Why Marketing Agencies Love Retainer-Based Business

Like in nearly every other sector of commerce, competition among marketing agencies is fierce, and the agency that rises above the crowd will ultimately win out with the most clients. In obtaining those clients and their business, marketing agencies tend to favor the retainer method as retainers boast many advantages that make them a popular method for compensation when it comes to professional services. Right off the top, here are some reasons they make sense for a full-service marketing firm:

  • They Set a Budget for Marketing Spend – Clients, in many cases, will have a somewhat consistent level of marketing needs over the short-to-medium term, and the costs to meet these needs can be projected quite accurately. Assigning a fixed fee – or retainer – to this work enables a client to easily budget for most of their marketing expenses while also allowing the agency to forecast revenue.
  • They Catapult Clients to the Front of the Line – Marketing agencies have a priority within the agency over those clients who do not have a retainer. These retainer-oriented clients are preferred customers pre-paying for services so that they may be handled as a priority.
  • They Elicit Creative Thinking on Behalf of the Marketing Rep – Rarely is the world of marketing a static situation; what keeps a business’ brand at the forefront of customers’ minds is creative action. By retaining a marketing agency, businesses give them the ability to explore creative ideas that may have never been finalized…but would result in billable hours.
  • They Give Clients a Better Deal – If a client is willing to sign up for a retainer agreement, some agencies are willing to offer somewhat reduced rates in exchange for this commitment, leading to a more enthralling reason to stay with that agency.

Challenges Marketing Agencies Face in Winning Retainers

Based on preliminary data collected from various marketing agencies, there are some common trends emerging with regard to what some of their biggest challenges are. One of these falls into the ‘variable cash flow’ category, wherein marketing agencies that consider their cash flow to be too variable are typically too tactical in approach and tend to specialize in only a few services for their clients. By only performing niche services, such as website design or social media marketing, these agencies mostly acquire PROJECTS rather than RETAINERS, leaving clients to rely on them for only a brief amount of time.

Left with mere project work, cash flow within an agency becomes unpredictable and often leads to financial challenges.

Into this foray have come a number of tools and software programs that allow agencies to do more for their clients, such as the ActiveDEMAND marketing automation platform, while being more efficient in executing their businesses. If you are a serious-minded modern marketer, it is definitely a wise move to look into one of these solutions today.