Now that you know what to expect from the main characters, let's talk about media buying. The principal source of income for agencies is the 15% commission they receive for placing clients' advertising in magazines and newspapers, on TV, radio, billboards, and so forth. The system has been going on since Moses was a boy, and it made sense back when only agencies bought media space or time, but that was long ago. Today, there are media-buying firms that buy hundreds of millions of dollars' worth of ad placements. By combining the buying power of a number of accounts and by making long-term buying commitments to TV and radio stations, the media-buying services can offer substantial savings on placement. While there are agencies, particularly the very large ones, that still make their own buys, others find it more economical and more efficient to leave the purchases to the media-buying companies. Since agencies can pass the job of placing advertising along to someone who will probably do it better and cheaper, does it make sense to pay them 15% of billings? That's one problem with the system, but it's not the only one. Since the billing percentage is the principal source of income for the agency, they are under pressure to spend as much as possible in order to collect more in commissions; they may even be tempted to spend too much at the wrong time. Also, it's more profitable for the agency to use the same ad or commercial over and over again, avoiding added creative or production costs. The whole billing system is antiquated, and I, for one, think it's wrong. At the very least, it sows the seeds of mistrust.
There is a better way. Suppose you tell the agency that in the future you want all advertising to be billed to you at net cost -- no commissions. Instead, you agree to pay the agency for the services it performs; pay by the hour, as you pay for most professional services, but by all means let them make a profit on the account. Why not even give them an incentive kicker, based on sales results? I'm not suggesting that you try to save money, but rather that you try to get more bang for your bucks.
Here's another idea for you to consider. Tell your agency to authorize its media-buying service or department to make what are called "opportunistic" media buys on your behalf, to be limited by whatever dollar, seasonal, and demographic requirements you may have. There are times when TV and radio stations, along with other media, are unable to sell a particular spot or space, or they may have last-minute cancellations. Like every other business with excess inventory, they want to get rid of it and are willing to deal. You'll be shocked at the buys that can be made. As an example, two years ago, when my own agency was taking a client's product national, our media buyer was able to get a prime-time spot on a major network for $40,000. The spot normally sold for $200,000, but there had been a last-minute cancellation. Such fantastic buys won't happen often, but they will happen, and you'll want your agency's media buyer to be right there when spots open up.
While it may go against your grain, at least consider making long-term commitments to your agency. The owner is trying to build a business, too, and he has a lot of accounts vying for his attention. A long-term commitment by you may be just what it takes to make him light up. I had an experience a few weeks ago that shows how important a long-term commitment can be. I am a consultant to a small company that has developed a dynamite consumer product. What they don't have is money. They desperately need a lot of start-up creative work, such as package design, copy and layout for sales kits, print ads, as well as radio scripts and story-boards for TV commercials. Obviously, they need an advertising agency, but no money, no agency, right? Wrong. We met with top management of one of the largest and best agencies in the South, who liked the product and the people. When the meeting was over, we had an agency that was willing to bet on the future and to invest their creative talent to accomplish all the in-house work at no cost. We, in turn, had agreed to a long-term commitment. Not only do we have an outstanding agency, but we're getting top management's special attention.
Which brings me to my final, and probably most important, point: your personal relationship with the top management of the agency. You need their involvement and they need yours, which does not mean living together. But there will be a few times each year when you'll want to sit with them and their key people, usually when you are in the planning stage of a new campaign. That's when you really need their professional input. Have an understanding right from the start that you won't ask for many of these sessions, but that when it's your time, you'll want their full and undivided attention. If you respect the people involved and listen well, these sessions can make a hell of a difference to the success of your campaign.
So get rid of the glazed expression and the frustration of hating your agency. Get involved. Work out fair financial arrangements that pay your agency for its services; give them a retainer if necessary; pay them more, if they produce. Set specific goals to which they agree. Be sure you have the right account executive. Let the creative people have their head. And be willing to make long-term commitments. Advertising is in your budget as an expense; it's time to make it generate some income.
