Marketers Can't Afford to Keep Basing Agency Decisions on Pricing

But as Pattern Shifts, Agencies Must Offer What Clients Need

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Marc Brownstein
Marc Brownstein
One of the after-effects of the Great Recession is the criteria by which client decision makers choose their agencies. It used to be primarily on chemistry, which was borne out by an agency that went deep to understand the client's business and expressed an insight in marvelous creativity. I cannot say that is the case anymore. The scars from more than 20 million people losing their jobs is that companies are doing more with less. The mantra is: leaner and meaner. Naturally, that falls downhill to the vendors that companies bring on board.

So ad agencies are often chosen on price now. That is, of course, after the strategy, creative and chemistry boxes are already checked. We have certainly experienced that at Brownstein Group, and many of my peers in the agency world have as well. Agencies are regularly chosen for their low-price bid, even if their strategic thinking and creativity wasn't the best. As long as that was good enough, and their price was superior, then they win. Losing sucks, but I could usually stomach losing to a better idea. I have a tough time losing to an unreasonably low price that, in my opinion, devalues what our industry does.

Rather than bitch about low-ball pricing, I am focusing on the big picture. I believe that price-based decisions are a short-term effect of the economy, and that more realistic fees will again become the norm. (I have to laugh when I say "realistic," as the advertising industry has forever lagged our service-industry brethren by a wide multiple. If we could only charge what law firms, for example, charge with their new, lower fees, then we'd actually be way ahead of where our industry was before the recession!) Long-term, we will earn normal fees by staying important to clients on a number of issues. And that is the key: staying important.

That means adjusting what we sell by truly understanding what clients want. Many clients have in-house resources to crank out marketing materials. But in my experience, they do not have the kind of thinkers that move the sales needle and build mega-brands. So agencies need to continue to invest and upgrade talent on the strategic, rather than tactical, side of the business.

In addition, the world is changing so fast that many clients are confused. What should their digital strategy be -- including social media and online marketing? How much resources should clients invest in this, vs. traditional marketing? These are important questions that agency partners should be able to guide clients through, to help them gain greater effectiveness with their marketing efforts and achieve high levels of efficiencies with their media dollars. That's certainly what I call staying important.

And agencies need to become the harbinger of things to come -- peering out over the horizon for new trends, technology and change, so that they can prepare clients to make adjustments. Most clients don't have the time to think about issues like that, and it would be a welcome relief to have that kind of proactive thinking on their side.

For agencies that want to stay the course, and try to win the low-price game, that is a route to becoming a commodity. Since we're in the business of avoiding commoditization by building unique brand identities, it goes against everything we do. I recommend another route -- the path to selling what clients need today, and tomorrow. You can't put a price on that.

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