AboutPeter Gabany Expertise Strategic planning:
Objective based advertising, Ad creative, Writing, Photography - buying and making, Illustration - buying, Print, Outdoor, Event, Media, Media Planning, Broadcast, How to select an agency, What the client must provide, Pitching a client / being pitched
Experience Over 25 years in the business - 22 years operating an agency. Creative direction and agency management.
Question I have been on the sales and operations side of the advertising business for over 20 years (mainly in broadcast and Internet sales). I have launched a media buying and marketing services company based on a vetted collaborative network. I assemble the team I need for the job at hand. I function as the strategic center and principle media negotiator. My focus has been more on start ups (rather than trying to displace other companies without strong case studies I can point to). I am beginning to get traction with a few of these and it's time to shift the dynamic from offering free advice (pitch) to charging for my services. Two questions: 1)Is their a clear point when say a client is asking for a detailed media plan when it is acceptable to say "no, not without a retainer". Secondly, if I am bringing in partners who will require a retainer for say creative services, should I also charge for coordinating this or wait to make my money on 15% of the media buy? I am curious if most ad agencies still make 15% on media placement and if that is the most efficient way to bill for my services. Here's a look at my website: Louis
Answer Louis,
I have been SO GUILTY of giving more away than I ever should have and as a result have learned that there has been nothing gained in the long run. Is there a clear point to start charging for your work - yes! The morning you wake up. Each and every morning as a new business owner or old “salt” at business we awaken unemployed looking to make a buck. Today and everyday is the day to start making it. There is NO free advice - it either costs us or it costs them.
Years ago when I made my living as a photographer I charged $75/hour. I would arrive on site with a plethora of camera gear, lights, stands and the like. I was shown where to shoot and often left to my own devices to get shooting and get the shots needed - no discussion. Sometimes the shots were used and sometimes many of the shots were just not suitable. I raised my price to $2,000/day. I would be greeted at the door, 1 or 2 people would help me get my equipment to the location and all eager to help set up. One person (usually someone from marketing or sales) would assist and recommend what it was that they were needing. All the shots were used and often the relationships grew.
If a client does not want to pay (the barrier we all dread if we jump to quick) then do we want the client? Lay out the cost of service within the pitch. In the pitch speak about expectations and only hint at process. It is your process that makes for your point of difference - use it to service the client and perform to or exceed expectations. Clients - solid clients have NO PROBLEM paying for that type of service.
As for the partner question - absolutely you should make money on this. You are then working as an account manager on the business and you should be compensated on the insight you bring to the project.
Most agencies still make 15% (bill 17.65%) for media. Many publications are dealing direct with clients removing the 15% fee to make the sale. This has been going on for over a decade and consequently altering the OLD-method of agency compensation. If you can still arrange the discount then by all means go for it but charge the client net or net + a smaller percentage (actual cost of the advertising) and earn your dollars by the fees you charge. This is reflective of the new method of agency compensation. The hourly rate for what you charge should be reflective of the dollars you will loose by waving the commission.
For example. It takes you 40 hours @ 100/hour to create a solid media plan or $4,000 on a $100,000.00 media buy. You would be giving up $15,000 in commission. Doesn't make a lot of sense does it? Why not charge yourself out at $185 - $200/hour and charge net or net + 5%. this will better cement your relationship with your client. You work more, bill more often and create a stable business model. In the Net + 5% scenario you could earn nearly as much as a direct 15% commission and still be under what other agencies charge. Many media companies utilize a similar form of compensation, albeit the actual models can be different.
Last point: stay away from retainers with this sort of business model. The management and liability is a lot to manage unless you are managing buys in excess of $500,000/annum.
There was not website to look at but send it along, we are always looking for a solid media planner/buyer.
