Are Clients Paying Their Ad Agencies To Be Inefficient?

At many ad agencies, the most creative work people do is composing their time sheets.

I once worked at at an agency that billed in six-minute increments. I was never good at math, or thinking in a linear manner, so my calculations were wild ass guesstimates. At best.

Sometimes ideas happen in a snap, and sometimes they require the gestation period of a wildebeest.

The more I worked in agencies, the more I saw they liked banging the ol’ billable hours. The worst thing you could do was doing your job too fast (not much profit in that).

And if you billed too many hours, the poor account person had to figure out how to bury them or slather the overage on to other jobs. More creativity!

It’s a shell game that became even worse when procurement departments began negotiating ad agency compensation. Blended hourly rates became critical for selecting agencies (it works when looking at per unit costs of pencils, right?). So naturally, agencies have experienced heavy hitters on pitch teams, and when they win, a crew of juniors man the oars to keep expenses down.

A profitable billing machine is launched–– high margins, ho!

A Fortune 100 client told me that at the end of every quarter, his big intergalatic agency would bring him large binders of time sheets demanding an increase in fees, as justified by all the extra hours worked. The client countered that the additional hours were because new agency people were constantly cycling on to his account, and some people just didn’t understand the business. The account head pointed to the thick tome of time sheets and cried his case.

It drove the client nuts, but his company eventually blinked and the agency ante was continually upped.

The founders of Ames Scullin O’Haire Advertising saw how the game was played and decided not to play. We thought clients would hire us for our thinking, our work, not the time it took us to do the voodoo we do.

So, we decided not to keep time sheets–– and we’ve never gotten into tussles over money. We talk openly with our clients and get an understanding of what’s needed. Then, we put a price on deliverables. It’s up to us how we get the job done. Inefficiency doesn’t work for our benefit, or our clients.

And we don’t have separate parasitic profit centers of different disciplines looking for a receptive host to feast upon. Clients get what they need, not what the holding company needs

We’re beholden to no one but our clients.

We believed that if communications are good, it’s in everyone’s best interest to be efficient. If our thinking is smart, if we deliver empathetic messages that motivate, clients becomes a heroes and we continue cashing checks (it’s a beautiful thing, capitalism).

No one argues a rising sales curve. Which beats the hell out of arguing over billable hours.