Brand Central Station

One of the things clients seem to hate is budgeting.  I get it.  Nobody likes to feel they’re the equivalent of somebody else’s Sunday dinner.

Last week, I had a client say to me: “I’m reluctant to give out a number for that project because I don’t want the vendor to keep loading it up with bells and whistles to meet my budget.”  It was a refreshingly candid (and honest) statement.

So in a world of creative smoke and mirrors – where every job seems to be a custom job requiring (at best) “educated” guesses at costs and production timelines; how does an in-house marketing manager get things under control and make sure he or she doesn’t get taken for a ride by an unscrupulous ad agency or design boutique?

Believe it or not, the best process to use for controlling production costs on the client side is very much the same kind of process agencies should be using on their side as well … but more on that later.

The secret to controlling production costs is to take the guesswork out of it. 

Believe it or not, as creative and high energy as most agency-types are, they can be incredibly risk-averse when it comes to money.  The reason for this is pretty simple.  If they’ve been in this business long enough, they know that if a client refuses to pay a bill for printing or broadcast production or media (or name your major expense), the agency is the one who is often “on the hook” as far as the supplier is concerned.

After all, the agency serves as an agent for the client, representing the client’s interest and intent to make the purcahse in the first place.  Many vendors maintain that if the agency doesn’t have a fiduciary responsibility to them, there’s no point in working through the agency in the first place.

In fact, the financial downside for agencies is significant.  If a client refuses to pay (or just plain can’t pay) a media bill, for example, the agency’s responsibility to cover the balance of the costs outweighs the commission earned on the media schedule by a factor of 7 to 12 times (depending on the commission structure).  A client that files for bankruptcy can take its ad agency down with it.

Aware of the possibility that any client could become a financial “Titanic”, most agencies encourage their creative people and production people to plan for every conceivable contingency when putting together budgets – especially if the client has not provided clear guidelines with regard to what he considers to be an acceptable cost, scope of work or delivery date.

There are two main factors that drive cost when it comes to producing anything from an ad to a web site to a brochure to a commercial: scope of work and delivery date.  To understand how those two parameters impact cost, consider the following:

We’ve all had clients (or bosses) who seem to always add more to a project as it progresses.  What starts out as a relatively simple and straight-forward assignment picks up new objectives over time until it becomes almost Byzantine in its complexity.  This results in writers, art directors and others having to complete the project multiple times.  Some brochures I’ve worked on in the past, for example, went through 15 or more sets of revisions.

And some of those revisions were ridiculously small; almost certain to be missed by all but the most anal-retentive customer.  But for political or “artistic” reasons, the changes had to be made – each round driving the price of the project higher and higher.

Conversely, projects whose scope of work (what the client and agency agree to produce) remains the same but never receives a firm due date for completion can suffer the same kind of fate.  These projects pick up minor changes like lint.  I’ve seen it get so bad that clients and agency personnel change on the project and forget (or just don’t know) why certain changes were made and wind up changing things back.

Much of this can be avoided by documenting key production facts about every project undertaken by an in-house marketing department or by an agency on behalf of a marketing director.  At a bare minimum, you need to track the following:

1. Project type
2. Project start date
3. First concept presentation date
4. Concept approval date
5. Project completion date
6. Budgeted Cost
7. Actual Cost
8. Quantity of Pieces Produced

Believe it or not, just documenting these eight things can be tremendously helpful when it comes to establishing budgets early on in the process and finding areas where the “fat” can be trimmed.  Much of the same information can be gleaned from old invoices or from agency production records; so you may not even need to wait until you’ve completed a sufficient number of projects to start making informed decisions.

Because informed decision making is what this is all about.

Giving an agency, design boutique or freelancer a budget should not be a license to “hang bells and whistles on a project” ever!  The understanding you should have with your marketing service provider is that a budget is exactly what it is … a budget.  They need to come back to you with a clear scope of work that falls within that budget level.

If you need to be more frugal with your money than in previous years (not an uncommon occurance), then provide your service provider with a budget that is lower than the average of the costs of similar projects produced over the previous few years.  Encourage the agency or designer working on the project to explore new, dynamic ideas and present them as options or extras to consider.  The result may be an increase in your budget – but only if you see value in the “bell” or “whistle” as it is presented.

Deadlines need to be evaluated and issued using the same kind of methodology.  Make sure you know what kind of internal deadlines might exist for a project and then compare that to how much time similar projects have taken over the past few years.  You’ll know that if the internal deadline for a project is much shorter than the historical data would suggest is required – you’re likely to face some rush charges or up-charges for more senior people to work on the project.

By the same token, if there is no specified deadline for a certain marketing project, you need to use the information from your research to set a reasonable (and timely) deadline to keep your marketing service provider engaged and operating efficiently.

I’ve seen this methodology work for clients and agencies alike.  If you use a different way of controlling production costs, let me know by leaving a comment on this blog.