** Tig's weekly column fields questions from and for marketers. Got a question for Tig? Email him by clicking here. **

 

Dear Tig,

The boss of my day-to-day client contact came to me yesterday to ask me about my client's performance. This isn't just a performance review, but part of a process to fire her. The truth is that she's a terrible marketer, bad client and not even a very friendly person. But I fear that if I'm honest about her to the boss, I'll wind up in trouble if he decides to keep her on. I also don't want to be the agency person known for ratting on clients. Any advice?

Please help,

Not a Rat

Dear Rat,

This can be even more of a pickle than you may believe.

On one hand, companies tend to be very slow to fire people. Even if this is the intent of the boss right now, it remains probable that some half-measure will be taken at least initially.

In a very similar situation many years ago, I had to endure two months of my client contact's “probation” before he was genuinely sacked. In that time, he had plenty of opportunity to poison the atmosphere with the others in the marketing department. My good deed certainly did not go unpunished.

On the other hand, saying nothing acts as a form of endorsement. This is bad in that the agency may be stuck with this marketer for a good deal of time, causing untold damage to the client. Worse, when something goes awry, and the agency gets unfairly blamed, you will not be able to credibly change your testimony and claim that the client is incompetent.

I suppose the short form of the answer is that you are doomed, and that all your compatriots should avert their eyes and take at least three steps away from you.

Seeing as you're damned both ways, I'd bite the bullet and be honest.

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Dear Tig,

In starting the process of renegotiating our agency contract with a major advertising client, we're trying to decide which manner to charge for our services. We're considering charging for specific hours billed (the most accurate), specified proportions of people's time, or by an arbitrary percentage of media billings. Which do you think makes the most sense? Thanks,

Negotiator

Dear Negotiator,

I'm not a big fan of fastidiously noting every minute of every employee's time spent on a client. Not only is it more of a hassle than most people anticipate, it also leads to client conflicts later when they look through the list of activities and attempt to cherry pick things they think are inappropriate.

The sad truth of the matter is that most times, there are inevitably the silly items in the list that later look foolish under client scrutiny. An account executive writes a memo, and the account supervisor reads it, rejects it and makes her do it over again. To a client looking at billed hours, this doesn't look like something for which they should pay.

While most of these unreasonable concerns can be thwarted, they can create a poisonous, adversarial attitude.

The media billing percentage method is fraught with danger as well.

In the olden days of broadcast primacy, the arbitrary 15 percent of billings was consistent enough (and had enough fat in it) to take care of most situations. Nowadays this isn't true, certainly not in shops doing online advertising, or even non-network forms of television.

Some agencies try to avoid the problem listed above by choosing a different percentage of media billings—sometimes higher and sometimes lower, depending on the nature of the work and the billings. This works only under the condition that the client continues to spend on the same scale and requires the same work levels, which is a rare client indeed.

In my role as Goldilocks of client renegotiations, I have to choose the third option—assigning portions of people to the account and charging the client for them.

Why? It's just right.

An agency takes the employees' various salaries, adds in an average corporate overhead figure and a specified profit margin, and charges the client an ongoing rate. This creates an environment where the employees can be inspired to work their tails off without having to worry about an imminent-yet-unexpected billable hours problem. It also prevents the agency losing a lot of money when media budgets change radically.

Do be warned, however, that all is not beer and Skittles in the land of apportioned employees. The very nature of the contract negotiations requires that you reveal employee salaries to your client.

I did have a very large client some time ago where it seemed like the agency salary list had been inappropriately emailed to everyone in the firm. Of course, that list got back into the agency and created its own fun management situation.