Why holding back your ad budget ... holds you back

piggy bank looking at mini piggy bank on stacks of coins

Sharing your marketing budget with your agency is important

In a negotiation, the first person to say a number loses. So goes the conventional wisdom.

That may well be good advice if you’re buying a used car, but if you’re shopping for agency services and are asking for proposals, not being “up front” about your marketing budget or potential investment level is a big mistake.

Here are four big reasons why:

  1. It’s a waste of your time. Absent any real information, your agency is going to make assumptions about your budget and how best to use your dollars for maximum impact. Those assumptions likely will end up being wrong. In most cases the assumed number will be much higher than your actual budget and that means the first proposal you receive will feel out of reach and unaffordable. The result? The agency will now need to invest more time to regroup to revise their proposal. Precious days (and sometimes weeks) will pass and you will not be any closer to solving your business challenge than when you first met to discuss the situation. All this could be avoided by simply stating a realistic budget out of the gate.
  2. You’re not going to get as much for your money. Without a firm number, your agency may present you with optional levels of spending. High. Middle. And low. It’s almost certain that the highest level of spending is the one they feel makes the most sense. The middle option is likely to be a compromise, but the lowest level probably represents a very stripped-down version of the recommended solution. I can guarantee that if you went in from the start and said, “I only have [X dollars] to spend,” not only will you get a smart plan that makes great use of those dollars, your agency will almost certainly give you even more value. Why? Despite what you may feel at times, agencies really do want to help solve your business problems. A tight budget will force your agency to be really efficient with each deliverable, which is easier to do when the whole team knows from the start what the “rules of the game” are.
  3. The solutions won’t be as good. It may seem counter-intuitive but it’s true. People are at the top of their game when faced with a challenge – even if that challenge is a low budget. It forces creative solutions. It clarifies purpose. It makes people proceed very thoughtfully. (You’ve probably experienced it in your own organization.)
  4. You may unintentionally hurt the relationship.There is nothing more refreshing than when a client says, “This is my budget and these are my goals.” NOW the client and agency can truly work together. They can partner up to develop a plan that makes best of use of the dollars.Imagine: No more awkward meetings where you nod along and get excited about what your agency is proposing only to find it’s hopelessly out of range. Or imagine (from the agency perspective): No more wasted hours putting together a proposal only to find out that it has to be drastically scaled back.

Of course, sometimes clients truly don’t know what their budget is. Maybe you have big initiatives planned but don’t know what they will cost. Maybe the proposal will be used to secure money for the following year’s budget.

Even in these situations, be as forthcoming as possible about what you know (or don’t know) … or perhaps you can let your agency know what you consider to be too costly.

When you treat your agency like a trusted partner, they will rise to the occasion. They will work hard to meet your expectations (even on a shoe string budget).

So don’t hold back the budget. Be an open book, even if you don’t have an open checkbook.


Rich Vetrano is a Managing Partner at Core Creative.


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