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A few years ago, I wrote about a ludicrous e-auction process by the British Government for their prestigious creative roster.  Their process was a shortsighted, misguided attempt at lowering costs without any consideration as to what constituted value.  It was a dim-witted idea, devoid of common sense, conceived by idiots.

Yes. I said idiots.  (Perhaps the same lot that came up with Brexit, I don’t know…). Unfortunately, the British Government is by no means alone in being dim-witted when it comes to coming up with daft ideas that end up treating agencies poorly. Many marketers seek deals that can be unsustainable for agencies. This might include extreme discounts, unpaid work, or extended payment terms. While aiming for the best value is understandable, these practices can damage the working relationship.

Think of it this way:  Agencies have resources, talent, and overhead costs to cover. Deep discounts or delayed payments make it difficult to deliver high-quality work. When this pressure becomes excessive, here are some potential consequences:

Provide fewer resources

Just like any business, agencies need to maintain healthy finances to deliver their best work. This means staffing projects with the right resources based on the agreed-upon scope and fees. When fees are significantly reduced, it can become difficult to dedicate the necessary team members and expertise to your project.

Provide less senior resources

To manage cost pressures, agencies may sometimes adjust their staffing approach. This could involve assigning less senior resources alongside senior guidance. While this can be a way to maintain project scope within budget, it’s important to be aware of the trade-offs. A client noticing a shift towards less experienced team members is a sure sign fee negotiations have likely impacted resource allocation.

Team burn-out

Limited resources, particularly when involving less experienced team members, places a strain on everyone else. This can lead to increased workload and potentially burnout, which will ultimately affect the quality of the work delivered. Inspiring strategies, exceptional creative, and innovative problem-solving typically thrive in environments where teams feel supported and have the bandwidth to excel.

The agency quits

If your agency quits – it’s more than just embarrassing – it’s expensive, time consuming and disruptive to then have to undertake an agency search. Even if your agency doesn’t quit – it’s likely they’ll be fishing for a competitive vertical business to replace your unprofitable account (even if you don’t know it).

Everything starts to cost extra

When budgets are significantly reduced or payment terms extended, it can be challenging to maintain the initial project scope. This may lead to the need for additional estimates, change orders, or contingency budgets. These adjustments can add complexity and potentially increase overall costs compared to the initial agreement – all of which may cost more than you’ve actually succeeded in cutting!

You’re handed an (unpleasant) year-end surprise

Even if you succeed in cutting costs, reducing fees or extending payment terms and you think you’re out of the woods, the chances of the agency coming back to you at the end of your fiscal year with a nasty surprise are high. Trust me when I say, ‘agencies keep track of the work they do, who’s working on what and how much your business really costs to service‘ (even if it doesn’t always appear as if they do!)

So…

In the marketing world, news travels faster than a social media hashtag, even across continents (think of it as the marketing gossip grapevine.) So, if you do manage to pull a fast one during a pitch process, become the life of the party at industry events by complaining about everything, and or treat your agency like a used napkin – let’s just say word gets around. Faster than you can say “unrealistic expectations.”

Remember, even the flashiest brand can’t hide a reputation for being a, shall we say, “frugal” client. There’s a sweet spot between value-conscious and, well, infamous.

And while your brand may be enticing, there’s a limit to what marketers should ask and what agencies should expect.