How’s your agency budget doing? On track, overspent, or don’t know?

The budget question is something that can often give marketers an unsettled feeling in the pit of the stomach. And whether you’re overspent or just unsure as to exactly how your budget is faring this year, there are some proactive steps you can take to help ease both mind and stomach.

Before getting into those solutions, here some root causes and warning signs your budget may be seeking some help:

  1. You haven’t defined an annual scope of work. Your annual scope of work is the foundation of any agency compensation plan and should be defined before negotiating fees with your agency.
  2. You don’t know what your agency’s resourcing plan looks like. An agency staffing plan shapes the cost of delivering your scope of work and you should understand what resources your agency needs to service your business.
  3. You don’t know what agency deliverables cost. Understanding what resources are required for specific deliverables helps eliminate unwelcome surprises to fulfill your requests.
  4. You don’t how much you’re being charged for extras. Extras can add up quickly and you should have a handle of what extras you’re being charged for on a monthly basis to avoid sticker shock at the end of the year.
  5. You’ve already had some nasty budget surprises. If you’ve been scratching your head at some of the recent invoices crossing your desk, the budget almost certainly needs reviewing.
  6. You don’t know what constitutes fair market value. Knowing what your agency should be charging and comparing with their actual compensation plan helps eliminate uncertainty and verifies compensation agreements.
  7. You haven’t reviewed the agency contract in more than two years. Probably time to do so.  Unless your agency requirements are identical to what they were two or three years ago, then you should dust off the contract and take a look at what needs updating.
  8. You’re already in disagreement with the agency about what things cost. This is an early warning sign the agency relationship could take a further nose-dive unless you bridge the disconnects.
  9. You got a bill at the end of last year for costs you didn’t realize you’d incurred. A sure-fire hallmark that your agency compensation plan is out of alignment with your scope of work and requires adjustment.
  10. You’re outsourcing to freelancers or a smaller agency because it’s cheaper. If you’re outsourcing resources on a regular basis, it’s worth asking yourself whether this is a sustainable solution for your team or whether additional fast-track solutions need to be included in your agency compensation plan.

If any of these signs are resonating within your current agency agreement, it may be helpful to consider one of the following course-correcting solutions to help manage financial expectations:

Contract Review

If your agency contract hasn’t been looked in the last two years, it’s a great opportunity re-articulate needs, requirements, expectations, remuneration structure – even staffing requirements – to help improve the health of your relationship.  In some cases issues and requests come up for discussion during the contract review that the other party wasn’t aware of. Dealing with it in contract form then gives both parties the opportunity to articulate and negotiate potential solutions – way more expedient than triggering an agency review.

Scope of Work Development

Perhaps the most important aspect of budget planning and allocation is to define an annual scope of work and have your agency(s) provide a plan and cost to deliver it.  Without it, it’s virtually impossible to allocate your budget in a meaningful way and managing it will prove extremely challenging.

Benchmark costs

Marketers often say to us ‘we’re paying too much for our agency services…‘ to which I usually ask, ‘how much do you think should you be paying?‘  If the answer is ‘we don’t know‘, then it’s time to find out. We can benchmark costs across all aspects of your marketing budget to provide you with reliable data that will help determine whether you are or aren’t paying too much and specifically where in your budget there may be room for improvement.

Get to know our calculators

Whether you want insight into agency salaries, hourly rates, number of billable hours in a year, or overhead and profit multiples, we have some easy to use calculators that’ll give you transparency and a better handle on how agency costs are proposed.

When all else fails, ask your friendly Agency Management Consultant for specialist for input. In addition to agency search we specialize in benchmarking, agency evaluation, contract negotiation and resolving cost friction between marketers and their agencies, with proven methodologies and proprietary tools to help shift often emotional discussions into the rational. How can we help you?


Stephan Argent is Founder and Principal at Listenmore Inc offering confidential advisory to marketers looking for truly independent insight and advice they can’t find anywhere else. Read more like this on our blog Marketing Unscrewed / follow me @StephanArgent

Photo: Cesar Gonzalez
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