How to Hire an Ad Agency

Here's an excellent blog about hunting for an advertising firm from BusinessWeek:

How to Hire an Ad Agency
Our columnist offers 10 guiding principles to consider the next time you're looking for an advertising agency
by Steve McKee

Here's a staggering statistic: In the month of June alone, accounts worth over $1.7 billion changed advertising agencies. And that's only among the six largest advertising agency holding companies. It doesn't include any of the brands that shifted their accounts to thousands of independent agencies across America.

Why so much turnover? One reason is the diminishing tenure of the chief marketing officers who hire agencies—an average of less than two years, according to one recent study. But even in companies where the marketing staff is stable, the temptation to shop for a new agency can be strong.

Whatever the reason for an agency switch, too many companies make their selection based on the wrong criteria. That causes heartache, inefficiency, and a significant amount of lost productivity.

I'd like to offer 10 guiding principles to follow the next time you're looking for an advertising agency. Let's start with the five things you shouldn't do:

1. Don't limit your search geographically. Yes, the most expedient way to build trust is in face-to-face relationships, but that doesn't mean trust can't also be built across miles.

Keep in mind that what you're looking for is the correct fit; restricting your search from the outset to a defined geographic area is unnecessarily limiting. If you had a legal problem that a specialist across the country could solve, you'd be crazy to limit your search to only those firms that are most convenient. With the amount of money you're likely spending on advertising, the stakes are just as high.

In this day of the Internet, e-mail, FedEx (FDX), faxes, PDFs, WebE (WEBX), text messaging, and mobile phones, communication is easy and instantaneous. In fact, my firm often uses the Internet to make presentations to even our local clients. And when we do meet in person with our clients across the country, meetings are usually focused and efficient because we've planned them in advance and our time is limited.

2. Don't screen out agencies based on size. If you're a small company, you shouldn't rule out big agencies; sure, you may not be a huge profit center for them but perhaps you represent a new industry they are interested in or a chance to do award-winning work. Maybe they have the precise expertise you need hidden in one of their account groups.

Similarly, larger clients shouldn't exclude small agencies from their consideration. Consider how small agencies develop. Talented people enter the business working for an established agency. The good ones grow with the agency. The great ones move up and eventually run the agency. And the really great ones think: "I can do this better myself" and go off to start their own shops. It's a continuous cycle of renewal, one reason why agencies at the top of the heap tend to change fairly often.

Talented people at the helm of small agencies are likely to have more experience than the mid-level staffers that would be assigned to your account at a big firm. Services not offered by the agency can be outsourced, and scale can be bought. It's the attention and ideas that matter.

3. Don't make industry experience a requirement. What most brands need is to increase differentiation from competitors, and agencies with a lot of category experience might be subject to industry group-think. No agency will ever know as much as you do about your industry, so you should hire them for what they do know: the art of marketing and communications.

One of the things I love about being in the advertising business is the cross-pollination of ideas gained from working across a variety of industries. Every industry is unique, but they all share common characteristics. Often what we learn serving a client in one industry triggers a fresh idea for a client in another.

Will an agency that doesn't know your industry face a learning curve? Certainly, and perhaps a steep one. But if you find the right partner that learning curve will quickly shrink as it disappears into the rearview mirror of a successful relationship. If you want something different, go with somebody different.

4. Don't ask for—or even entertain—speculative work. Speculative campaigns are the bane of the agency business. Spec campaigns are like steroids, artificially inflating the appearance of an agency and often overstating its true capabilities.

It's easy to think that by asking for speculative work you're getting true sample of the agency's work, but you're not. The timeline is artificial, the discovery process is shortchanged, and in the excitement of a new business pitch an agency can focus disproportionate resources on the task, something unlikely to happen in an ongoing relationship. It's a dirty little secret of the agency business that freelancers are often brought on board to help develop spec work—freelancers nowhere to be found once the agency is awarded the account.

But the biggest reason not to ask for spec work is that the best agencies—the ones you really want—won't do it. They don't have to simply because their services are in demand. The more an agency is willing to jump through speculative hoops for you, the more you should be [suspicious]. If they're ready to give away their work there must not be a very good market for it.

5. Don't let a spreadsheet make your decision. It may help if you develop some sort of checklist to track and evaluate an agency's capabilities, but don't go so far as to develop a scoring system and award your account to the agency with the highest average. Not every element on your list will be of equal value and a scoresheet can easily introduce an impressive-looking, but false, equation into the decision. If it helps you bring some element of discipline to the process, fine, but in the end you have to go with your gut.

So how should you select your next advertising agency? Like this:

1. Do determine what you need. The worst thing you can do is hire an agency to do a job and then not let them do it. Do you need someone to lead or someone to follow? A firm that can develop strategy or an expert at execution? A company that likes to have fun or one that's all business? Someone to take orders or someone who will challenge your thinking? There are literally thousands of agencies in America and they offer every possible approach and suite of services (see BusinessWeek.com, 07/11/07, "When to Fire Your Ad Agency"). Don't reflexively seek the hot shop of the moment, seek the one that best meets your needs. If you don't know exactly what you need, well, you need an agency that can help you figure it out. They're out there too.

2. Do notice the advertising that you admire. Look for campaigns that you think are smart, or creative, or have been around for a long time (a good indicator of success), and find out who did them.

Another idea is to look through award annuals, particularly "Communication Arts," "The One Show," and the EFFIE Awards. Yes, awards matter. Research shows a high degree of correlation between award-winning advertising and sales results. Leo Burnett Worldwide, one of the oldest and most respected advertising agencies in America, has undertaken four different studies over a 15-year period that demonstrate the link. Using a variety of methodologies, each study has demonstrated remarkable consistency of results: Of the most awarded ads in the world, 82% to 86% correlate with business success.

In what other industry would you think that awards don't matter? Wouldn't you feel better if you hair stylist was an award-winner? Your golf instructor? Your cardiologist? Your pilot? All other things being equal, it only makes sense to hire someone whose peers have a great deal of respect for their work.

3. Do initiate a conversation. Send the agency president a letter or an e-mail, or give him a call. Spend a few minutes on the phone together and you'll get an immediate sense of chemistry and interest. Ask them about the history of the firm, who the current clients are, what their principles are. Ask them if they've heard of your brand and are aware of its issues. If yes, explore their initial, top-of-mind thinking. If not, don't dismiss them. Not everybody can stay on top of every industry.

4. Do invite the agency to your place to review a handful of case studies. Keep in mind that you're not looking to see if they have good outcomes to report (all of them will) but to understand the thinking behind how they arrived at their solutions. Learn about their process, what it is, how it works, and how it might fit your company and culture. Is it methodical? Inspiration-based? Involving? Inventive?

You want to imagine your brand at their agency and see how they would go about addressing your issues. Let the senior principals handle this part, and don't initially insist on a presentation from the team that will work on your account. Often agencies don't know at this stage of the process. Like spec creative, spec staffing is a dangerous game to play. And people below the executive suite may not be familiar enough with all of the agency's work to fairly represent the most appropriate case studies.

5. Do narrow your list to two or three agencies and spend time at their shop. Lots of time. Meet their teams. Experience their culture. Initiate conversations with people in each department. Inquire about their jobs. Ask to see what they're working on (as long as it's not confidential). Go out to lunch with them. See if you like them, and give them the opportunity to do the same.

Have them answer a handful of difficult questions. Don't surprise them with the questions, but send them ahead of time. The point is to get honest insight, not quick comebacks. What was the last account you lost, and why? Who was the worst client you've served (without naming names) and why? Who is the best client you have and why? Describe a big failure or flop you've had, what happened, and how did you respond? Where do you see our account fitting into your agency? What will we mean to you, now and in the future? Just like in any relationship, you're probing to gain insight into the company's personality and character.

When you find a good fit, discuss with them the best way to ensure a long and successful relationship. Come to clear agreement on your expectations for staffing, compensation and service. Then fire the starter's gun and let them work.

The correct route to hiring an agency is not a simple task. It takes time. But it's better to do it right once than wrong twice (or three or four times). A bad agency decision can set your brand back years. Go through the discipline and hard work of making a good choice. Then you can get down to the fun and excitement of inventing the future together.

Steve McKee is president of McKee Wallwork Cleveland Advertising, an ad agency specializing in working with fast-growth companies and businesses whose ad budgets are under $10 million.