"They don't see our potential, so how could they do great advertising for us? They're too stuck-up." So wrote John Chuang, CEO of MacTemps, in Cambridge, Mass., after his 1992 meeting with a prominent Boston advertising agency. In his three-month search to find a suitable agency, Chuang encountered many that couldn't appreciate his small but fast-growing business. Why did he bother with agencies at all?

While MacTemps' homegrown advertising had suited its initial local clients just fine, Chuang realized in late 1992 that the client base of his then four-year-old provider of Macintosh-trained temporary personnel was changing -- for the bigger. "The sophistication of your advertising has to match the sophistication of your clients. Our start-up image looked unprofessional and cheesy," he says.

Everything an agency does, including developing and producing ads and buying media space, can be done in-house or with free-lancers and independent production houses. But, the argument goes, an agency can save you time and keep your advertising on track. Whether it's worth the cost is another question. Even small agencies (15 people) often won't bother with accounts of less than $250,000 annually; 5-person shops want accounts worth at least $100,000.

Before Chuang hired an agency, he made clear the agency's role: to handle all his print ads and develop some collateral material, such as the corporate brochure.

He drew up a list of 15 agencies culled from Adweek and newspaper clippings. He made cold calls to all 15, in each case asking the top account executive about the agency's size and client list and requesting copies of its best print ads. He targeted 9 agencies for visits, asking tougher questions: Why were your best print ads effective? Do you know my industry? What is your agency known for? Fees? Do you have any small clients? References? Will I have access to top people?

"We spent half a day at each agency -- half that time explaining our business and the other half learning about the agency's background and its theory of advertising," explains Chuang. The agencies detailed any work done for smaller clients, and suggested ways to save MacTemps money. "No one had experience with temporary agencies, so we looked at start-up services or products. We wanted to make sure the ad agencies had solved business problems similar to ours," says Chuang. He also wanted assurance that he'd be working with the creative directors he admired.

The ads that struck a chord in Chuang were the work of John Doyle, who'd left a big agency to start his own Boston firm, the now $7.5-million Doyle Advertising and Design. Chuang hired him, paying a reduced retainer and a project fee. (Agencies often ask for a monthly retainer, but it's OK to try out an agency on a project basis or, say, a three-month retainer.)

MacTemps' ad budget has increased from $350,000 in 1992 (1.7% of $21 million in revenues) to $760,000 in 1993 (2.6% of $29 million in revenues) and will remain steady in 1994. For his money, Chuang says, the advertising has made a quantum leap in quality. "We were embarrassed to send out the old collateral," he says, whereas the new work won an award from a temp-services association. The ads have scored, too, with potential customers: a study by HR Executive showed that 25% of readers remembered the ads a full seven months after they began appearing in its pages. Believing that the ads are producing better leads, Chuang plans to run more.

Resources: Selecting an Advertising Agency: Factors to Consider, Steps to Take, published by the Association of National Advertisers (212-697-5950), is $22.50 for 17 pages, but it's packed with helpful lists and examples. Check the library for Adweek Agency Directory and Standard Directory of Advertising Agencies. Ad Age's annual agency report is $5 (to order it, call 313-446-1634). -- Robina A. Gangemi

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