The past few years have seen major changes in firm and customer communications in both business-to-consumer (B2C) and business-to-business (B2B) marketing. Among the major forces are globalisation, the need to integrate various communications forms, digital communications and a shift from almost exclusively firm-to-customer communication to communication modes that also include firm-to-customer, and also customer-to-customer.

Notwithstanding these many changes, for many companies, the choice of advertising agency remains a critical decision. In most cases the firm selects an advertising agency to create ideas that provide the firm a powerful connection with customers and devise the communications element of its marketing strategy; sometimes the advertising agency’s responsibilities extend to marketing research and also to more fundamental marketing decisions. Furthermore, in most cases, the firm does not just require an agency to be responsible for advertising; it may also be concerned with direct response, publicity, public relations, Internet communications, product sampling and other forms of interfacing with customers, and communications requirements that are increasingly international or global.

Before the firm arrives at the point of defining criteria for its choice of agency, it must make several critical strategic decisions. First, does the firm want the agency to be its general contractor, making decisions in all communication areas, or does it want to select individual agencies (best of breed) for each communications area? Secondly, assuming that the firm operates internationally or globally, does it want to select agencies for different countries/geographic regions? Or, again, does it want a single agency to deal with all of its geographic areas?

Finally, the firm must decide if it wants to be a big fish in a small pond or a small fish in a big pond. Large agencies offer multiple services in multiple geographies, but the average firm may not be that important in a large agency’s scheme of things. By contrast, if the firm selects a small agency, it may be one of that agency’s most important clients, and receive the sort of attention consistent with that position. Start-ups often select smaller agencies for this reason: In the 1970s, Federal Express selected Carl Ally, and Nike still uses Weiden+Kennedy, a relatively small agency.

Having made these crucial decisions, the firm must now face the choice of agency decision by focusing on four areas: Meet the team. When the firm invites various agencies to solicit its business, it typically meets the agency A team. Agencies put their best feet forward with their best people to show their agencies in the best possible light. But frequently, these individuals will not be the people working on the account. The firm should ensure that it meets with the team that will have the responsibility for working on its issues, and make sure that it is comfortable with these individuals, their way of working, their creative potential and how they would interface with the firm.

Agency experience. The breadth of advertising and communication programs is huge. An agency may have developed scores of programs, but does it have experience related to the firm’s communications issues? For example, if the firm’s communications challenges are in B2B, it may not want to employ an agency whose experience is largely in B2C. Or if it does a good job in the fast-moving-consumer goods industry, it may not be a good choice for consumer durables.

Understand the agency’s point of view. Most good agencies have a point of view (POV), a way of approaching communications challenges. Ted Bates’ POV was the unique selling proposition; David Ogilvy, founder of Ogilvy Worldwide, focused on engaging with the customer; Carl Ally was know as a “bomb thrower”; TBWA\Chiat\Day thinks that disruption in the marketplace is a crucial POV, and Crispin Porter looks to leverage trends in pop culture. The firm must understand the agency’s POV and make sure it is comfortable with it.

Track record. The firm may ask a set of questions about how the agency works and what its track record has been. Such questions may include: What are your most successful campaigns? What made them successful? How is the agency evolving? What are the agency’s other client relationships? How old are these relationships? What clients has the agency lost in the past? Why did these clients go elsewhere? What creative awards has the agency won? What is the management’s tenure? What experience does the agency management have?

Selecting an advertising agency is a critical firm decision, not one that the firm should take lightly. But if the firm does a careful job of asking and answering the questions we have laid out above, it is more likely to be quite content with its ultimate choice.

(Noel Capon is the R. C. Kopf Professor of International Marketing at Columbia Business School, New York. His publications are available at www.axcesscapon.com. Joseph T. Plummer is Adjunct Professor of Marketing at Columbia Business School, and former Vice Chairman at D’Arcy, and EVP at Young and Rubicon and McCann Worldgroup)