Are you having trouble with your Agency fee negotiations?
Simon Francis
Its that time of the year when you are probably scoping for your agency’s next year’s fees or at least thinking about it.
We know what that can feel like, half exciting, half scary. You probably have big efficiency and effectiveness targets to hit. The likelihood is the Agency Finance Directors feel the same, but they are going to try increase scope and fees.
So here are our top agency fee negotiation tips;
Scoping
Better scopes make for better fees, and better relationships.
You have to work with marketing to prioritise scopes of work. You may not be able to afford everything. It may be that getting the best resources of key projects and accepting lesser resources on those are less important and is the best route for you. “Dumbing down” your Agency resources on all scopes (because you haven’t prioritised) is a common mistake.
Making sure the scopes are mutually exclusive. It amazes us how often scopes of work overlap driving duplication, and waste.
Identifying outputs and outcomes. Many poor scopes do not identify quantities outputs and outcomes that specify the quantity AND quality of the deliverable.
Our scoping tool is very helpful to build great scopes and saves endless Excel exchanges and hours and hours of analysis!
Remuneration and bonus system
Have you looked to see what is the best remuneration system for your agency? There are many to choose from, that can be combined, to deliver a fair, flexible, and efficient way to reward your agency for their work and excellence:
- Time and materials
- retainer
- deliverable based
- project based
- commission based
- outcome based
If you would like to see the presentations we have given to the World Federation of Advertisers, ANA, and ISBA then let us know.
Are the KPI’s for bonus effective? You may want to incentivise certain behaviours and penalise others. Our agency appraisal tool offers a great solution.
Basics
Make sure you have great “unit costs” for staffing, overhead, margin and bonus before discussing volumes of work/hours etc. If you don’t have good benchmarks, then let us know.
Process
Set up a clear process by which agreements will be made. Stick to it. Make sure agencies stick to it.
Transparency
Be as transparent with your agency as you expect them to be transparent with you. Explain budgets, goals, measures and timelines. Be open about issues.
Have a strategy and a Plan B
Make sure you and other stakeholders have a clear strategy to optimise the return from each agency. This may involve a Plan B, where scopes get dropped, or moved to alternative suppliers.
We hope that these tips help bring you great returns. If you’d like any more information or help, then let us know! We’re here to help!