Before you go about the difficult task of choosing an ad agency for your small buisness, you should ask yourself 10 questions:
What do we need from an agency: help in planning, researching, creating, producing, picking media, all of these, or none of these? If you don't have a need, you may not need an agency. You may well function with the services of a freelancer.
Should the ad agency handle the media buying, should we use a media-buying service, or should we do it ourselves? Just because the agency offers a service doesn't mean you have to use it.
Will the agency be compensated solely by the commission it earns on the media it purchases and the added commission it earns on production, or will you pay a flat fee that includes all services? I've never heard of a surgeon charging a commission on the cost of the operating room. But watch out for hourly fees. Agencies often nearly bankrupt companies with these, and not on purpose. I recommend getting a monthly estimate of what the hourly fees will be. Or I'd try to avoid them entirely by means of a flat fee covering specific projects.
Are we picking an agency because we want a specific kind of advertising campaign or because it's the best agency? Beware of agencies that specialize in one kind of advertising. Your company isn't like the others for which they have created advertising. You're different, and your ads should reflect that.
How important is it that we have regular and unlimited access to the president of the agency we select? You need to see the person who's involved with your account regularly. If you get to see someone from one management layer down, and that person lives and breathes your business, the president means little to you.
Does the agency have quantifiable prowess in direct marketing and the Internet since they so closely tie in with marketing? If the answer is no, go directly to the next agency. Direct marketing and the Internet are integral parts of marketing, growing in importance every day.
Do we require an agency to handle only our existing advertising, or our new-product launches and grand openings as well? Ideally one agency should handle everything. How adept is the agency at introducing new products, and does it have access to first-rate public relations services? The two right answers are "great" and "of course."
Does the location of the ad agency matter to us? In these days of e-mail, faxes, cellular phones, and satellite transmission, location is less important. Nonetheless, personal contact is the best form of communication. Will you miss it if you don't get it?
Although we have the ultimate say-so in what advertising runs, who will really be in charge of advertising decisions - someone at our place or theirs? Do we respect that person?
Finally, do we love both the work done by the agency and the results it has achieved? Do we like the people? Do we trust them? Are they more concerned with awards or sales? Subtract 10 points for everything they say about awards instead of profits. I have won many international advertising awards, but I am far more proud of the profits my clients have earned. Awards don't pay the bills.