Home || Recommendations || Blog || Contact

Don't Rely On The Opinions Of Advertising Agencies Alone

by Rich Harshaw, CEO

Marketing & Advertising - 66 Strategies: Y2M TIP 2

Do you know how advertising agencies make their money? Most of it comes from commissions they receive from advertising media when they place your ad. So let's say that they write a radio commercial for you and then turn around and buy you a $10,000 block of ads on one station. The ad agency will typically receive 15% - in this case $1,500 - from the station for placing the ad. If the wonderful ads that they wrote for you work (or if they bomb), it doesn't matter to the ad agency. They get paid just the same. On the other hand, if they don't work, you are out of luck. I'll be honest with you, there's probably not 1 person out of 50 at an ad agency that knows even 10% of what you've read. Even if you've never done a thing in advertising before today, you already have more knowledge about how to make money with advertising than most ad agency people, regardless of how long they've been in the business - just from reading this. If they did, they wouldn't continue to churn out the mindless gibberish that they do every year. That's kind of harsh, I know. You probably think I'm just saying that to make a point. But I'm telling you right now it's absolutely true. I think that it's a disservice the way most agencies treat their clients. They'll buy whatever space they can talk their client into buying, just for the sake of collecting a commission check. How do you think the Lexus dealership we talked about in an earlier issue got roped into that bad deal? They let a knuckleheaded ad agency make decisions for them.

I was talking to the head of a major agency once when the subject of television commercials came up. We had just completed the production of four spots for one of our clients and, in all modesty, I have to say that these were just about the coolest, most well thought out, well produced TV commercials I had ever seen or been involved with. They were filmed using the same equipment and same kind of film that the professional high-quality national TV commercials are filmed on. The other guy from the hotsy-totsy ad agency started telling me about this one ad they had just produced for an Internet provider...the one ad had cost over $120,000 to produce. I had seen the commercial. I thought it was so-so at best. Then I told him that my client had cut all four of these ads for a grand total of just $34,000. This ad agency guy just about had a heart attack and insisted that they must have been filmed on somebody's camcorder. Real TV commercials cost way more than $8,500 each to make. Give me a break. Some of these agencies are so proud of themselves. They think that they're Steven Spielberg with a multi-million dollar budget. My advice to you: BEWARE.

Remember this: advertising and marketing are the lifeblood of your business. Don't treat it lightly. Don't hand it off to someone who's more concerned about their ego or their personal pocketbook than your bottom line. Your advertising and marketing have the potential to impact your business - for better or for worse - more than any other aspect of your business. Think about it. Let's say you place an ad that costs $2,500. That ad is going to cost you the exact same amount of money whether it generates $100 of business, $1,000 of business, $10,000 of business or 10 times that. The investment is identical! You spend the same money for potentially vastly different results. If you can get the results up, you've just massively leveraged your ad dollars. No other part of your business offers that kind of leverage - only advertising and marketing.

We have a client that sends about 250,000 pieces of mail a month. It costs over a hundred grand a month to send that out. Before we came along, they were pulling about .45% response - meaning 45 out of 10,000 people would respond. We've gotten that average up to .71%. You might think that doesn't sound like much, but it means an extra $330,000 in their pocket every month - most of which is profit. See, that $100 grand is spent and gone no matter how many sales it generates. Understand this point loud and clear: Your ability to make money hinges on your ability to advertise and market your business in an effective way. That's why you're reading this. Please, please don't leave such important decisions to some knuckleheaded ad agency whose goals are totally different than yours. Oh sure, if you ask them, they'll tell you that they want you to make money. There's some truth to that...you're less likely to FIRE them if they make you money. But in the final analysis, they just want you to place ads in every conceivable media known to man so they can make more commissions.