How Smart Clients Get the Most From Their Agency

Guest Article by Gerry Preece – Past Global Head of Marketing Services and Agency Sourcing, Procter & Gamble – Past Agency Search Consultant External View Consulting LLC

Smart clients get the most from their agency. The secret is recognizing that marketing spend is completely different from all other spend areas.

In all those other spend areas—packaging, ingredients, distribution, labor, utilities, etc.—the goal is to reduce costs. Companies specify precisely what they want, and that enables them to leverage competition amongst potential suppliers. As long as the item they are buying meets specifications, price becomes the key (or only) differentiator between Vendor A and Vendor B.

But marketing spend is very different. Companies spend marketing dollars not because they have to, but because they choose to—they spend marketing dollars because they know it grows their business. Marketing dollars are an investment to be maximized, not an expense to be minimized. It’s not about savings. It’s about Return on Investment.

ROI = Incremental Profit / Cost of Investment

Yes, cost is important, but so is the additional profit—and when marketing is good, the profit number often dwarfs the cost number.

Smart clients also recognize that sometimes, the smartest thing to do is to invest more money, not less, in marketing—because the incremental profit pays for the investment and then some.

Smart clients also know that marketing services are creative and therefore cannot be reduced to a specification. Unlike other spend areas, in the world of marketing, quality is a variable. Agency A’s work will not be like Agency B’s, and A’s services won’t grow the client’s business like B’s will. Would you buy a share of Coca-Cola stock because the share price is lower than a share of Microsoft stock? Of course not. Which stock to buy depends on not just the share price, but also (and more importantly) what return each stock will deliver over time. Smart clients know that marketing investments work the same way.

Be a smart client and get the most from your agency.

Remember: marketing spend is an investment to be maximized, not an expense to be minimized. Pick the best agency, not the cheapest. Have clear business objectives. Set clear goals. Collaborate with them by sharing the background, target customer, and business information they need. Then give them the latitude they need to be creative and watch them grow your business!