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Marketing & Advertising Strategies
Don't Rely On The Opinions
Of Advertising Agencies Alone
Do You Know How Ad Agencies Make Their Money? Most of it comes from the commissions they receive from advertising media when they place your ad. So let's say 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% - or in this case $1,500 - from the station for placing the ad. If the wonderful ads they wrote for you work, or if they bomb, it doesn't matter to the ad agency. They get paid just the same.
Of course if they don't work - you, on the other hand, are out of luck. In our experience, there's probably not 1 in 50 people at most ad agencies that knows how to create truly effective marketing. If they did, they wouldn't continue to churn out the senseless gibberish they do every year. Yeah, that's kind of harsh - but it's absolutely true. We think 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 all those dot-com businesses back in 1999-2000 got roped into thinking that 1 Super Bowl commercial could make them wealthy overnight? They let some 'creative' ad agency make decisions for them. It's amazing ... just look at the stats:
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"They wasted an average of $2.2 million per 30-second spot ... or about $73,333 per second. Most dot-com companies are wishing they hadn't advertised."
- USA Today (Money Section) |
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"Only 36% of the viewers polled could recall a dot-com brand. Of those more than 75% said E-Trade."
- Opinion Research Corp |
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"Marketing experts say the Super Bowl advertisers have to keep advertising if they are to take advantage of the visibility achieved in the telecast."
- Spend MORE Money! |
One Of The Large Agencies in Dallas produced a television commercial for an Internet provider that cost $120,000 to make. During the same time, a strategic partner of ours had just completed the production of four spots for one of their clients. They were both filmed using the same kind of equipment and the same kind of film. The difference was, our strategic partner had cut all four of their ads for a grand total of just $34,000. When the head of the large agency heard this he just about had a heart attack and insisted that the 4 spots must have been filmed on someone's personal camcorder. Real TV commercials cost way more than $8,500 each to make? C'mon ... No they don't. Some agencies are so proud of themselves - they think they're Steven Spielberg with multi-million dollar budgets. Remember, the more money they charge you, the more they make. And it's just not necessary. BE CAREFUL.
Same Money, Better Results
Remember This Always: Advertising and marketing is the lifeblood of your business. Do not treat it lightly. Do not hand it off to someone who's more concerned about his or her ego than your bottomline. Your advertising and marketing has 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. Now, 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.
Commissions Vs. Results
For Example: A company that sends about 250,000 pieces of mail a month is going to pay over $100,000 a month to send them out. They used to pull about a .45% response rate ... or in other words, 45 out of 10,000 people would respond. Through effective marketing, that that average climbed 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: Your ability to make money hinges on your ability to advertise and market your business in an effective way. Please, please don't leave such important decisions to some 'creative' 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.
Pretty strange advice coming from an marketing agency, isn't it. But our job isn't to sell you something so we can collect a fat commission. It's to sell you on doing your advertising in an intelligent, well thought out manner.
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