As a digital marketing agency, we do a lot of different things for our clients. Some of them are straightforward services that are easy to understand with pricing that is simple (managing pay-per-click spending or managing social media channels).  Other things we do are far larger and more complex such as developing marketing strategies, building web sites, designing mobile applications, creating Facebook applications, or any kind of integrated system development.  For a client seeking these “complicated” services, the estimation and proposal process can be mysterious and frustrating.  I’d like to remove some of that mystery and give advice for getting the right price from a digital agency.

Tip 1 – Demand a price in line with your value

Our typical customer contact is usually a marketing leader who has a problem to solve or an opportunity to go after.  For such a person, a big digital project can represent a healthy chunk of their budget for the year.  They need to see serious value for their investment and if the price is more than that value, they need to rethink the entire project.  For this reason, it’s crucial to have some idea of the financial value of your project before you start negotiating price.  This is sometimes difficult, but without even a ballpark figure you can waste a lot of your time chasing a project and a vendor that simply can’t make the project worthwhile.

Estimating the value of marketing projects can be an extremely difficult exercise requiring lots of assumptions and projections.  Even so, it’s better to have some idea rather than none. One option when trying to build such a value estimate is to approach the agency and ask them to help you analyze this.  You may not agree with their calculation exactly, but looking at their approach and assumptions can get you some kind of working value number.

Tip 2- Give the agency a price box

Now that you know the rough value of your project, you can focus the agency properly.  Some schools of thought suggest it’s better not to give any kind of price guidance either because it will limit the imagination of the agency or because it will cause them to inflate their estimate.  In our experience, this more often leads to disappointment than bargains or brilliance.  Working inside of a budget limit actually helps focus innovation by avoiding ideas that were never financially viable (e.g. Hiring Morgan Freeman to do the voice-over for all your product videos).

I recommend setting a pricing box that ranges from 50%-75% of your expected value up to 150% of expected value.   But be sure to let the agency know that the upper range is only worth considering if their ideas unlock more value to justify that cost.  This is a way to open the door to innovations the agency might have to go above-and-beyond your projections.  You will spare yourself the hassle of having the agency bring you a proposal that makes absolutely no sense financially.  At the same time you demand that they either bring a cost-effective deal or genuine innovation.

Tip 3 – Ask for the cost drivers

Before you send the agency off to estimate, ask them to keep track of the most expensive aspects of the project and to be prepared to bring alternate options. When the expert team at Terralever goes off to brainstorm a great solution and estimate the cost, we tend to take our client’s specific feature requests seriously and ensure we bring back a proposal to match the request.  However, many clients find they are willing to tweak the exact approach if it means a large cost savings.

For example, we worked with a client a year or so ago who asked for a new microsites for a key sub-brand.  As a minor part of that microsite, the client wanted an animated clickable map with zooming.  In our analysis we concluded that 30% of the project cost would be consumed creating the elaborate interactive behavior our client described.  We proposed simplifications and the client was happy to have a functional, attractive map and reduce project cost by 20%.  This kind of opportunity appears on virtually every project.  Make sure to let your agency know you want a chance to consider these big costs.

Tip 4 – Take some work in-house

Working for an agency, I’m proud of the expertise our team brings to projects.  We’ve got a combination of smart people, high motivation, adaptability, and clear focus.  In addition to skill and motivation, external consultants aren’t distracted by politics, other workload, or rival objectives.  This combination can make an agency team highly productive.  However, there are lots of occasions where it makes sense to use an internal team or a mix of internal team members and agency staff to bring down cost.  Prior to the estimation, give them an idea of the internal resources you have at your disposal for the project and ask them to build a proposal that leverages those resources.

Be honest with yourself, though.  If you have 2 web developers and a designer but they all have responsibilities that can’t be postponed, don’t build a plan that calls for them to work 100% on the new project.  Your agency should be able to give you a pretty good idea of the hours of work they have planned from your team and when that work will be expected.  Sanity check those hours so you don’t imagine a cost savings that doesn’t exist.

Tip 5 – Figure out who is paying for quality

In the old days of marketing, quality was skin deep.  You could look at a your ad spot, creative, copy, or other assets and use your own eyes to be sure that it was right.  In the complex world of digital marketing, making sure that things are right can be quite a bit of effort and sometimes very technical.  It’s crucial to understand whether the price you are agreeing to includes quality assurance or whether the agreement calls for your own team to ensure the agency’s final work is up to snuff.  If the agency hasn’t budgeted for this in their price, you will need to plan for the additional separate cost of final quality assurance either using your own team or a third party. You will still have to pay, but the cost is somewhat hidden.  It’s far better to see it clearly accounted for in the scope and estimate.

That should give you some tools to get the price you want.  The good thing about using these tips is that you won’t drive yourself crazy or have to feel like you are battling the agency.  Most agencies will be happy to have you ask for these things.  It doesn’t do an agency any good to win a project but lose the customer.  We want your success; it’s the reason we exist.

You probably know a generalist—someone who possesses a broad set of skills but doesn’t specialize in anything. Generalists are fantastic for situations that require a high-level view across a variety of subjects, but they can struggle when asked to solve problems or execute plans that require deeper expertise.

The same principle applies to marketing agencies.

Generalist agencies are typically called “one stop shops,” and they offer services that range from branding, design and public relations to search engine marketing, social media and app development. It’s definitely a logistical allure for companies that don’t want to deal with the headaches that come with managing multiple vendors, but can any one agency offer the same level of expertise across the board?

Here are a few tips to help streamline your approach when you search for your next agency partner(s):

Step 1: Define your goals and objectives

What are you trying to achieve, and what does success look like? These may seem like easy items to identify, but they may be more difficult than you think. Clearly identifying goals and assigning metrics will make it easier to set expectations with your new agency partner. In most cases, the agency team will help to expand business objectives into project objectives. For example, a business objective may be to increase product sales by 20%, and a supporting project objective may be to increase email subscriptions by 35%.  A good rule to remember is that you can’t manage what you don’t measure.

Step 2: Understand what you’re looking for

Are you looking to solve a business problem or do you have a plan in place that simply requires execution? Businesses will often approach an agency with a specific project in mind (a new website, mobile application or a product brochure), which makes selecting a vendor fairly simple since you’ve already defined your needs. You can quickly assess an agency’s expertise by looking at case studies, processes and work samples.

But if your business needs aren’t that cut and dry, you may need to seek a partner that can begin the process from a strategic perspective. You’ll know, because you’re probably asking questions like, how do I target a new audience? Should I begin selling products online? How do I improve customer retention? If that sounds familiar, then a consultative approach is probably the right choice.

In the case of tactical project work, seek an agency with proven specialization that closely aligns with your project goals. Companies that focus on specific services typically have a methodology, tools, and a team of experts to execute successfully within a defined budget, scope and timeline. An engagement that requires a strategic approach such as a marketing campaign or business operations solution would be better suited for a generalist. A generalist has the ability to assess the situation from different angles, generate ideas, and provide a plan that can be transferred to a team of experts for execution.

Imagine walking in to your local bike shop, wanting to buy a new bike for your 7-year-old son. The nice gentleman in the shop greets you and asks how he can help. Your only response is that you need a bike, one for your son. He asks what type of bike the ‘lil guy is wanting…with no response. Are you thinking a BMX bike, a mountain bike, one with Batman on it, he asks. Still, you don’t respond. Ok, so the bike ‘salesman’ then asks how much you are looking to spend – maybe that can help narrow it down. You continue to hold out, stone faced.

This seems to be many people’s perception of the Request for Proposal (RFP) process – both agency and clients among Fortune 500 companies and small businesses.  There’s a lot of anxiety when there doesn’t need to be.

Almost by definition, an RFP is simply a company asking for help. So let’s take a more pragmatic approach. As a general consumer, if you were going to make a big purchase, wouldn’t you want to 1) get multiple offers and 2) do some research on potential suppliers?  If not, you’re a fool.

That said, I understand where some of that anxiety comes from. I’ve seen some RFPs that are simply a list of bullet points that provide little information for agencies to put together a relevant and useful offer.  These types of RFPs have given the process a bad name, no doubt.  To the contrary, I’ve seen some RFPs that are incredibly detailed where they provide clear information on the three key pieces that any project needs to have defined:  scope, timeline, and budget.

So with that, I wanted to provide some advice to any company looking to issue an RFP:  invest in the process.  That’s really all it boils down to – investing in the process to make sure what you get back is sufficient, realistic, and an efficient use of everyone’s time.  An investment means doing the following things:

Focus on quality over quantity.  Spend some time upfront understanding each of the agencies that you’d like to invite to respond to the RFP. Whether you do that through a more simple RFI process or do the research on your own. By inviting fewer, more qualified agencies you will reap two primary benefits. One is that you won’t be drowning in responses and can therefore focus on each individual response. Two, you will not turn off more qualified agencies that might otherwise be a perfect fit. At Terralever, it is not uncommon for us to respectfully bow out of responding if there are more than 5 agencies vying for the business.  Of course, there are always exceptions, perhaps a case where we are familiar with the business or the client. In these cases, though, there is always a debate internally about how many resources to put towards a response.  As an organization wanting to find the right partner for your project – you want an agency to put their best foot forward.

Provide a budget.  Even if it’s a range, it is critical to the process to provide some sort of budget. Otherwise, you will get a far broader range than what you had in mind from the outset.  This will cause additional work for everyone involved. In talking to a former colleague she told me a story of her first experience issuing an RFP. Her team did not provide a budget and ended up getting bids from $5,000 to $84,000. The low budget didn’t provide enough services and the high budget provided too many. After all was said and done, she had to go back to each agency and ask for a revised bid.  Lesson learned.

Provide as much detail as possible.  The better the scope is defined, the better quality the responses will be. The RFP should be thorough in describing both the problem at hand and the intended work that you presume needs to be done. I say presume because sometimes what is needed is different than what the RFP is requesting. Because strategy is such a big part of what our clients expect from us, we will always ask if you are open to hearing alternate solutions.

What if you really don’t know what a realistic budget should be? For that matter, what if you don’t know the skills needed to do the work or the timeframe to complete the project? That’s reasonable, especially given the pace at which digital marketing moves. If the project is small you can probably get away with doing your own basic research online. If the project is larger in scale, think about engaging one of the agencies that you are more comfortable with to help you write the RFP or put together a more thoughtful budget that will help direct your own internal conversations. Bottom line – all of this should be done prior to the formal RFP process.

Our success rate with RFPs is high.  No doubt, it has a lot to do with the reputation of Terralever, but it also has to do with how we approach the process.  We don’t work on every RFP. In fact, we decline the majority of them, referring them out to a better option.  The ones we do respond to, however, we invest in and try to be as thoughtful about them as we can. That’s the least we could do. After all, it’s what we ask of you.