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.

Advertising is an exciting, visible business, and when another brand's agency is making news, it can make their grass appear greener. Plus, it's a business based on experience, confidence and trust. When trust breaks down, relationships end.

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. After all, some of the strongest marriages have been built after long periods of physical separation which allow time for reflection for both parties about what really matters.

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. Most of the time a simple search on Google (GOOG) or through the archives of Advertising Age or Adweek will turn up the name of the agency, or you can call the company advertised and simply ask them who does their work.