Creating clarity around the budget is not difficult to do when there’s a trusting partnership between both parties. Every client has a spend tolerance; they almost always have some sense of what they can or want to spend. Depriving the marketing agency of that information creates confusion, and a loss of valuable time working through multiple scenarios to get to a number. But communicating it clearly creates a win-win situation in which both parties have the greatest possible chances of meeting their respective goals.
Marketing agencies have three goals: to help clients achieve their business objectives, to do great work and to have fair compensation for the services they provide. Without knowing the budget, the agency is put in the awkward bind of trying to guess what the clients' objectives are and estimate how much human resources should be allocated to the project, all while being unsure as to whether they will be paid fairly for the work created.
With the client's budget in hand, however, the agency can meet all three goals. The budget sheds light on the actual objectives of the client and gives the agency clarity into what is actually feasible to accomplish with the project. Most importantly, an agency team that knows they will be fairly compensated will always put forth more effort - and produce better work - because it feels good about the relationship and wants to go above and beyond for a good client.
Revealing the budget helps the client, too! It enables and encourages transparency on the part of the marketing agency: they will be able to share the approach they plan on taking on the project, the talent they will have working on it and precisely how your budget will be used. It also permits vital alignment in expectations for both price and product, reducing the likelihood of coming in far over your unrevealed budget or of the project ending with an underwhelming result that falls short of your business objectives.
Like all good things in life, though, there is a catch: The marketing agency you are working with must be a good one. As former chairman and CEO of Lockheed Martin, Norman Augustine, said, "All too many [marketing agencies], when asked, ‘What is 2 and 2?' respond, ‘What do you have in mind?'"
A good agency does not take advantage of a client when they share budgets for projects or yearly spend; instead, they use that information to plan the best possible outcome, then maximize the use of that money for the good of both parties. To set yourself up for a win, be clear about your budget with your marketing agency. But first - make sure you have a good one.