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I don’t know about the client perspective on this. Maybe somebody should tell me. But from the agency side, there are few things more frustrating than having to estimate, line by line, a laundry list of items—some of which turn out to bear little connection to actual objectives—in order to back into a budget, so we can start to provide advice to our client. I see the problem as two-fold.

1. Few people have a handle on how much their advertising should cost. So they look to the marketplace to set their prices. This is counterproductive, of course, because the marketplace then has to set prices that pay for all of the free price consulting that goes into the proposal process, and that cover the 80± percent of the time you don’t get the business. So the old get-some-proposals-and-take-the-second-lowest-bid approach, or worse yet, the get-some-proposals-and-use-the-lowest-bid-as- a-club-to-beat-down-the-agency-you-actually-wanna-work-with approach doesn’t get you to a fair price. It gets you to an inflated price.

2. Many companies have an us-against-them culture. This creates the self-fulfilling assumption that only those within our walls can be trusted to a)know what we need, or b)not rip us off. As a result, companies begin what should be a high-trust, consultative relationship with an adversarial (sometimes insultingly so) price negotiation. By the way, a variation on this syndrome is one in which companies believe that EVERYONE within our company is smarter, more knowledgeable, more capable than ANYONE outside of our company. If you’re company has this problem, lots-o-luck getting any decent professional advice. Smart people will only be treated like numbskulls so many times before they give up and start telling you what you want to hear. And dumb people…well…they’re not smart.

But getting back to the old budget thing…

Here’s what I think companies should do.

1. Put together an agency job description—what roles, responsibilities, and capabilities are we expecting from our agency. You might need to hire a consultant for this. Or maybe you can just get some folks from various company functions to sit on a committee. Everyone should be represented—agencies work or the whole company, not just the marketing department.

2. Blast out a questionnaire of 20 questions or less, as a qualifier. Send it to as many agencies as you can. Use an email blast. Give a deadline. Make it cheap and fast.

3. Get a list of 3-9 agencies (I like odd numbers—guess I’m just odd). Visit all nine. Ask to see their best and worst work. Talk to them—brainstorming style—about your business and the kind of problems you face. Get a sense of how fast they learn, how well they understand, how inclined they are to listen, how well they develop good ideas on the fly. Also, get a sense of who you like and connect with. A very smart, qualified agency you don’t want to spend time with will not serve you well. A slightly less qualified agency that you LOVE to be around will stretch to serve you if necessary.

4. If one agency stands out as Mr. Right, hire them. If not, narrow it to a list of two or three. Give them an assignment and a budget. Give them plenty of face time as they work on their assignment. Select your agency on the basis of who seems to work best with you, as well as who delivers the best final product.

5. Once you’ve chosen your agency—folks you trust and respect—give them the first real assignment: working with you to devise the annual marketing communication plan and the budget, based on actual C-level objectives. By this time, you and your company have a high level of trust. The agency has actually worked with key people in your company. And they are familiar with your priorities and quirks.

Or, you could just send out an RFP and see what happens.

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