Retaining Advertising Accounts

Retaining Advertising Accounts

To retain an advertising account which has taken so much effort to win, an agency must make conscious effort to offer dedicated creative services to the client. Service is the name of the game agency should never tire of giving to its clients at all times. In this regard let’s look at the following guidelines.

1. Contact meeting with client should be regular and agency staff should be punctual. Contact reports should, in turn, be written and circulated to the client promptly. Its value as a prime and formal vehicle for progressing advertising programs on a continuous basis is of such importance that is cannot be overstated.

2. Only realistic deadlines should be promised and these must be met. Excuses should be avoided.

3. It is important to monitor the media regularly in order to be able to update the client on the media scene. Use dependable suppliers. This will save the agency endless visits, a lot of lies and embarrassment with the client.

4. The agency should be thorough and be on top of its job at all times. Creative materials should not be rushed through to the client the way they are rushed out of the studio. It can be highly embarrassing to discover mistakes only after a job has been delivered to the client. The cost implications can be enormous.

5. Cordial relations should be maintained with the client at all times.

 

Creativity is the professional commodity the client is buying from the agency. This, the agency should be able to package in style. Everyone in the advertising business should be creative to ensure creativity in ideas, in layout and finished artwork, media planning and buying and in presentations.

Conflicting interest in account handling should be avoided. If the agency wins a big account which, incidentally, conflicts with a smaller one it has been servicing the agency should be honest enough to part ways with the smaller one to avoid “bad blood” through divided loyalty. Overall, great tact, enterprise and a high sense of responsibility are required to win and retain advertising accounts.

Financial management

The goal of prudent financial management is to enhance profitability for the organization. To this end, Campbell, E.B identifies four essential factors, factual role of an advertising agency, income, expenditure and profitability all applicable in today’s Nigeria, that facilitate reasonable profitability while providing efficient services to clients of an advertising agency. These are analyzed as followed.

1. Statutory Role of an Advertising Agency

An advertising agency is essentially an agent who offers services to organizations who in that vein, act as principals. However, an agency also acts as a principal in its own right with all the attendant consequences as a corporate entity.

As an ‘agent’, it exists on part of the monies spent on advertising and promotions. Its revenue is only a small part of the whole. This is usually made up of

a) 10% or 15% (suppliers) commission on gross disbursements plus between 5% and 10% supplementary fees or

b) A fixed fee calculated in advance and reviewed periodically.

An advertising agency, therefore, depends on the health of its clients and, by implication, the health of the economy of the market in which it operates. This vulnerability is variably tied to the efficiency of government and client organizations in worldwide to work out new and equitable forms of payments to agencies, remuneration for advertising agency services have remained largely static.

Furthermore, honest advertising agencies pay out up to 80 percent of its turnover to the media and suppliers before the clients pay them. This, perhaps more than any other factor accounts for the failure of many small agencies in many parts of the world.

Therefore, the vulnerability of agencies in managing their affairs is predicated on the facts that;

a) At all times they are subject to national market forces;

b) They are tied to strict percentage terms for their income;

c) They often depend on bank overdraft or loans to cope with pre-payments; and

d) They are vulnerable to sudden changes of accounts and/or the client’s level of business with them.

Agency Income

The main sources of income to an agency are

a) Media commissions, which are currently at 15% and in the case of fixed fee clients, 12% on gross media spend.

b) Commission from suppliers, mechanical production houses, studios, photographers, freelance artists, printers etc. Almost all these are at 10% on gross production costs.

c) Supplementary fees, currently at between 5% and 10% of gross advertising costs.

d) Fees for special projects, which vary but range generally between 15% and 25% of gross costs. These are applicable mostly to special packaging design projects, display or exhibition work etc and from only a minor proportion of turnover.

On the average, therefore, an agency’s income comes to 20% on gross expenditure. In the light of today’s economic realities with high salary expectations, spiraling tax and interest rates, prohibitive electricity, petrol and water bills, with property rentals, furniture and fittings as well as costs of stationary, photographic and art  materials rising at an ever increasing rate, agencies are obviously walking a tight rope.

With an inflation rate of about 30% in real terms on those costs, which are essential for the running of agency while income level remains static at only 20%, prudent agency management must aim to

a) Increase profitability on client workload by strongly controlling time spent on each job.

b) Assess the value of new business against the inevitable demand for more people to handle the added workload.

c) Achieve a minimum of 25% on all jobs other than media

d) Reduce by whatever sensible means time spent on unnecessary frills and excessive services.

e) Keep clients’ business at the level within which the company can cope efficiently.

An agency’s income can be improved by an increase in its clientele. However, profitability can only improve through prudent control of manpower and services, matched with an increased per capita workload and efficiency.

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