How do you get clients to pay the right price for ads?

A senior account man was on the way to an important new business pitch when his car gave up the ghost and stopped. He called the client to be told if he didn’t make the appointed time his agency would not be able to be included in the review. Panic set in.

A van pulled over and the driver said he was a car mechanic and could he help. He opened the bonnet of our man’s car, picked up a hammer from his van, hit something and asked the account man to try and start the engine which it did immediately.

Our man was overjoyed and asked the mechanic how much he owed him for his trouble and the answer was £100. He challenged the amount as being excessive but was told it was £5 for his time and £95 for knowing what to do as a result of his 20 years experience fixing cars.

A story I’ve heard told in a number of ways.

Now let’s just examine the story. The situation was a classic of demand and supply.

Big problem which couldn’t be solved and a solution turns up, no room for negotiation.

The recipient had no choice but what would have happened if three vans had pulled over? The price would have changed because the account man would have had the scope to negotiate.

It’s the same with any distress purchase, the issue of money declines in direct proportion to the scale of the distress.

There are several parallels with agencies, the buyer lines up three or four candidates to pitch for their business on the assumption they are all capable of solving the problem, otherwise why pick them? I completely get that there are other factors in the mix but price becomes a major question that can influence the outcome.

Currently there is a serious pitch going on that has moved from final presentation to procurement; the latter stage is taking longer than the agency was given to crack the strategic and creative issues the brand owner is facing.

I can’t name names out of confidential reasons for both sides of the current negotiations. The client concerned has left two agencies in the frame subject to the outcome of the procurement process so is this about money at the end of the day?

I would guess so as the client clearly would be happy with either agency or why have them both biting their finger nails?

Quite a long time ago our agency pitched for the BT account which we won out of JWT. We were told BT did not want to work on commission or a flat fee and we were directed to the procurement team.

We went round in circles for weeks getting nowhere when Carl Johnson and I had a brainwave conversation by asking the obvious question “what are these people normally buying” and of course it would be tangible items such as miles of copper wire.

So rather than attempt to justify intangibles we put together a proposal where we priced the tangibles – the ads. So £X for a TV ad, £Y for a 48 sheet poster etc., etc. We did a thorough job on the maths for each item on our list which was quickly approved by procurement.

It worked out really well for both parties and it removed all discussion about costs because BT approved a price list which gave them a known amount for anything they decided to buy.

We knew exactly where we stood and of course we loved it when a BT marketing team briefed us for 3 x 45 second tv commercials. We had also created a sliding scale price list for multiple executions off one brief.

There are some lessons that can be taken out of these stories:

How does an agency create a real or perceived attribute that distinguishes it from others?

Quite hard to do but it is possible. I’ve lost pitches in the past to M&C Saatchi because the client has bought their fame which gives them a genuine brand reputation outside advertising and marketing.

So try and avoid negotiating on the same playing field as the other candidates. Think about the procurement folk and what rings their bells rather than yours.

Is there a way of talking about value rather than cost?

Think carefully about your competition and find ways of positioning your own agency away from the others in the frame.

Never go for a low price because it will bite you in the bum later when the financial director tells you the account is losing shedloads of money.

Unfortunately agencies are rarely in the position enjoyed by our car mechanic earlier but trying to get close is worth it; the advertising market is over-supplied so the clever bit is finding a way of putting your own business in the demand side of the equation.

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advertising BT Carl Johnson JWT m&c saatchi Paul Simons procurement

About Paul Simons

Paul joined Cadbury-Schweppes in brand management and then moved to United Biscuits. He switched to advertising in his late 20s, at Cogent Elliott and then Gold Greenlees Trott. He founded Simons Palmer Denton Clemmow & Johnson in the late 80s, one of the leading creative agencies of the 90s. Simons Palmer then merged with TBWA to create a top ten agency. Paul then joined O&M as chairman & CEO of the UK group. After three years he left to create a new AIM-quoted advertising group Cagney Plc. He is now a consultant to a number of client companies.
Paul also shares his thoughts on his blog. Visit Paul Simons Blog.

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