
Ironically, today it’s much easier to run an “in-house” agency (doing placements and creative yourself). Advances in technology, templates, and computer applications make the production infinitely easier. In addition, if you place the media, you'll get the 15% because of your in-house agency status.
Right now you’re probably scratching your head wondering why I said an agency can still make sense. Well here’s why:

1. The aggregate cost of your staff salaries and benefits as an in-house agency far exceeds those of a competent agency doing creative and media.
2. Your staff spends too much time supervising printers, copywriters, and designers and far too little time producing the work.
3. Company sales volume has continued to decline over the past few years. yet your in-house agency costs are going through the roof.
4. Your media plan seems to be the same every year. Today’s proliferation of media choices can be daunting to all but the well-trained professionals (Think about internet click-throughs, unique page views, and CPL models).
5. Timing is critical. You don’t have time to negotiate prices every step of the way. In addition, you can’t benchmark as effectively as an experienced agency.
6. Your work, quite frankly, is not as professional as the competition.
7. Suppliers have become complacent with your business. Agencies have a dynamic list of suppliers they can call on at any time.
8. Your company has a long list of priorities, and advertising projects never seem to get done in time.

John Howlett is president of the AvizaGroup, a consulting service that specializes in reviewing advertising and marketing programs. His 24-member strategic partnership team focuses on improving the company’s ROI by analyzing every component of the advertising and marketing program.

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