Do your homework

Dig out the Rolodex and tap colleagues for recommendations, particularly for agencies familiar with your type of business. Peruse advertising industry magazines or Web sites to research agencies who might service your or business style or size. Finally, have a budget so you know how much you can afford to spend with an agency.

I recommend: For comprehensive listings of agencies, check the AdWeek Directory or the A to Z Advertising Agencies listing at the About.com advertising portal. To read up on industry news, click on Advertising Age's Web site, adage.com or search the Yahoo! Directory for marketing and advertising trade magazines.

Perform due diligence

When contacting prospective agencies, request a portfolio, review the agency's Web site, and examine their work for other clients. Contact current and past clients and find out what they liked or didn't like about the agency's efforts.

I recommend: Read the buzz on the good, the bad, and the ugly on advertising blogs like AdAge's Small Agency Blog or The Print Advertising Blog, or consult The American Association of Advertising Agencies, the industry's largest trade organization.

Ask Detailed Questions

Does the agency work by the project, the hour, or on commission? What aspects of marketing will the agency govern? What experience does the firm have representing similar businesses? Does their prior work feel like a good fit for your business or products?

I recommend: Inc.com offers 10 great questions to ask before choosing an ad agency. AllBusiness.com also offers helpful insights into choosing the best agency for your business.