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You are rockstar agency for Acme Bank, your local financial institution. Word gets around and now a competing local bank reaches out to you. They want you to do for their bank what you did for Acme Bank. You are left wondering, “Can I work for both banks? Isn’t that a conflict of interest?”

If you’ve ever wondered about this, congratulations, you have some good integrity. You are not wrong to wonder about the business ethics involved.

My Personal Client List and Experience

While growing my agency, I never really considered the “conflict of interest” debate. I was just grateful to be landing clients! Haha. My first client was Sony followed shortly thereafter by ABC Family and Warner Bros. Each of these three clients are technically competitors. They all wanted consumers eyeballs to watch their content.

That initial client list was followed by landing Disney, ABC, NBC, Fox, FX Networks and HBO (more competitors of my first few clients).

I still have a collection of some of my badges from client visits over the years. In this pic you will see badges from visits to ABC, NBC, Warner Bros. and Sony (all “technically” competitors).

Not once, ever, never ever, never did any of those “competing” clients ask me about stopping work for their competitors in order to land work for them. None of them ever asked me about a “conflict of interest.” It just never came up because of the unspoken assumption that it is not a problem.

Becoming an Expert in a Field

As a matter of fact, because I had done work for Disney, HBO felt they could trust my agency. Doing work for a competitor wasn’t a blemish on choosing my agency, it was a reason to choose my agency! “If Disney trusts them, we can trust them,” thinks the client.

Much of you success and growth a a creative freelancer or agency owner will come from building expertise in specific services to solve specific problems for clients in a specific industry. This requirement of success means you will have to work for many clients in the same industry.

Big Agencies Work for Competing Clients

I decided to do a little research by looking at a few of the “mega agencies” that are well regarded in the creative industry. Check this out…

The esteemed agency, Pentagram, with offices in NYC, London, Austin and Berlin, and a legacy that includes famous designers Paula Scher and Michael Beirut has work in their portfolio for the following “competing” financial institutions: American Express, Mastercard and Citibank, to name a few.

They also show work for Jack Daniel’s and Kikori Whiskey, both of which certainly prefer that you buy THEIR brand of whiskey. As a matter of fact, Pentagram even organizes their portfolio by “Type of Client” showing hundreds of projects they’ve done for many “competing” clients in 18 different industry types.

If Pentagram can work for multiple companies inside the same industry, surely you can too. You’ll find a similar story on the websites of many other mega agencies.

Exclusivity Comes at a Price

Now, you may encounter a situation where a client asks you about this exact topic. You may even find a client who attempts to require you to only work for them (and none of their competitors).

If that ever happens to you, here is your response, “We appreciate you desire to work with us. We would love to work with you and are confident we can produce great results together. As for exclusivity in your industry, it is certainly something we could consider. However, it will require an ongoing monthly retainer and a formal ‘Agency on Record’ agreement. We would need to price that retainer sufficient enough to cover the opportunity cost of not working with any other clients in your industry. Additionally, in this situation, we would ask that you sign an agreement that you won’t work with any other agencies, making us your exclusive agency. If that type of structure might suit you, we could explore how we might price that in a way that makes sense for both of our companies. What are your thoughts on this?”

This response is formal and thorough. If they want you to be exclusive to them, they should pay for the potential loss of income you might have by landing other clients in their industry.

Additionally, it is not out of line for you to ask them to return the favor and agree to only work with you exclusively for their creative services. “What’s good for the goose is good for the gander,” or so they saying goes.

Smart clients will understand your point and most clients won’t agree to those types of terms.

How to Price an Agency on Record Retainer

What if the client says, “Ok, that sounds great. How much will it be?” Here are some considerations when pricing an Agency on Record retainer.

First, how much money will the client be spending with you each month/year? You’ll need a commitment from the client for future work. If the client doesn’t hit that number, then you agreement should allow you to pursue other clients in their industry. In this case, let’s say that the client agrees to spending $10,000 per month with your agency ($120,000 over the course of a year).

Second, how many legitimate competitors are their in their industry? You might ask them who they consider their foremost competitors. Most clients will name 3-5. Let’s say the client gives you four competitor’s names. It is safe to assume that IF you landed all four of those competitors at the same financial outlay as your client it would be $40,000 per month ($480,000 per year).

Let’s cut that number in half due to the unlikely scenario that you land all four of their top competitors. This will leave us with $20,000 per month. That is the number I would propose to sign an exclusive agreement with a client. It is a mathematical and logical approach to pricing an exclusive agreement.

And that is just the starting number. When in doubt, go higher, not lower. The last thing you want is to have your growth inhibited by signing a low cost exclusive deal with a specific client.

It Is Expensive to Buy Your Future Potential Earnings

As I stated before, most clients won’t want to enter into an agreement like this and most clients can’t afford it.

It should be expensive to purchase your future ability to grow your business by finding clients in the same industry as your current clients. After all, so much of your growth will come from building relationships with people who work inside of a specific industry.

Don’t price it too low and don’t budge on the mutual exclusivity. Fair is fair.

Michael Janda

I am Michael Janda, an executive level creative leader with more than 25 years of experience in both in-house creative departments and agencies working with some of the greatest brands in the world including Disney, Google, Fox, ABC and NBC. I create books, courses, workshops, lectures and other training materials to help creative entrepreneurs run successful businesses.