Being Charged for Agency New Business

Being Charged for Agency New Business

A new business director was telling us the other day about how new business worked in his agency and how he was being charged for agency new business and we found it rather strange.

Their new business agency would arrange a meeting and get as much information as they possibly could, but, as we all know, sometimes the prospects we speak to are unwilling to give too much away before meeting; this is especially true if your agency’s service is a strategically important one, such as branding, digital transformation, financial PR or advertising for instance.

The reason for this is, in our opinion, very obvious; if a client is listed and is considering a strategic change along the lines of the above, then the fact they are even considering such a change could have an effect on their share price, so to share such information could be in breach of stock exchange rules or even break the law. So they may discuss these things face-to-face, maybe even after getting the agency to sign an NDA, but VERY rarely cold, over the telephone.

Would YOU?

Anyway, this NBD didn’t go to the meetings, he decided which of the senior team would go along. If it was to discuss digital, it would be the CTO, branding, the Planning Director – you get the idea.

But here’s the thing; the New Business Director was given an annual budget, from which he paid his new business agency, himself and his new business executive (naturally) but ALSO …

He was charged £250 per hour by the departments of the senior team members who went to his meetings. So, if he couldn’t see that there was an immediate opportunity, he couldn’t RISK getting anyone to attend the meeting because it would eat up his budget, which he was using to, er, get meetings.

It was, apparently, because of the ‘opportunity cost’ involved. You see, if these senior people weren’t going on his meetings, then they could sell their time to clients for that much, so their departments had been told by the FD to charge new business the same. Rather self-defeating we thought.