Choose and manage an advertising agency
Introduction
Advertising can be a powerful part of your business' marketing strategy. It can bring short-term benefits, such as an increase in sales - and long-term benefits too, such as brand awareness.
Advertising agencies can help you devise an advertising strategy. They can then create the media campaigns that will best promote your business.
To make the most of advertising it's important you choose an agency that understands the needs of your business. It's just as important that you then effectively manage the relationship with the agency you've chosen.
This guide will help you select the right agency for your business. It will outline what you should put into an agreement with an agency and how, once you have struck a deal, you can best work together. It will also advise you on ending the relationship with an agency.
Find an agency
When you appoint the right advertising agency for your business you are starting a long-term relationship with a partner that can help your business become more profitable. It's good business practice, therefore, to keep the task of finding and choosing an agency with the top people in your business.
Your first step will be to find suitable agencies. You can do this by:
- Searching business directories - this can be particularly helpful if you want a local agency.
- Asking contacts for recommendations.
- Reading trade magazines - useful websites for trade magazines include Campaign, Marketing Week and Adline.
- Consulting the Advertisers Annual, which lists more than 2,800 agencies.
- Use the profile service on the Institute of Practitioners in Advertising (IPA) website. This lists members of the IPA, the professional body representing advertising agencies.
- Visit a search agency at the Advertising Agency Register website. This helps companies select suitable agencies.
What to look for
You should pay particular attention to agencies' specialisms. Check if they have:
- experience in your sector
- expertise in either business-to-business or consumer advertising, if you have a preference for either
- a track record in the media you want to exploit
You could find more than a dozen suitable names this way before taking the process on and choosing between them.
Choose an agency
Once you have some names of agencies you need to choose which will be best for your business. It will help if you are clear about:
- the target audience you want to address
- the key messages you want to put across
- the key objectives you want to achieve
- the budget you have set
Creating a shortlist
You should ask the agencies to provide you with information about themselves. Tell them what you want and ask them to give you quotes. Consider:
- Are they the right size for you? Bigger isn't necessarily better.
- Do they have the right expertise for you?
- What is their reputation?
- How do they charge and how do they measure effectiveness?
You could arrange to meet some of the agencies. From this, ask about three of them to pitch their ideas to you.
The final selection
The pitch is where an agency competes for your business by presenting prepared work. Agencies might charge for this.
When you ask an agency to pitch you should provide it with:
- a clear brief
- details of your budget
- the nature of the contractual arrangement you want
It can be good practice to sign a confidentiality agreement at this stage.
Find out if the team pitching to you will be the team that works on your account. Most businesses find that personality is important. You need to get on well with people in the agency you employ if you're looking for a fruitful, long-term relationship.
Set a budget
Your advertising budget will be a proportion of your total marketing budget - and from the very point you consider engaging an advertising agency you should have a clear idea how much it is.
The type and volume of advertising you want will determine how high your budget should be set. Remember, though, to allow for your other marketing needs, such as PR or promotions.
Consider whether you want:
- a one-off advertisement or an ongoing campaign
- business-to-business or consumer advertising
- trade and technical press advertising
- local or national advertising
- radio, TV, press, magazine or Internet advertising
Once you know what you can afford to spend, what you want to spend it on and over what period, any agency you engage should work to this.
Measuring effectiveness
You need to consider, together with your agency, how you will measure the effectiveness of your advertising. Only then will you be able to determine whether you are getting value for money. Sometimes it is even possible to have a payments-by-result agreement with an agency.
Although advertising is not an exact science, there are many ways you can measure effectiveness, for example, market research on brand recognition or image shifts.
Strike an agreement with the agency
When you have chosen an advertising agency it's good business practice to negotiate and sign a detailed contract with it. Before you do this though it's helpful if you're clear about what you want from the deal.
Ask yourself whether you want to contract for a short period, allowing for a one-off campaign, or whether it's better to prepare for a longer-lasting relationship.
Your contract should then outline the nature of campaigns to be undertaken, as well as any other work, such as media buying, that the agency undertakes. It should detail any campaign schedules to which the agency will work.
You should agree objectives and how you will evaluate campaigns - for example by measuring sales or carrying out market research. You might want to set measurable benchmarks.
You should make sure you know exactly how the agency will calculate its charges. For example, will there be additional expenses and does it include fees for buying media space. Sometimes you can agree a payment-by-results system.
Building in safety measures
Any contract should include confidentiality clauses.
It should also prepare for either side wanting to end the agreement by:
- specifying the notice period each party must give
- detailing the obligations on both parties during the notice period
- determining who owns copyright in the work created for your business
Manage the relationship with the agency
Your senior managers should have been involved in choosing your advertising agency. They should be involved in managing the relationship too. It's important for the development of your business' sales and its profile that it goes well.
Some businesses find it helpful to arrange induction meetings after appointing an agency. People from the agency can visit your business in order to better understand it, and your people can visit the agency.
Some also find it helpful to have occasional brainstorming events or away-days in which the two parties can productively get to know each other better.
In any case, regular meetings should be arranged so that:
- the work of the agency can be reviewed
- the effectiveness of campaigns can be measured
Ineffective campaigns can then be changed or ended quickly. The agency can also work from feedback you give.
Remember that to make the relationship work well you may need to give the agency confidential information about your business, for example news of planned products. Your relationship should be one of trust but, in any case, you should have a confidentiality agreement with the agency.
End the relationship
At the end of a campaign you may want to end your agreement with an agency.
If you are dissatisfied with the way a campaign is going, and have tried but failed to work with the agency to bring it back on course, you may want to end the agreement too.
In either situation, you should first consult your contract. Check its provisions for:
- notice periods
- copyright ownership
When ending the relationship you need to be clear about:
- Any compensation you may need to pay for early termination of a contract.
- Who owns the intellectual property rights to the creative material that the agency has produced. Can it be used by any subsequent agency you engage?
Checklist: ten things to ask your prospective agency
- What size is your agency?
- Are you a member of a professional association?
- What media do you specialise in and what creative strategies do you prefer?
- What past campaigns have you run and how successful were they?
- Who are your clients, past and present?
- Who will be the main people working on my account?
- Do you have experience of my business type and understand competition in my field?
- What measures do you use to assess a campaign's effectiveness?
- What are your fees and what do they include? Do you ever strike payment-by-results agreements?
- Can I take up references from your clients?
Checklist: ten things to watch during a campaign
- Is the agency showing that it understands my business objectives?
- Is the agency demonstrating an understanding of my market and the competition?
- Is it reporting back regularly to me?
- Is it instituting agreed measures of effectiveness?
- Is the campaign hitting targets? If not, is the agency coming up with ideas to bring it back on track?
- Is the agency working to my agreed budget?
- Is it getting the best deals for me?
- Is it letting me know where and when ads are being run?
- Am I still dealing with the people in the agency I was first promised? Is my relationship still good with them?
- Is the agency still proving creative and coming up with ideas about taking my advertising strategy forward?
Related web sites you might find useful
Read a practical guide to advertising on the Advertising Association website
http://www.adassoc.org.uk
Download a guide to agency search and selection from the Incorporated Society of British Advertisers (PDF)
http://www.isba.org.uk
Download advice on contracts with advertising agencies from the Incorporated Society of British Advertisers (PDF)
http://www.isba.org.uk
