A couple of months ago I got a call from a frantic client who needed help with their interactive agency. It seems that their eMarketing person had quit and left a lot of open projects with the agency and that the VP was at a loss to try and make head or tails out of what was happening and what was paid for. As I started to dive into the pile of over 46 invoices I could not believe what I was seeing, $15,000 to do a simple Photoshop redo of an image? It started me on a rant about agencies and agency people that was evident to most readers of this website.
When my client called me in and handed me a folder filled with invoices I felt like a detective trying to sort through a crime. The crime here was that the invoices, totaling more than $250,000 were for things I could not believe. Some examples:
-$12,000 to develop a branded Power Point template for internal use within the company.
-$24,000 to review keywords
-$36,000 for developing some logo’s in print format
-$75,000 for people from the agency to attend research and usability studies at 4 locations throughout the country.
I called my client first thing in the morning and said bluntly “these people are ripping you off and you should fire them right away”. As we talked some more and I gave him input on their fees, he said “don’t do another thing, I am turning this over to procurement and legal”. The sad thing was that none of these expenses were directly related to actually producing their website. The estimate for that was well over $600,000 which could or could not be within the scope of the project depending on the project.
There are two ways you can retain agencies for interactive work. One is to pay them a monthly retainer and the other is to pay them per project. The monthly retainer is good if you want them to be your strategic partner as well as do some work. The pay per project is good for explicit projects, but you have to have a good project manager to ensure that the costs don’t spiral as new requirements are added.
With pharma cutting back in all areas I’m not sure that any agency can get away with this anymore. Agencies are going to have to become more than vendors they are going to have to become strategic partners and at a lower cost. The other problem of course is that they can do all these things and become a good partner, but when their key contact leaves the company, they often find they are in limbo as new managers make changes and add agencies they are more comfortable working with.
Agencies are going to have to change their ways but with the lack of talent in DTC marketing they are going to have to let results speak for themselves while keeping costs in line with expectations.