As a client of an ad agency, I'm becoming a little concerned about the “gifts” my media planners receive for recommending certain vendors. Twice recently, in casual conversation, members of my media team mentioned receiving what they call “swag,” including items like a Gameboy and a leather jacket.
I didn't used to mind the T-shirts and expensive lunches, but this seems to be creeping into some high-end bribery. The problem is, I don't know how to bring this up without making it a big deal. I certainly don't want my media people disciplined; I just want them to refuse items over a certain threshold. I fear that if I bring it up at all, the agency management will feel the need to admonish my people. Any suggestions?
- Stymied in Atlanta
Your concerns are quite valid. Reps don't give away expensive pieces of hardware because it makes the planners more rationale--they do it because it makes them more amenable.
Also, it's quite likely that the “casual” mentioning of these gifts wasn't so casual at all. When media buyers have moral qualms about accepting gifts, it becomes tempting to try to absolve themselves through disclosure. You are very probably the target of just such a disclosure effort, masked as incidental conversation. Which means that now is the time to make your qualms known. Your lack of a reaction now will send a strong message to the planners that you don't care what they accept.
One very effective way to get across your desires involves rolling out your company's ethics guidelines. Without mentioning a particular incident, you can send a formal memo to the agency, copying the buyers, quoting from your firm's ethics statement.
Firms without explicit ethics statements can turn to any of a number of corporate documents--even statements of policy in public financial disclosures. You can say that as a matter of regular policy, perhaps even mentioning that there will be annual reminders, your firm expects vendors to decline supplier gifts of a value more than $50, and that failure to do so is cause for nastiness.
Couching it in terms of regular reminders and existing policy will help get the message across with as little immediate repercussions as possible.
At what commission rate do you recommend charging for media billings around $4 million? Is the standard 15% still appropriate?
Planner in Lake Placid
The old-time standard of 15 percent of media billings came about back when the vast majority of media spending was done by accounts amounting to $1 million to $10 million, which means that your $4 million account qualifies in the scale category. This assumes, of course, that you are conducting not just the media planning and buying, but also the creative development and research.
But two other factors come in to pull at either side. On one end, clients have been trying to drive down the percentage for decades, to the point where no one really believes the 15 percent standard is much of a standard. On the other hand, some media have become a great deal more complex, requiring additional agency time. In direct response media and in online media, for instance, 15 percent can be quite reasonable.
If you plan consumer print and broadcast television, 15 percent would be on the slightly generous side. But if you plan to use trade print and spot market TV, it could be just about right, given the additional management requirements.
A good rule of thumb is to look at the number of media flights and the number of creative executions. If you spend the entire nut in one buy, and you're not developing creative, 10 percent could be overpaying. If you have hundreds of small buys (and many creative iterations), 20 percent may not be enough.
We've been offered the business for what looks like a very profitable ad agency account, but we're not sure we should accept. The problem is that the business is a site that could be seen as pornographic. What say you?
Embarrassed in Miami
Clients definitely see themselves in peer groups, and having a distasteful peer in your client roster will negatively affect your chances to find and retain business. I do know agencies that have “off-books” clients, where they conduct the business, but they don't mention the account in their brochures and web site.
The fact is, though, that this knowledge gets around. Your staff work on multiple accounts, and any given client will one day discover their “could be seen as pornographic” compatriot. I don't know enough of the circumstances, but my instincts tell me to stay away.
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