top of page
  • Writer's pictureLucas Bergmans

How to find the perfect media agency (and agency contract!)

Updated: Jan 4

So, you’ve just secured a new round of funding to scale up your awesome new business. Congratulations.

You have enough money to invest in more Marketing channels and attract a huge new audience. But at the same time, it’s too much money to invest it all in the usual channels that your internal team have managed brilliantly to date. What you need is a media agency to help plan and buy new channels more efficiently and effectively than you can by yourself.

But where do you start? How do you find the right partner? How do you run a pitch? And when you find one, how do you manage the dark and mysterious world of media agency contracts?

Fear not, help is at hand.

I spoke to Paul Phillips from AAR. He’s been helping brands find their ideal media agency partner for the last 25 years, including scale-ups like AirBnB, Tripadvisor and Zoopla.

Hi Paul. Can you tell everyone a bit about yourself?

I'm Paul Phillips, Managing Director of AAR where I set up the media practice 25 years ago. And I'm lucky enough to be able to say that I think I've got the best job in the world. My background prior to joining AAR was agency side - originally in full-service agencies working in the media department, and then subsequently in the independent community of media agencies. My last media agency was called CIA, now known as Wavemaker. But that was a long time ago.

Fantastic. We're here to talk about scale-ups and businesses that are looking at spending significant money on broadcast media - things like TV and radio - for the first time. Do you have any examples of scaling businesses that you've worked with that were looking for their first media agency and how they approached that challenge?

Yes. One of the earliest scale ups we worked with was CompareTheMarket. This was before the Meerkats when CTM and their competitors were, I think it’s fair to say, doing some pretty rubbish advertising, all claiming the same with very little differentiation. We've worked with them for many years now on various different projects but back then, they were one of the first businesses to recognise that if they were to differentiate themselves from their competitors, they needed to become a brand not just a business, because their offering was pretty much identical to that of their competitors.

More recent examples are businesses such as Motorway and Zoopla, both of whom you'll recognise as being on an aggressive growth path in their respective industries with a high degree of competition. So again, the need for differentiation was significant.

And finally, two recognisable global brands Airbnb and TripAdvisor, who I was lucky enough to work with - who also recognised the contribution that media could make to their overall brand and business performance.

Great examples. So what would you say are the big challenges that scale-ups face when they're looking for their first media agency appointment?

 I think the challenges are making sure that enough attention is paid to making the right decision. Anyone who has worked in the start-up and scale-up space will appreciate, speed seems to win.

And making a decision quickly is better than pondering too much or worse still, not making a decision at all. But the selection of a media agency partner is a combination of assurance and insurance, the assurance that they have got the skills, capability and resource to do what you need them to do, and the insurance that they're thinking about your business and challenges in particular, and what you're ultimately trying to achieve.

As a CMO you’re thinking, is this agency going to add value to the business? Is it going to help drive the business growth with whatever metrics are being used, be it engagement, downloads, sales, average order value or repeat purchase.

And finding the right agency to do all of this can take a little bit of time. But that time is definitely worth investing. Anyone can find a media agency quickly, but finding the right one for you, requires a little bit more finesse, a little bit more attention, which if you do, will pay off in the end.

I think the other observation I would make is, don't be cheap. And what I mean by that is that whoever you select, as a media agency partner, or indeed any agency partner, need to be able to make a profit on your business. Because if they're not making a profit on your business, you will ultimately suffer in the quality of the team, the attention that you get and in the case of media agencies, the media value they deliver for you in the market.

And that's clearly not what you're looking for. So, take time to choose the right partner, but agree the right commercial arrangement with them such that they are as invested in you and your business as you would want them to be.

Makes total sense. And do you find that scale-ups in particular look for different things in agencies than more established bigger global brands that you work with?

I think whatever stage a business or brand is at in its development, regardless of sector, they have much more in common with each other, in terms of what they look for from an agency, than differences.

But the differences that we see with start-ups and scale-ups in particular, is the significance of the attitude of a potential agency partner, the body language of that agency, do they talk the same language – fail fast, speed wins, test and learn.

Are they an agency that understands and appreciates the particular pressures in the start-up and scale-up space? Often, the primary purpose of media investment in media is to release the next tranche of funding from investors. It's a demonstration of proof of concept, if you like, and an understanding of that particular nuance which isn't a requirement of an established brand, or business.

This is definitely something that we see start-ups and scale-ups looking for in their media agency partners. Because often that's the biggest cheque that is being written - the investment in media.

As mentioned before, the right attitude is also important. Do I want to spend time with these people? Are they smart? Are they going to add value to my business? All of these are the softer elements of what they look for. Of course, the agency has to be able to deliver the hygienic capabilities to plan and buy the media, to report, to analyse and to optimise. But there are more than enough agencies that can do that. So once you reassured by that, then some of these softer elements, these cultural elements, come to the fore.

That neatly comes onto my next question. How do you decide which is the right agency for you? If you're running a pitch with three or four different agencies, what are the key things that you really need to look for when you're appointing your first agency?

It would be remiss of me not to say that the first thing you should do is to get help from AAR. (LB: other suppliers are available!) because of course, we are experts in this area.

That aside, finding a good agency isn't a huge problem, and particularly in the media space. The quality of the agency marketplace, be it domestically or internationally, is incredibly high amongst a relatively small number of agencies. And then pretty quickly, that quality falls off the edge of a cliff. This is in stark contrast to creative agencies where there's significantly more, not least because the cost of entry for creative agencies is within everyone’s reach.

When choosing your first media agency partner, failure is not an option. To start with there will be some agencies that are off brief. This might be because they don't have the capabilities you're looking for; they don't have the geographic footprint that you need them to have. They might not have the bandwidth to take on your business, or they might be conflicted because they're working with a direct competitor.

Once you've taken account of all these factors, you can pretty quickly get to a relatively small universe of agencies on which to focus your attention. And then that focus has to address the deliverables that are needed; the strategic smarts, the planning, and buying, execution, optimisation, reporting, analysis and re-planning.

But above and beyond that, it's the people, it's the team who will be delivering all of that. And this is key to your decision making and what you should look for, because ultimately, when appointing an agency, you're appointing the seven or ten people onto your account, these people are your agency. If they're a great team, then you've got a great agency. And if there are so-so team, then you've got a so-so agency.

And whether there's 50 or 500 other people in the agency is really an irrelevance. It's that team of people working on your account that are your agency. So, the team is the most important evaluation that we would suggest.

And once you’ve selected an agency, you get into the wonderful world of media agency contracts! What are the kind of things to watch out for when you're looking at different kinds of contracts that you could choose for your media agency?

The contractual and commercial side of the appointment of an agency is as important as the strategic and operational side of it. The dark art of media as it can sometimes be referred to, is as much due to a lack of detailed specialist understanding as it is because of any opaque practices. It's a specialist skill set that if you don't know the right questions to ask, you won't even understand the answers that are given. So, getting some specialist help particularly in this area, will be of benefit.

When it comes to remuneration, essentially there are three types of remuneration approach that you can adopt.

The first, which is the historic manner in which media agencies were paid, is a commission based approach. That commission comes from the media owner not from the brand. So, the media agency buys £100 of media on behalf of their client, the media owner invoices the agency £85, leaving 15% commission for the agency. The agency then invoices the brand £100 and retains the £15 or 15% commission. Now, it's not always 15% that the agency retains, but a commission-based approach is the foundation upon which agencies were remunerated. Without wanting to complicate it, 15% commission was originally paid to full-service agencies to cover the cost of creative as well as media services, the split being broadly 10% for creative and 5% for media.

This approach is clear and easily understood by everyone. When you're spending money on media, you know that you're going to be paying your media agency. And assuming you know how much you're going to be spending on media then you also know how much you're going to be paying to the agency immediately. It then becomes a simple negotiation as to what level of commission you're going to pay them.

The other more contemporary approach to remuneration is a fee-based approach where all the commission is returned to the brand and a monthly retainer is agreed for the scope of work and services being delivered.

The benefits of this approach, in comparison to the commission approach, are twofold. Firstly, both the brand and the agency know the amount of the cheque that's being written on a monthly or annual basis, as it’s not dependent on how much is invested in buying media and so it's good for business planning on both sides.

The second benefit, is that it encourages more agnostic advice to be given by the agency. To illustrate, if an agency has negotiated with its client for argument's sake 15% commission for digital media placement, and 5% commission for print buying, then the agency may be persuaded to encourage their client to spend more budget in the digital space, because in doing so, the agency will earn more money. With a fee-only remuneration, the agency has the freedom to recommend whatever the most appropriate media is, because it has no bearing whatsoever on what the agency is getting paid and their client is reassured that media recommendations are being driven by what’s the right approach for the brand, not what offers the highest remuneration for the agency.

The third approach is a combination of the two. A monthly retainer to ensure strategic advice and consistency of team and then a smaller commission that pays for the buyers when their services are being used and you're spending money with the media.

So those are the three options, and alongside any of these might be some performance related element, which can also be added into the agreement.

So if you could just finish off with giving your top three tips for any scale up looking to appoint their first media agency.

My first tip for a scale-up who is looking to appoint their first media agency is to work with AAR!

Number two, preparation is everything. What you want to be is the business that every agency wants to work with and will put their best people forward to deliver their best work on your account. This requires some preparation by the brand before reviewing the market and running a pitch. So make sure that you are as attractive as possible, and that you've got your own house in order as much as you can so that you are appealing to the marketplace.

My third top tip is to keep your promises. What I mean by that is, if you agree to a meeting, if you agree to supply information by a certain date, if you agree to give feedback in time for the agency to respond to it, then make sure you do it. Because what's happening on the agency side is that they are all working to those dates and pre-agreed timescales and it is very disheartening when they cannot deliver their best because a prospective client hasn’t kept their promises.

Of course, there are always reasons why things can slip that are unforeseen. But even just telling an agency that we said it was going to be Wednesday, but in fact, it's going to be Friday because something's come up, just keep them in the loop will be helpful.

Prospective clients who keep their promises are people that agencies will particularly want to work with.

And can you think of one particular mistake that a scale-up should avoid when appointing an agency?

The mistake to avoid is scheduling a meeting with an agency during the pitch process the day after a bank holiday weekend. Let me just explain if it isn't already obvious.

Most of us keep our diaries clear the day after a bank holiday weekend because we're catching up. What a perfect opportunity to ask the agencies to pitch; possibly for you, definitely not for them.  Because of course, what you're actually doing, is inviting the agency to work over the bank holiday weekend and miss the time off that you’ve enjoyed.

That's a very good example and very specific. Love it. Thanks very much, Paul. That’s some fantastic advice for anyone looking to appoint their first media agency. Top of them, of course, is appointing you guys to run the pitch process, which I can sure recommend!

11 views0 comments


bottom of page