Everything is calculated and determined and there is minimal risk for both parties.
But here is the problem. Like most businesses, agencies need to demonstrate growth to their shareholders and for publicly listed companies this is a quarterly requirement. If I am going to increase my revenue and profit it is through selling more resources for more money to my clients, who increasingly are looking for more cost effective ways of having their advertising requirements delivered.
Last year I was contacted by a major advertiser’s global procurement team asking if I would tender to provide them with agency hourly rate benchmarks across global markets. I declined. In the conversation I explained that simply looking at rates alone is a flawed process as it is not the hourly rate but the total cost that is important.
Nevertheless they had made up their minds that this was the approach they wanted to take. Eight months later I checked in with them to see how the project was progressing. Apparently I was right. All they ended up with is a list of rates by job title or service.
At TrinityP3 we have collected and analysed a significant amount of rate data across brand agency, media agency, digital, production, public relations, direct marketing, promotional marketing and more for more than 40 major advertising markets, mostly focused in Asia Pacific.
In China they have the Golden Rule: The man with the gold makes the rules. This is an interesting principle as a buyer of services. The fact is that as the buyer you get to set the terms. Therefore if you are unhappy with the terms of the purchase then you only have yourself to blame.
This especially applies to marketers complaining about their agencies and their performance. Because, as the buyer, you get to set the terms of the engagement between the two parties. Let me demonstrate.
Case Study 1: I just assumed…
“My agency is not performing to my expectations”
I wish I had a dollar for every time I have heard this from a frustrated marketer. Invariably, this is because everyone involved is relying on the power of mind reading. We usually find that these expectations are not usually articulated in a clear and consistent manner.