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Agency charging scrutinised

MOST ADVERTISING agencies in Perth have resisted changing their charging structures, says Rob Mitchell Advertising director Rob Mitchell.

“In recent years, the whole way agencies are renumerated has come under closer scrutiny from clients,” Mr Mitchell said.

“Many feel that the service fee structure – a traditional way for agencies to fund non-chargeable, incidental costs such as account management – is a penalty.

“As a result, many agencies now charge less than the traditional 7 per cent to 12 per cent service fee.”

Mr Mitchell said the service fee structure should be abolished.

“It is a tired old formula that has seen its best days,” he said.

“Today, the general trend is towards more tangible charging methods that allow clients to see exactly what their budget is being spent on.

“Some agencies, in place of the service fee, have gone to the other extreme where they charge for everything.

“I have heard of one agency that charges $30 for sending emails on behalf of clients. Obviously, that is ridiculous.

“Clients want charging structures to be far more transparent than they have been in the past.”

Stratagem managing director Robbie Stewart said transparency, flexibility and accountability were his key words in terms of charging.

“Every client wants to be able to see exactly where their money is going so they can make judgements as to the value they are getting for their investment,” Mr Stewart said.

“$30 for emails would not seem to be value-for-money.

“The agency must be constantly be re-examining how to most efficiently earn the client a return on their advertising investment.”

Bowtell, Clark and Yole managing director David Owen said an agency that obscured the extent and sources of its revenue would very quickly find itself in trouble with any client capable of operating a calculator.

“I have yet to come across one who isn’t,” Mr Owen said.

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