Choose and manage an advertising agency

Advertising can increase sales and raise brand awareness for your business as part of your marketing strategy. You can organise your own advertising directly with media outlets, eg newspapers, trade magazines and radio stations, but you may find it helpful to use an advertising agency if you feel you lack the knowledge or time.

Advertising agencies can help you devise an advertising strategy. They can then create the media campaigns that will best promote your business. Remember that although agencies will generally receive discounts from media owners as they book regularly, the charge for their media-booking service may mean it is still cheaper for you to approach the media owner directly.

It’s important that you choose and effectively manage an agency that understands the needs of your business and is not tied to any media owner.

This guide helps you select the right agency for your business. It outlines what you should put into an agreement with an agency and how, once you have struck a deal, you can best work together. It also advises you on ending the relationship with an agency.

---

---

Find an advertising agency

In order to get the most out of any advertising agency, it is often best to appoint them for at least a year at a time and allocate a suitable budget that has been identified and costed in your marketing plan. That way, they can develop an overall strategy and take a longer-term approach. This means that it is important to do some research to ensure you find the most suitable agency.

You can research advertising agencies by:

• Using the internet – most agencies will have a website and you can often view their portfolio of clients and get an idea of their particular sector strengths.
• Using specialist internet portals – search for an advertising agency on the Creative Match website- Opens in a new window.
• Searching business directories – this can be particularly helpful if you want a local agency.
• Asking contacts for recommendations – it’s often particularly helpful to ask the advertisement departments of relevant trade magazines, who will know agencies with experience in your market.
• Reading advertising trade magazines – the main titles include Campaign, Marketing Week and Marketing.
• Consulting the Advertisers Annual, which lists around 3,000 agencies. Ask your public library if they have a copy.
• Making use of a profiling service. Use the profile service on the Institute of Practitioners in Advertising (IPA) website- Opens in a new window. This lists members of the IPA, the professional body representing advertising agencies.
• Using a search service – a service provider that helps businesses select suitable agencies. Search for an advertising agency on the Advertising Agency Register website- Opens in a new window.

What to look for

You should pay particular attention to agencies’ specialities. Check if they have:

• experience in your sector
• expertise in either business-to-business or consumer advertising, if you have a preference for either
• a track record in the media you want to exploit
• experience in other marketing services, such as electronic media or PR

---

Choose an advertising agency

Once you have some names of agencies you need to choose which will be best for your business. It will help if you are clear about the:

• target audience you want to address
• key messages you want to put across
• key objectives you want to achieve
• budget you have set

Creating a shortlist

You should ask the agencies to provide you with information about themselves. Tell them what you want and ask them to give you quotes. Consider:

• Are they the right size for you? Bigger isn’t necessarily better.
• Do they have the right expertise for you?
• What is their reputation?
• How do they charge and how do they measure effectiveness? Will they negotiate on fees?
• Are they a full-service agency, capable of handling work other than classical advertising?
• Do you like them?

You should arrange to meet some of the agencies – ask around three of them to pitch their ideas to you.

The final selection

The pitch is where an agency competes for your business by presenting prepared work. Agencies might charge for this.

When you ask an agency to pitch you should provide it with:

• a clear brief
• details of your budget
• the nature of the contractual arrangement you want

It can be good practice to sign a confidentiality agreement at this stage.

Find out if the team pitching to you will be the team that works on your account. Most businesses find that personality is important. You need to get on well with people in the agency you employ if you’re looking for a fruitful, long-term relationship.

---

Set an advertising budget

Your advertising budget will usually be a proportion of your total marketing budget – and from the very point you consider using an advertising agency you should have a clear idea how much it is.

The type and volume of advertising you want will determine how high your budget should be set. Remember though, to allow for your other marketing needs, such as PR or promotions.

Consider whether you want:

• a one-off advertisement or an ongoing campaign
• business-to-business or consumer advertising
• trade and technical press advertising
• local or national advertising
• radio, TV, press, magazine, outdoor or internet advertising

However, remember that an agency should advise you on which types of media best suit your objectives. Once you know what you can afford to spend, what you want to spend it on and over what period, any agency you engage should work to this.

Measuring effectiveness

You need to consider, together with your agency, how you will measure the effectiveness of your advertising. Only then will you be able to determine whether you are getting value for money. Sometimes it is even possible to have a payments-by-result agreement with an agency.

Although advertising is not an exact science, there are many ways you can measure effectiveness, for example, before-and-after market research on brand recognition or simply monitoring sales by asking customers how they heard about your business.

---

Negotiate a contract with an advertising agency

When you have chosen an advertising agency it’s good business practice to negotiate and sign a detailed contract with them. Before you do this you should be clear about what you want from the deal. Many agencies have their own pro-forma agreements that you can adapt to your needs.

Length of contract

Ask yourself whether you want a contract for a short period, allowing for a one-off campaign, or whether it’s better to prepare for a longer-lasting relationship. You could opt for a year-long contract allowing the agency to create an overall strategy, but perhaps including a probation period to allow for an early termination if necessary.

Agreeing campaign details and schedules

Your contract should then outline the nature of campaigns to be undertaken, as well as any other work, such as media buying, that the agency is expected to do. It should detail any campaign schedules to which the agency will work. You should also clarify who will own the intellectual property in any work that you commission, particularly where it involves the design of an advertisement or logo, for example.

Agreeing objectives

You should agree objectives and how you will evaluate campaigns – for example by measuring sales or carrying out market research. You might want to set measurable benchmarks. You should also agree a procedure to address any situation where either party is unhappy or wants to end the agreement. See the page in this guide on how to end your relationship with an advertising agency.

Setting payment terms

You should make sure you know exactly how the agency will calculate its charges. For example, will there be additional expenses and does it include fees for buying media space? Sometimes you can agree a payment-by-results system. Also, check if there will be any extra charges for meetings and brainstorming sessions.

Building in safety measures

Any contract should include confidentiality clauses.

It should also prepare for either side wanting to end the agreement by:

• specifying the notice period each party must give and whether the agency will be entitled to notice payment
• detailing the obligations on both parties during the notice period
• determining who owns copyright in the work created for your business

---

Manage your relationship with the advertising agency

Senior management should be involved in choosing the advertising agency, and managing the relationship. It’s important for the development of your business’ sales and its profile that it goes well.

Maintaining regular contact

Some businesses find it helpful to arrange induction meetings after appointing an agency. People from the agency can visit your business in order to better understand it, and your people can visit the agency.

Some businesses also find it helpful to have occasional brainstorming events or away-days in which the two parties can productively get to know each other better.

In any case, regular meetings should be arranged so that:

• the work of the agency can be reviewed
• the effectiveness of campaigns can be measured
• future strategies can be considered

Ineffective campaigns can then be changed or ended quickly. The agency can also work from feedback you give them.

Confidentiality agreements

Remember that to make the relationship work well you may need to give the agency confidential information about your business, for example news of planned products. Although you need to manage the agency and set objectives, allow them the freedom to introduce their creative skills. Your relationship should be one of trust – but, in any case, you should have a confidentiality agreement with the agency.

---

End your relationship with an advertising agency

If you are dissatisfied with the way a campaign is going or its results, and have tried but failed to work with the agency to bring your relationship back on course, you may want to end the agreement.

In either situation, you should first consult your contract. Check its provisions for:

• procedures in the event of a breakdown in the relationship
• notice periods
• copyright ownership

When ending the relationship you need to be clear about:

• Any compensation you may need to pay for early termination of a contract.
• Who owns the intellectual property rights to the creative material that the agency has produced. Can it be used by any subsequent agency you engage? You can find out more about intellectual property rights in our guide on copyright for your business.

If in doubt, you should seek the advice of your solicitor or business adviser.

---

Checklist: choosing an advertising agency

You can increase your sales by using advertising and promotion as part of your marketing strategy. An advertising agency can help you, but they will charge a fee. Given the broad range of advertising options available, it pays to get good advice from a reputable agency if you want to ensure your campaigns are effective. Before you choose an advertising agency, you should:

• find out the size of the agency
• check if they are members of any professional associations
• ask what media they specialise in and if they have any particular creative strategies they prefer to use
• examine their past campaigns and find out how successful they were
• look at their types of clients, past and present
• ask about the main people who will be working on your account and their track record
• see if they have any experience of working for your type of business and if they understand the competition in your field
• check how they assess a campaign’s effectiveness
• get an estimate of their fees and what’s included – eg whether they would accept a payment-by-results agreement
• take up references from their clients if possible

---

Checklist: ten things to consider during an advertising campaign

An advertising campaign can be a successful way to increase sales, as part of your marketing strategy. However if it is not well run and designed for your needs it may be a waste of money. During a campaign you should:

• determine whether the agency understands your business objectives
• ask yourself whether the agency is demonstrating an understanding of your market and the competition
• insist that the agency report back to you regularly
• institute agreed measures of effectiveness with the agency
• assess whether the campaign is hitting targets – if not, find out whether the agency is coming up with ideas to bring it back on track
• calculate whether the agency is working to your agreed budget
• think about whether you are getting the best deal you can
• track where and when the advertisements are being run – make sure the agency keeps you informed and that the advertisements actually appear when and where they are supposed to
• check whether you are still dealing with the people in the agency you were first promised – consider the state of your relationship with them
• make sure the agency is still being creative and coming up with ideas to take your advertising strategy forward

---

CASE STUDY

Here’s how I managed my advertising agency to produce an effective campaign

Sheactive specialises exclusively in sportswear and activewear for women. The company has an online shop plus a store in Brighton. Marketing director Johanna Fawcett describes how Sheactive worked with its advertising agency to produce a campaign that’s raised brand awareness and increased sales.

What I did

Find an agency

“Our aim has always been to create a brand, so our first advertising campaign had to do more than just show our products. To ensure we could brief agencies properly we assessed competitors’ ads and went through magazines pulling out images that captured what Sheactive is about.

“We took these to three agencies we shortlisted through contacts and research. We presented to them and asked them to propose ideas for a print campaign to attract customers to our website. We also asked for proof of their experience in producing campaigns on a tight budget.

“The time spent preparing for and briefing the agencies proved invaluable. It ensured we were dealt with professionally and gave us a basis upon which to judge responses.”

Set clear objectives

“The agency we chose, The Think Tank, had some great case studies and the rapport was good from the start. We began brainstorming immediately to decide key visuals that would translate into future ads and support materials.

“As agreed they then came back with visuals for us to respond to. It pays to be really specific with your feedback. For example, if you feel a colour isn’t right, don’t be vague – state that you want it changed, why, and to what.”

Make the money go further

“We didn’t have a huge budget, but we still wanted quality, so we were open with The Think Tank and asked them to look beyond the short-term fees, which they did.

“Another important point was that we negotiated doing the media buying ourselves. Agencies usually do the buying and take a cut, but you can get it cheaper by going direct. Our agency was also prepared to help us cut costs in other ways – we used friends as models and didn’t pay for locations.

“Ultimately, their creativity and execution made it look like we’d spent a lot more than we actually had. Customer research in the month after the first ad appeared showed that sales rose by nearly 20 per cent and a third of visitors to the website had seen Sheactive in a magazine.”

What I’d do differently

Nail down the fees

“We got excellent value for money, but we should have been clearer about exactly what we could afford from the start. An agreed monthly retainer would have helped us control costs.”

Do more brainstorming

“Our deadlines were tight, so we didn’t have the luxury of getting to know the agency first. In an ideal world, we would have held more brainstorming sessions to get us working as a team.”

---