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Should my firm receive a finders-fee or retainer mark-up...

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arch_phillyShould my firm receive a finders-fee or retainer mark-up...
by on Feb 12, 2007 at 3:14:10 pm

We recently contacted a perspective client about their marketing needs. They indicated that they need a full-service ad agency to service their broad marketing needs. We only service a selection of those needs and in turn, have promoted the idea of a collaboration with a local ad agency. So...the client would like pricing to be coordinated under a retainer arrangement. My question is, is it standard business practice to receive some sort of kick-back or incorporate a mark-up for sourcing the client, if the contract is award to our firms? I want to be ethical and reasonable, as well as promote a price-point that the client is amenable to. I'm open to suggestions on how best to manage this relationship, as it could be sizeable.

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JBaumchenRe: Should my firm receive a finders-fee or retainer mark-up...
by on Feb 12, 2007 at 5:55:49 pm

You could handle this several ways.

1. You could be the point of contact with the client, hiring the ad agency to work with you. Sort of like being the general contractor. That way, you can provide the services within your capability and markup the agency's invoice. Much more work on your part here but also the potential to make more too.

2. You could approach the agency with a proposal that you recieve a commission on the work they do for the client and that you provide the services for this client that fall within your area of expertise. After all, they wouldn't have the business if it weren't for your involvement.

3. You could hand the business to the ad agency with the understanding that you provide your expertise to the client.

If it's a big agency that you've never worked with, this might be a good opportunity to do business with them for their other clients as well.

There is nothing wrong at all with receiving a finders fee. The only time it is considered a 'kick back' is if you are an employee of the client, and want the ad agency to kick something your way for hiring them.

As for the amount of the fee? Well, if you just pass on the clients name to the agency and they land the job, 10% of the gross. If you actively work on their behalf to bring the client to them, 20-25% is not uncommon.

Cheers and good luck.

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Nick GriffinRe: Should my firm receive a finders-fee or retainer mark-up...
by on Feb 12, 2007 at 10:59:49 pm

Do you have any particular agencies in mind or will you be auditioning them? Call me bitter (or overly experienced) but I have very little trust for many people in the agency business. If you're approaching people you already know you have a lower chance of getting S-C-R-E-W-E-D. (A lower chance -- not none.)

While it's possible that you could be the "general contractor" and have the agency working for you, it's unlikely (IMHO) for more reasons that the one above. The fact that the client wants a broader skill set says to me that they'll require someone with the ability to fully manage that skill set, too. That requires an in depth understanding and knowledgeable overview.

For example, a good agency will develop a wide variety of strategies, tactics and executions for marketing, advertising, promotional, media planning/placement, and (maybe even) public relations. They will develop messaging as well as brand presentation and management. If you're not knowledgeable in these areas, what do you bring to the party? Agencies (as well as most people) like to be in charge. That makes you perpetually vulnerable.

Go for the referral fee WITH the written understanding that you will be handling specified areas of the business. It's safer and more likely to last longer.

-Nick Griffin

"If you think there's good in everybody, you haven't MET everybody."

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