Pricing Wars - Agency/Client Dialog

This one, "The Vendor Client relationship - in real world situations", has been making the rounds. I've already heard from several colleagues that they've seen it and have even used it as part of internal, agency meetings. If you haven't viewed this, it will make you laugh and cry.



For any clients reading this: Please keep in mind that on the agency-side, we realize these are caricatures. And further, a spoof that could be produced on the many agency-side foibles related to pricing would similarly generate laughter and tears - (e.g. 2 weeks to generate a $10,000 high-level estimate).

However, determining pricing and managing expectations and scope as it relates to pricing are some of the most charged areas of agency/client relationships.

Like so much else in a partnership, clear communication up front and some organizational empathy can help avoid scenes like the ones depicted in this clip. Often issues surrounding pricing have more to do with poor communication and expectation-management than one party trying to pull something over on or unduly squeeze another - although there's certainly a bit of that floating around, especially in this pressured, economic environment.

A few things for all to keep in mind surrounding pricing include:

• It is impossible to tell how much time and money it will take to develop even a modestly complex project prior to receiving a proper brief. For a long range/complex project, even once the brief has been given and a broad solution determined, time & money can't necessarily be accurately predicted - and yes coming up with a viable, broad solution also takes time and money.
  
  
• The most accurate way to price a project is through sequential estimates that gain fidelity as insight is uncovered and actual phases of development approach. (See my posting: Letter of Agreement (LOA) - Getting paid from the beginning for more on this topic.)
  
  
• All parties need to understand that there are both activities and deliverable that need to be funded and that sometimes seemingly simple features and functions are very interconnected to other issues and take a lot of thought to execute effectively and efficiently - Right, like one of those Tiger Woods ads: 75% Preparation / 25% Execution.
  
  
• There is a wide range of variables that affect pricing of a seemingly simple scope of work, including: quality of briefing, state of assets, state of brand/style guidelines, condition of technical environment, timing pressure, client's internal structure/relationships and 3rd party involvement.
  
  
• Any agency worth its salt should be able to clearly articulate what is known and what is not known and the basis for their pricing.
  
  
• When bids come in with gaping discrepancies, more often than not, there are not shared assumptions about the scope of the project.
  

So, here's to hoping that collectively agencies and clients can bring "getting what you pay for" and "paying for what you get" a bit closer.

Project Management Recognition - Getting the Love (and more) that PM's Deserve

For the purposes of this post, let's consider Project Manager and Producer roles the same thing. There is certainly no clear distinction in our industry - more on this in a future post.

Trolling around the Droga5 website, in the "Stuff" section. I found, "I Want to Marry a Producer" by Ted Royer, Droga5's Executive Creative Director. It's one of the funniest, most endearing (and somewhat creepy) things I've read recently. He discusses various intra-agency marital options: account person, client, even another creative but dismisses them all for a producer. I don't know Ted personally (not entirely sure I'd like to - I certainly wouldn't want to get too close) but he has a body of work that puts him in high-regard in the industry and, in my book, his romantic side adds to his rep.

I always appreciate it when PM's and Producers are recognized for the important roles they play. Unfortunately, recognition of PM contributions isn't the norm. If you haven't read my post Project Management Success - Where's the Evidence?!, which features a clip of Dustin Hoffman, playing Stanley Motts, the self-absorbed producer in Wag the Dog, give it a try. Hoffman delivers a hilarious set of tirades about producers and recognition.

An Agency's Ability to Deliver - People Are Talking

Industry talk is tantalizing. Externally, aided in great part by the plethora of awards, trade pubs and blogs, buzz tends to center around account-wins, creativity, and to a lesser extent, results. Published industry evaluation reports (e.g. AdWeek's Digital Agency Report Card, Forrester's Wave Studies) evaluate similar things, but an agency's ability to execute efficiently is not considered. However, within the industry, peer-to-peer at the bar (like when one PM asks another about a shop she used to work at), an agency's working environment, and its ability to deliver, are main topics.

I've had the opportunity to get out and about to various industry events and conferences recently. Good form prevents me from listing details of what I've overheard. I will say that I was amazed at the consistency of buzz about certain agencies from one event to another and how well it aligned with the trash-talk I've heard inside of various agencies. The lack of understanding by some non-creative agency parties about the challenges of managing clients and creative/tech deliverables was striking as well.

An agency's reputation is important to maintain. Here are just a few areas where buzz comes into play.

• Hiring - In the current economic environment, agencies that are hiring have the upper hand. However, the best talent out there, especially those that have a stable gig, will still be applying even more scrutiny when considering whether or not to join a new shop.
  
  
• Business Referrals - Media companies often influence clients' choices of what creative agencies to work with or, believe me, to stop working with.
  
  
• Headhunters & Agency Recruiting Personnel- These guys hear it all. They get a regular insider's tour of agencies from the slew of talent they interact with. I've begged one of my long-term headhunter friends to write a book, I, and I'm sure others, would love to read it.
  
  
• Third-Party & Publisher Preference - Guess which agencies 3rd party vendors like PointRoll, EyeBlaster and EyeWonder are going to partner with and feature in their case studies for their newest, high-functioning units? Publishers are well aware of which agencies deliver on time, and which deliver heartache.
  
  
• Who's Got Your Back? - When the trash talk about your agency starts flying (usually behind your back), you want/need someone who knows your agency's and your work to chime in and support you.
  

I don't need to tell you that clients care very much about an agency's ability to deliver. Any agency evaluation report card, or feedback given by a client (especially those leading up to or following an account being put into review) consider agency efficiency and reliability very heavily.

PM's main mission is to ensure high-quality output that is delivered on-time, on-budget and on-spec. It's incumbent on you to not only execute on this and to form positive relationships with those who share the ecosystem with you. Obviously, this will help improve your ability to deliver together, but it will also improve your company's and your own reputation and your ability to thrive. I assure you, you will need it someday. As the Oracle of Omaha suggests:

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”

- Warren Buffet