Wednesday, 18 November 2009

Making Money out of Digital Recruitment

Its been a month of meetings, proposals and tendering. If i looked at the money in as opposed to effort out - it probably does not tally but we have added 2 new clients (welcome PGC and Dixons) and it feels better out there even if feelings don't pay the bills. Overall we are still up year on year so the team deserve a very nice blow out for the Xmas bash this year. But 4-5 more good weeks to go before any let up.
Anyway - in this process of meetings i have been able to see many other proposals from other agencies both traditional recruitment and digital specialists (non recruitment) and some interesting ways of making money seem to get slipped in to the deals. Most common listed below.
1. Campaign Management - these costs generally are far too high - either the agency is getting a bad deal from a 3rd party or they are trying to make the margin here. Reporting is incredibly important and a key part of any campaign we run but the costs need to be proportionate - i don't think there is any justification for 20% of media bills for this service - discuss....
2. Appalling media buying - again 2 possible reasons a)cant negotiate with media or more likely b) marking it up massively. Now in the interests of full disclosure - when we have achieved huge discount on certain deals i am sure on certain occasions we have kept part of it (with agreement from client) but its silly when you are trying to charge a big Monster 12 month deal out at 10% discount for instance.
3. Production charges. You absolutely need to charge a rate for work you do - but its silly to charge occasionally v high prices for 30 seconds work.

Interestingly - what i don't tend to see is proper charging out for the expertise involved in planning buying managing a digital campaign - that is the real value but the industry still seems shy to price accordingly.


John Buffey said...

Interesting post Dom, and a topic that is still causing major headaches for many recruitment advertising agencies, as their pricng model just doesn't work now. When times were good and everyone advertised in the press, the majority of agency income came from the media and so the agencies gave away own expertise for free, thereby devaluing themselves.
Now that we are increasingly moving into a digital-based recruitment model with its own set of pricing rules, agencies have to realise that they need to charge for their time and intellectual capacity. However there is genuine nervousness to do this as clients still expect this part for free. Costs can then get hidden away in areas such as 'Campaign Management' which is actually not just tracking response, but putting the campaign live, checking its working, optimising, running reports etc.
I agree with you on the media buying front too - it simply does not work to hide discounted media costs from clients, especially if we are trying to accurately measure ROI. We all need to be bolder and clearer in our pricing structure and provide some standardisation to an under-valued industry.

domsumners said...

thanks for the comment - we at OME do also succumb occasionally to almost masking the cost for our work behind more product related charges. we have insisted on day 1 to have some charge though for mgmt of account. This sometimes is very low but its the principle i guess.Boldness vs not scaring client off - its a tough one...

Peter Gold said...

OMG, you do talk absoulute rubbish sometimes - gotcha!

It is difficult to work out pricing models for this IMO and do sympathise (LOL) with the agencies but, the client often does not understand the amount of work that has to go into for example, managing an adwords account the "right" way.

Good debate all the same.