What to Expect from a Marketing Retainer
As businesses grow, their marketing needs often grow too… quickly. The thought of adding salaries and benefits packages to handle your content development, ad planning, design, copywriting, web development, etc., can be daunting. But trying to differentiate your brand without these assets isn't an option for most organizations. A marketing retainer might be the answer to solve both challenges.
Most of us probably associate the word retainer with lawyers or legal services. You pay a set amount of money to secure a set number of hours of legal work. A marketing retainer is basically the same. It is simply an agreement between an organization and a marketing agency that establishes a monthly payment in exchange for a set number of hours for a variety of services. In contrast to project work, retainers generally encompass longer time periods (often from 3 months to 12 months) and are not project-specific. This long-term relationship allows an agency to become familiar with a brand and help facilitate its marketing goals. Many retainers allow for a review after a few months, and even a modification of terms if both parties agree. However, it is important to remember that a retainer is a legally binding contract.
Retainers tend to be an attractive option for both agencies and clients. With a retainer, you (the client) can better plan your monthly or even annual marketing expenses. You can also build a relationship that allows an extension of your internal team. The agency benefits in 2 big ways. First, they will have a steady stream of revenue coming in that is paid in advance of work being done. Second, they will need to spend less time and money marketing themselves to prospective clients.
How Does a Retainer Work?
There is no one-size-fits-all retainer structure. However, the nature of a retainer is highly collaborative and puts the agency in more of a consulting role. The agency will still execute the marketing and creative efforts, but they will also become very familiar with your brand, enabling them to recommend the work that offers you the greatest value.
The agreement can take many forms, but the most common is a time-based model. You (the client) and the agency will evaluate your needs and objectives and agree on a set number of hours that you believe it will require to accomplish those goals each month. This model also provides the flexibility to refocus on other projects quickly. As an added benefit, many agencies will offer a short-term trial retainer (usually 3 months) and even a discounted hourly rate for retainers. A discount of 10% or more is not uncommon.
One of the biggest differences (and biggest hurdles for some clients) from project work is that retainers are paid-in-full, in advance of the work being done. This guarantees that the agency gets paid while providing you some budget planning benefits. But, it also means you can (and should) ask for regular reports of the completed work. Because retainers are paid consistently in advance, you should also expect an added level of availability and timeliness.
Even though the hours are defined, occasionally you may need more time in a given month to reach your objectives. Most agencies will simply extend the hourly rate for those additional hours. At the same time, you need to communicate with your marketing partner to ensure you are using all of your allotted hours in a given month, otherwise those hours may be lost. Do not expect your marketing agency to discount your retainer agreement if you do not utilize the agreed-upon hours. Retainers can be written to waive a small number of hours or allow you to carry over a few of those unused hours into the next month, but those terms should be specified. Be diligent about this. Nothing can spoil a good retainer faster than being invoiced for unused time.
What Does a Retainer Agreement Define?
An effective retainer should detail the relationship and expectations for both parties. There should be little room for misunderstandings, yet plenty of room for flexibility in the marketing activities. The retainer is an agreement that ensures your goals are met, while also protecting your marketing partner from exploitation. Some things that should be a part of any retainer are:
Strategic Goals: i.e. Brand awareness; Increasing web traffic; or Lead generation
Scope of Work: A detailed scope ensures appropriate time allocation
Monthly Fee and Due Dates
Duration of the Retainer: How many hours per month? Is it a 3-month trial? Annual? Other?
Reporting Expectations: To ensure all parties are in alignment, accurate reports will need to be provided regularly. Remember, retainers are billed in advance.
Hourly Rate for Additional Hours: Usually this is an extension of the retainer rate, but define it.
Payment Expectations: What payment needs to happen to ensure consistent workflow?
Billing for Expenses: Generally, expenses and extra hours are invoiced separately each month.
Opt-Out Clause and Penalties
Other Terms and Conditions
What Type of Work Can a Marketing Retainer Cover?
As we’ve said, entering into a retainer agreement means you are entering into a relationship with a full marketing partner with a broad skillset. Here is an example from Hubspot. Common activities for a retainer agreement may include:
Marketing and branding strategy
Marketing Plan development
Social media marketing
Website updates and maintenance
Collateral design (brochures and sales tools)
Content creation and publishing
Media Planning and Management
Advertising creative – Traditional and digital
Search Engine Optimization (SEO)
SEM (Google Ads/Pay-per-click)
Any other agreed-upon projects
But just as there are times when a retainer is practical and beneficial for both parties, there are several situations where it may be wise to avoid a retainer in favor of a project-based agreement.
Limited budget for marketing activities. While there is no hard-and-fast rule about how much a marketing retainer fee should be, if you have a budget that limits your investment to $1000 or less per month, you may not benefit from a retainer.
Very specific project requirement. Some projects can eat away monthly hours quickly, limiting other activities. For this reason, at Authentige, web development, video production, and initial brand development are always outside of the scope of a retainer.
Few ongoing marketing needs. Perhaps you need to revamp existing materials, market on limited channels, or just have templates built. A project model may be more beneficial.
How Does a Marketing Retainer Benefit You, the Client?
There are obviously time and financial benefits for the agency, but there are also many benefits of a retainer agreement, as opposed to a project-based agreement for businesses and organizations. The most often cited is “predictable costs”, but I would argue that is only the second benefit:
Brand Understanding: We started off talking about the dilemma organizations face when they grow – the cost of hiring. One reason to hire is the belief that an employee can generally understand the brand and its objectives better than non-employees. A retainer partnership closes that gap considerably, and quickly.
Budget Predictability: Most businesses don’t like budget surprises. A retainer provides a predictable invoice month after month. It enables better expense forecasting and allows the flexibility to amortize marketing campaigns over longer periods of time.
Priority Service: As a retainer client, your agency will usually try to shuffle requests around, if possible, to accommodate its retainer clients. The agency also knows that it needs to set aside an allotted amount of resources every month to dedicate to a specific client.
Value: Agency retainers often provide a lower hourly rate for services compared to their project rates. And as the relationship and understanding of your brand continues to grow, so does the efficiency of the agency.
It’s “Bus-Proof”: I don't want to sound morbid, but a retainer provides consistency and security from internal turnover or unexpected absences. If a key marketing area employee leaves, gets sick, goes on vacation, or gets hit by a bus, your marketing efforts can continue.
Reduced Staffing Costs: Marketing partners are independent. You do not need to invest additional resources (training, vacation time, benefits, overtime, etc.) beyond the retainer amount. The only trade-off is in not being able to define when/where the work is completed.
What are the Client Responsibilities in a Retainer?
As the client, you still maintain much of the control over your marketing activities. However, the success of a retainer relationship can also fall on your shoulders. Here are four tips to make sure it is as beneficial as possible:
Communicate! Establish regular meetings about your needs, expectations, and progress.
Have a marketing strategy, or plan to build one with your marketing partner.
Ensure your needs align with the hours you’ve secured, or it may result in being billed for unused time. You won't like that, trust me.
Pay on-time to ensure no interruptions to workflow. Remember, this is ultimately a partnership.
If your marketing needs are growing, or you are looking to add an external marketing partner to your team, consider a retainer agreement with Authentige. Contact us to find out how we can craft a custom retainer to meet your needs and expectations.