Expert: Peter Gabany - 9/26/2007

Question
Hi Peter. We have recently bagged the advertising account for a big sporting event coming up here in australia. The evernt is in 2010. Therefore there will be sustained brand building activity for 3 years. The client is a government undertaking. They have no clue about advertising and its processed. We have been given the option of proposing to them whether we want a retainer or a fixed 15% on the media release. They also expect the advertising agency to do MEDIA PLANNING for them. Media planning is not our core competency. We specialise in startegy and creative advertising solutions. Can you please suggest a way out? We have no vlue about their ad spends. I have no clue on how to arrive at a retainer fee component. All i know is that they will spend big money. Can you please help? I need to submit a proposal in a couple of days.
Thanks

Sankar

Answer
Sorry for the tardy response - I was away on vacation. I would and have contracted a media agency to do the planning and placement for all media properties. They take a portion of the fee and you get the rest. This has worked VERY well for us and removes a lot of work for our staff on larger projects.

As for a retainer solution we ask for an anticipated budget. From that we take 70% of the spend and divide it into 12 months. Let's say from $1,500,000 budget we assign a monthly retainer of $100,000. The fee is paid at the beginning of the month and reconciled at months end with a Budget Control Report showing where we have spent that money (as per job - invoice and media billing) Any overages are billed in addition. This works very well.

We review the retainer each quarter to ensure that there is enough to offset expenditures. And if we are drawing too much we adjust down.

I hope that this helps. Please let me know if you need more info.

Pete