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I used to work on a national business-to-business account with my old pal, Frank. Frank was a nice guy, smart marketing thinker, great sales force motivator. But he liked to think of himself as a wheeler-dealer. He liked to be the straw that stirred the drink.

So, even though his account was not that large, he always had a primary agency of record relationship, a graphic design firm relationship, a couple of freelance relationships, a couple of printer relationships, and a couple of photographer relationships. He thought he was going to work everyone against everyone else and end up with the best deal. Problem was, it didn’t work.

For media, of course, he always went with the agency of record. But, he also left his door open for reps to call on him personally for over-the-transit opportunities. Rep would pop in, pitch the idea, Frank would say cool, call Faye at the agency. Rep would call Faye and say, “Frank already said yes…he just needs for me to run it through you for billing and traffic.” Faye would make the buy and negotiate… NOT … AT … ALL… because it was Frank’s deal.

For a lot of other projects, Frank would…say…pay the agency for developing concepts, but then bid out the execution among his circle of vendors. Problem was, if the guy chosen to produce the work was someone other than the guy who conceived it, they either produced it without understanding it or they had to be brought up to speed on it. More time spent.

Aside from spending as much or more in the end, Frank would almost never end up with the best work. Ad creatives live and die by their portfolios. And portfolios win or lose on CONCEPT and PRODUCTION. If the guy doing the concept isn’t doing the production, he’s not going to work quite as hard on that account as he is on others, because the opportunity for career advancement is not as great. If the guy doing production is not the guy who did the concept, well in the ad world, he can’t really claim the work because he didn’t concept it.

Meanwhile, in the profitability ivory tower, everyone being worked against each other would begin to develop ways to remain profitable, while giving Frank what he asked for.

So, more and more stuff was taken out of flat fee areas and migrated into ala carte billing. This way, if the creative team had to meet with the design studio to explain the concept and provide direction, the agency was paid for that time outside of the concept fee.

Everyone learned to bid low, and build in contingencies. So, the bid went to the low bidder, but as soon as the specs or criteria changed, or new direction was given after the initial briefing, the clock started ticking.

And finally, because nobody had substantial control over the budget, nobody had either the authority or the motive to help Frank spend less. He reduced his “vendor circle” to task merchants in competition with each other for every dime. So, that’s how they behaved. “Sorry you overspent, Frank. I know what you paid for what you got from me. Can’t help you with what you spent elsewhere.”

Clients who are truly smart about their spending don’t try to compete against their agencies. But here’s what they do:

1. Work with the agency on objectives, goals, strategies, measures, and budgets per activity
2. Agree in advance about who is doing what (agency is doing this, design firm is doing that, client is doing the other in-house), how much is to be spent, how the agency is making money (and how much), and how success will be defined (in measurable terms over which the agency has sufficient control)
3. Build purchasing standards into agency purchasing procedures on client behalf.
4. Make sure everyone knows what they’re responsible for. Hold them responsible. Don’t hold people responsible for things over which they have no control.
5. Avoid the sense that you are competing with your agency.

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