Budget transparency is crucial for both agencies and clients to maximise the value of their collaborations. Hamish Cargill explains.
“This sounds like a complex, interesting brief. What’s your budget?”
As an agency, it’s the question that can change the course of everything.
Of all things – clear brief, capable client, cohesive stakeholder set – it’s budget that really sets the tone for any major project.
In a perfect world, by the time you’re having this conversation you already know the budget because it’s written in the brief. And that brief is a good one.
More often than not, however, the question needs to be asked. Of all the possible responses, these are the most common:
The no worries: “Sure thing. We’ve allocated $100k for this project.”
This client seems so committed and transparent, you’ll happily forgive them for not including that detail in the brief.
The non-committal: “We’re thinking loosely approximately somewhere around the $100k mark, but that’s a ballpark at this stage and not confirmed.”
You’ll notice a red flag going up in the distance at this point in the conversation. The client said $100k. You write down $100k. When you put your quote in at $99k, you can fully assume they’ve forgotten that number and expect it at half the price.
The no idea: “We don’t have a budget in mind. We want to understand what you think it will cost to deliver the outcomes of the brief rather than lead with guiding budgets.”
You’re in the desert without a compass. You’ll only find your way to the promised land by blending your finely tuned skills in corporate mind-reading with a laser-like analysis of your competitors’ determination to do the job cheaper than you. The only thing that’s certain is that “what you think it will cost” is significantly more than the client does. A clever agency will turn this situation to their advantage – seeming to provide helpful advice to while marketing their own proposal.
This tendency not to supply budget guidance is driven by one of three factors: they’re not sure how much they should spend and are going to the market to find out; the client hasn’t yet gotten approval for the project and is on a fishing expedition to create a case for it; this is a price-sensitive organisation (or individual) where every dollar counts. In these financially challenged times, this is happening more regularly – particularly from government organisations who should know better.
At this point, it would be easy to say that this expectation to start by putting your best offer on the table is merely part of the cut and thrust of doing business, as it has been for millennia. Supply and demand and all that. For a client putting out a competitive tender, why spoil the ending and risk attracting a lower-cost proposal from a particularly hungry agency?
The answer is value. When the client provides a budget, agencies are competing to deliver value for that budget. Evaluating the entire range of levers they can pull to stand out. Given all agencies are aiming at the same target, inclusions and quality of outputs become the key competitive measure.
In short, a well-organised client can entice maximum output and impact for what they want to spend. Being declared is better for everyone.
Not that it’s the job of clients to be concerned about the business models of agencies, but budgets also help guide the allocation of effort. Too big. Too small. Budgets are the swing tags of the corporate world helping us work out where to shop. Self-selecting out of projects where the fit isn’t right is a bold call but rarely the wrong one for those on either side of the equation.
Of course, even where budgets are laid out clearly, agencies can always find ways to complicate matters. Because is the budget really the budget? Or is there a secret vault hiding a secondary stash, just waiting for the right proposal to unlock it? What’s the commercial decision to be made between accepting what’s on the table and trying to make the deliverables work, or quoting higher and risking handing the project to another agency? Winning a project having quoted well above the budget guidance is the holy grail of agency life and the maker of legend for those involved.
Where clients should take responsibility is in what they ask for as part of a pitch process. No agency should be asked to deliver extensive unpaid creative work unless it’s clear the size of the prize they’re working towards. This also goes to the matter of how many agencies are involved in this kind of process – whether it’s a local independent or a part of a multinational holding company, for the sustainability of the industry clients owe it to agencies to be transparent about how many others they’re fighting against.
By its very nature, the relationship between agency and client will be characterised by positive friction. This is where brilliance comes from. And no matter what others say, you can put a price on this.
It’s the budget. And it should always come first.
Hamish Cargill is the Director of brand language agency XXVI, part of the Principals group.