Q & A Table of Contents
Convincing Clients of Advertising Agency's Value
From: Advertising Agent, New York
Question: I have a small creative advertising agency in NYC. I have to constantly negotiate with business men and women who know they need advertising, who want what I have to offer, great creative, exciting media buys, etc. But they do not want to pay for it. We constantly have to lower our prices in order to keep the accounts, but we do so resentfully. How do I convince them that this intangible service is imperative for their businesses to grow and that our level of creative talent will get them there?
Response: Thanks for your question. Bridging the nexus between price and value is always a major challenge, particularly when it would first appear that all we are dealing with are intangibles.
There are a variety of approaches you might want to consider using. Some may work with some clients; others may be more effective with others:
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First, examine your own mindset and your market placement. People tend to think price is indicative of the quality of what they are getting. No one would feel comfortable buying a Rolex for $5. They may not be able to afford a Rolex at all; the job is to determine what level of expenditure makes sense given their needs, resources, and expectations. If you reduce the price of your product, you may be devaluing it in the eyes of your clients.
Second, look at the cost/benefit approach. Are there measures of value that can be ascribed to your services. Say a given advertising approach is measured against sales on a quarterly basis. Can you get information from long-term or experienced clients that shows the benefits they have derived from your services? If these can be quantified, that could be helpful. Obviously you must protect their privacy in terms of disclosing numbers; they may, on the other hand, be delighted to see their names attached to testimonial quotations.
Third, how do you sell yourself? Have you done a good advertising campaign for your agency? Obviously an attractive, effective promotional package can be a crucial positioning mechanism.
Fourth, how hungry are you and how hungry an image are you presenting to clients? In our negotiation training programs, we focus on BATNA, the Best Alternative To a Negotiated Agreement. BATNA is a very useful measure of the balance of power. The more you need 'them', the weaker your BATNA.
The more 'they' need you, the stronger your BATNA. The mirror image is true; measuring their BATNA, the alternatives they have is an equally important measure of the balance of power. Once you have a sense of the power balance, you can think of how to change elements of that situation to put yourself in a stronger position -- even if it is only attitude.
Fifth, I don't know how you bill for your services -- but a good consultant generally is prepared to give useful, valuable advice/time for free because this is a demonstration that, if what they give away free is so good, the stuff for which one has to pay must be outstanding. In both your business and mine, we must add value, giving clients more than they pay for in order to justify their use of our services rather than those of someone else.
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Good luck and good negotiating, Steve.
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