The “Rich & Famous Agency” Rant: Pulling Back The Curtain On Why Agencies Suck
Written by Erik Hansen
Here is the truth – many businesses and organizations are discouraged from working with an “agency” for good a reason. Who knows what the hell they are going to be charged?! Our own agency has participated in a wide range of competitive bids for projects. Some we lost, and some we won – but in the end, we’ve made a concerted effort to open up a dialogue to find out why the client made their agency selection. Through those discussions, there was a consistent theme – pricing was all over the map from one agency to another.
Here is the problem. Many agencies – some which we have worked with, some which we have close relationships with, and some which we have shared business with – have no rhyme or reason to their pricing model. And that sucks. They base pricing on their portfolio, or accolades, or visibility of the prospective client, or the annual revenue of the client, or their overhead, or the specific people who touch the project, or the “technology” and even sometimes simply a “because I can” mindset. Rarely is it truly based on the scope of work!
Several months back I reached out to another agency owner with a partnership opportunity. I knew this person’s team did solid work and our own team was unable to execute all of the requirements of the project at hand. Yes. We’ll actually admit when there is work we don’t specialize in and pass it off or partner up. The partner I spoke with said something profound during our call that made me sad. “If it doesn’t make me rich or famous – why waste my time.” What the f*ck? Seriously? This was a solid project, good revenue, lots of future opportunity and a really great client that I had built an awesome relationship with. It wasn’t a sexy brand, and it wasn’t going to make anyone rich – but it was work that was going to help transform a business going through exponential growth and one that could open doors to bigger brands. But I didn’t waste my time with all that because he had made his case perfectly clear.
A couple months before that, a close person in my life reached out to me about a BIG opportunity (I mean BIG), but because of our relationship, it could have been perceived as a conflict of interest if we were awarded the project. This individual reached out to me due to the fear of the unknown with agencies and asked if I would help scope the work and select an agency. I was happy to help. Throughout that process, we focused on “bigger” agencies that I had some baseline relationships with. Why bigger? The client was a global company with deep pockets, and the executive team wanted the notoriety of working with a solid agency name. I get it! One agency didn’t return my call for a month, one told me on the first call without any context if it is less that $350,000 they weren’t interested, and another immediately wanted to upsell the project. But the crazy thing was, the project wasn’t very complex. For a global billion-dollar organization, it was actually less complex than many of the projects we work on with “small” business clients. Nevertheless, in the end, we selected a great agency that I respect, but the client paid fees five to ten times what the actual scope would call for. Why? Because the agency could charge that, and the big business was willing to comply. Unfortunately, that skews the playing field for everyone else. Agencies and businesses alike.
So, where does that leave business owners when confronted with needing agency support? Here are a few thoughts:
- No business deserves shitty design, so if you can’t afford an agency there are still plenty of low-cost options to receive good design without breaking the bank.
- Design without solid strategy isn’t sustainable long term – but strategy doesn’t need to cost $500 per hour (I don’t care how lauded the team is).
- As a rule of thumb, if your revenue is less than $25m per year you should plan to invest less than 5% of your annual revenue on a major branding initiative.
- Ask for advice from peers.
- Don’t assume you can’t afford it.
- Big agency names mean shit.
At Mekanic, we have designed our (un)agency with all of this in mind. We provide fixed fee, fair and ethical pricing based on standards set by our related trade associations. Our pricing is directly shaped by scope of work (not how much loot a client has) and we provide a transparent process to showcase our value from day one. Now, there are MANY great agencies out there, plenty of work to go around, and a ton of creative talent. And while we are not the cheapest option in the market, we are FAR from being the most expensive. At the end of the day, we are also business owners who understand the challenges of running one. We are humans like you, and the last thing we want to be is a “Rich & Famous Agency” partner.