Selecting an ad agency can be daunting, it comes down to need and asking the right questions

In the first part Taking Your Business To the Next Level? We covered knowing your priorities and the right time to choose an ad agency. As a next step it’s important to familiarize yourself with the various types, location and respective capabilities. Then set a budget and prepare. These steps are integral to choosing the right agency.

There are many ad agency options, but which is the right type? 

This is a hard one…

There are three basic models available for a small and medium-sized business:

1.  External consultants. I might be biased but, for some clients, a good external consultant can provide much more brainpower and experience at a fraction of the cost of a permanent employee or agency.

• The plus side: the implosion of the advertising agency industry over the past 5 years and the natural tendency of agencies to fire older employees has created a ready pool of experienced consultants.
• The down side: you really have to sit down and interview potential candidates.

2.  Full service agencies. These agencies do everything from soup to nuts; from creating strategies, to messaging, media, social media and everything in between. For a small/medium sized business, however, they present special challenges.

• The plus side: you only have to deal with one person; the agency will actually care about your company, its goals and their achievement and, depending on the specific background of the founders, there will be an outstanding discipline or two in the agency.

• The down side:

• • If the full agency is small, you will not be dealing with experts in all of their fields (it “could” happen, but, most likely, it won’t); they will not have a vast amount of research and tools; they will not have a lot of weight with local media to get you rock bottom prices.
  • If the full service agency is medium sized or big, unless your budget is big, you will be relegated to the “C” team and you will not be a factor for them.
  • One thing to keep in mind, hire an agency that can grow with you.

3. Specialists groups. These are agencies that specialize in one facet of advertising (e.g., creative, media, social media…). These are great when you (1) can identify the greatest help within your budget and (2) have the time and knowledge to serve as your own coordinator or have one in-house.

• On the plus side: you should be able to get a higher degree of expertise in the particular area you hire.

• On the down side: most of the time, if you are not careful, you’ll wind up with a bunch of siloed companies that spend more time fighting each other to increase their size of the pie than in thinking about how to grow your business. And you will need someone inside your organization to coordinate the different groups and make sure you are obtaining the value you need.

Setting a budget

This is an easy one: It should probably be around 10-20% of your projected sales.

You don’t have projected sales? You don’t have a business hiring an agency. Period. How are you going to judge whether the agency (and you) have been successful or not?

So, let’s shed any vestige of political correctness. In all honesty, if you don’t have a budget of around $100,000 per year, you might do better NOT to hire an agency but to hire an external consultant. The agency fee alone is going to eat through half of that. And, with good reason, they are a business too, they have to pay employees and they have costs.

Next page: Factors when choosing the right agency for a small or medium-sized business