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Whatever they are worth!
As a consultant, that’s my standard answer. But I know it’s a bit more complicated than that. Hourly rates run the gamut from $50 to $500. Some are worth it and some aren’t. You could probably say the same about your attorney, accountant, and physician. Each is an expert that should be looking out for your self-interest. After all, if you’re successful, then they benefit.
But advertising is a different animal. Let’s use the auto mechanic as an example. The car is running rough. You bring it in and the guy tells you it needs an engine overhaul. You trust him to do the right thing and, the next day, you pick up your vehicle. He presents you with a bill detailing all the work and you write a check. Hopefully, it’s working well now and you’re both happy.
Compare that with advertising. Your business is slow and you hire a consultant. He reviews your current campaign and makes a recommendation. You acknowledge that he or she is the professional and let them run the show. A month or so goes by and business is still bad. You come back and demand a refund. Sorry, it’s not going to happen. Unlike the car, that you could return and have more work done to correct the problem, the marketing cost has already been chewed up by the media. There is nothing to return or refund. Is it the consultant’s fault? It depends. Did you overreact expecting miracles? Perhaps.
If the consultant only got paid for results, that would be like a doctor only getting paid if he cured you. The doctor prescribes a course of treatment with medications according to his best estimates and using his vast expertise of prior cases. If the treatment fails, the doctor still gets paid. He might then try another type of action and still gets paid for that as well.
Marketing is of a similar ilk. The consultant makes a recommendation based on a history or case studies that produced certain results for specific companies. It’s rather like picking stocks based on previous performance. They may or may not perform as expected, but what else does the consultant have to use for their proposal? Each campaign comes with that caveat and the business owner must understand that risk in advance.
So, when it comes to how much the consultant should be paid, it’s more of an exercise in ROI, or return on investment. If he succeeds and helps the business prosper, what is that worth? If he fails, has he really damaged the business or just not helped it do better? I would never blame a good marketing consultant for a business failure. There are usually many other factors involved. Furthermore, a reasonable charge for services rendered could be an hourly rate that is competitive with other consultants or a flat fee based upon a schedule of the projected work required.
Under no circumstances should the consultant charge a percentage of the business profits gained. This borders on unethical behavior and can lead to numerous problems, including violation of the privacy of the business’s accounting. Check their credentials and references first, as you would for anyone you are considering before making an important decision. You’ll have a good feel for the person and whether you’re a good match. Then give them all the information they require and allow them to prescribe the best treatment. Hopefully you and you’re business will be happy and healthy.
Jeffrey Hauser was a sales consultant for the Bell System Yellow Pages for nearly 25 years. He graduated from Pratt Institute with a BFA in Advertising and has a Master's Degree from Monmouth University. He had his own advertising agency in Scottsdale, Arizona and ran a consulting and design firm, ABC Advertising. He has authored 6 books and a novel, "Pursuit of the Phoenix," available at amazon.com. His latest book is, "Inside the Yellow Pages." Currently, he is the Marketing Director for thenurseschoice.com,
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