"It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better."
Hat's off to anonymous, whoever you are. We wholeheartedly agree with your sentiment. It's rare that we find ourselves being the cheapest option for clients who approach us. In the past, we've been in the position of some clients saying to us that they like our work, but agency X will do it for Y amount, or that they only paid Z last time, can we do it for that? Well, why not go with agency X then? Because the work is inferior, of course. We like to think that our work is worth paying for. I'll admit, we have lost more than one potential client for this reason. It's not easy, and it hurts. We've actually taken to the approach of pointing out to prospective clients that we won't be the cheapest option before we even talk to them.
Of course, there are good, smart clients out there who realise the value they get from a good agency and not just the cost. We're lucky to have come across some of those over the years, and are thankful for that.
But there is pressure for business people of all kinds to cuts costs. And suppliers of goods and services are one of those costs. Marketing is no different, there is pressure to get the best deal possible.
The problem comes when you try to treat the product of advertising agencies in the same way as that of a supplier of paper clips. The fact is that all ad agencies are not created equal, and the talent and abilities of the people who work at different companies is very different. The company who can offer to to do the job most cheaply is unlikely to be the company who can do the job best. But it's true that some clients treat creative agencies like a commodity product where you can bargain off one against the other on price, in the assumption that the output will be of identical value. Any sane person working in the business knows this is far from the case.
But it seems that there'll always be companies out there willing to drop their trousers for a sniff of some new business. Indeed the pressure is on, especially among the big networks or listed companies, to keep new clients coming in. Often these larger or network companies seem to be willing to do work at cost or even a loss, just to get the client through the door.
What also muddies the water are other kinds of companies who claim to be able to offer the same product as a good creative agency at a fraction of the cost, often just by wheeling in a couple of freelancers. But in a way, if a client can't see for themselves that the end product of these kind of outfits is nowhere near the standard that they would get from a good agency, then you just have to let them get on with it.
There's also an increasing trend for clients to come to agencies refusing to give any clue at all as to what budget they have for their job or account, seemingly hoping to create a kind of 'blind auction' situation.
In an ideal world, we would obviously like all clients to value our work enough to be happy to pay a fair price for it. And we always try to stand by that principle, so thanks to the mystery person for the ad in Campaign.
But agencies themselves have encouraged clients by competing so heavily on price and being so obviously willing to discount. Agencies have to step up and be prepared to take the tough option (ie. turn away the business) if a client isn't prepared to pay a reasonable price, or wants to play you off against the lowest bidder, or it will just continue, or get worse.