Agency selection criteria – seven things to consider when choosing an advertising agency

Choosing a new advertising agency, be that creative, media, digital, experiential, shopper, pr or any one of the many other types of service providers is not something to be taken lightly. The cost and time involved and the impact on the business are significant. That said, if you’ve done due diligence and interrogated your reasons for finding a new agency partner, here are a few things to look at before you leap…

Agency selection criteria

1. Culture & Chemistry

One of the most important parts of the relationship between a marketer and an agency is ‘chemistry’ or ‘fit’. Most relationships that go the distance are based on mutual respect, understanding, transparency, communication and collaboration. And from our experience, if you have a strong cultural fit between marketer and agency, you can normally overcome most issues in any relationship.

Look for:

  • openness and a willingness to listen as well as talk;
  • something beyond the hype and camaraderie of the new business pitch;
  • a genuine interest or passion for your business;
  • a transparent approach that will fuel trust and respect.

2. Capabilities

Not all agencies are created equal. True story. Be clear on what areas you need your agency to be strong in – do you need strategic firepower, or is your strategy clear, and do you need creative brilliance? Do you need a new PR strategy, or is it more about executing better?  Being clear on what you need and shaping any advertising agency selection process based on that will help you and your team overcome the tendency to be swayed by the bright lights and shiny toys agencies can wheel out during a pitch, toys that look and sound amazing but may not be at all what you need to deliver your marketing requirements successfully. If you already have a clear strategy and need an agency to take that and create effective comms, being starstruck by a superstar strategic lead won’t help create an idea that will lead to sales and make you and your brand famous.

Look for:

  • demonstration of strength and firepower in the capabilities you are looking for;
  • use of scorecards to assess those capabilities to keep everyone focused;
  • case studies and work that provide a clear demonstration of the capabilities you need.

3. People

Many agencies will field a New Business Team for the pitch, a group of people who know each other well and are impressive as individuals and a team but never to be seen again once they win the business. You must identify the resources working on your business as much as possible, appreciating agencies often need to hire or move people around if they win a substantial piece of business. Whilst small agencies can have the advantage on this point, giving marketers access to the most senior people and often founders who have skin in the game, as the agency grows or if something happens to key staff, they may not have the flexibility to manage your business. Likewise, consider that multinationals may have higher turnover through career development and senior executives are rarely seen on a day-to-day basis. Assessing your needs and asking the agency to advise on likely resourcing will help you paint a picture of who you will work with daily.

Look for:

  • low churn indicating a loyal, long-term team of people;
  • dedicated resources or guarantees of time and effort by individual name or specific level of seniority/expertise;
  • depth of resource and breadth.

4. What’s size got to do with it?

How big or important do you want your account to be within the agency? Who doesn’t want their business to be the most important and the one everyone wants to work on but keep in mind, dominating the agency could mean you end up funding the infrastructure that others benefit from while being one of the smaller fish in a big pond may put you at risk of not getting the attention you require.

Look for:

  • Who are the other agency clients? Consider both size and type and where you fit in.
  • How demanding are these other clients – it’s not always about their spending if they are retail or high-volume clients who may demand resources to a greater extent than higher media spending clients;
  • what impact would the addition of your business have on the agency size?
  • Ask all these questions and more of the agencies you are speaking to, and use client referrals to get a steer on their experience on how the agency handles its portfolio.

5. Category Expertise

Many advertisers want an agency with recent experience in their category without competitive conflicts. Whilst it may be ideal to have an agency with category experience, it could be this comes with a package of set thinking and preconceived notions about the category.

Look for:

  • relevant experience in similar categories or those with similar challenges eg.  low interest, FMCG, service, and so on;
  • a cohesive team that can deliver a mature experience and fresh creativity.

6. Management Skills

Agencies are businesses in their own right, and managing their revenue and profit centres requires business acumen. The experience these management teams can bring to the table is priceless.

Look for:

  • key personnel who have experience across many industries and categories;
  • managers who have ‘skin in the game’ and are hands-on with clients (use referrals to talk to other clients);
  • demonstrably good management skills (strong and consistent agency performance);
  • key personnel who will be helpful for stakeholder management and decision making.

7. Remuneration Structure

Remuneration is often based on a ‘cost plus’ formula, ie. Salary + overhead + profit calculation based on the advertiser’s needs and expectations. More recently, we have seen some advertisers employ a Performance Based Remuneration (PBR) of Value-Based Compensation (VBC) to reward or penalise the agency based on performance.

Look for:

  • a flexible remuneration arrangement based on reasonable salary structures, overhead multiples and base profit margin (benchmarking well against industry standards and other agencies);
  • the willingness to participate in a PBR arrangement either immediately or down the track once you’ve gotten to know each other better;
  • demonstration of putting profit on the line (case studies);
  • a workable review facility that recognises the ebb and flow of budgets and workloads.

Choosing an Advertising Agency

These are just seven important criteria for selecting an advertising agency. What other considerations have you used in the past? You can read more on agency search and selection here.