The Death of the Conventional Advertising Agency March 2, 2010Posted by solutionsbconsultants in Accountability, Business Improvement, Increase Profitability, Marketing, Procurement.
Tags: advertising, agency, creative, photography, printing, profit, video
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Twenty years ago, while I was running a printing plant, I was told that printing on paper would be a thing of the past. Today, printing isn’t dead but successful printers have had to find their niche, take advantage of the new business fostered by e-commerce and work smart to find their competitive advantage.
I will go out on a limb and predict the end of an era – the Conventional Advertising Agency. I define the conventional agency as one that has makes its real profit on services beyond that of an innovative think-tank that takes the most mundane of products and turns them into consumer must-haves. Times have changed and no longer are agencies needed to send unneeded people to garner billable hours on photo-shoots, commercials, printing, web-site designs and other outsourced projects. The sophistication of the modern marketing director understands that a good photographer is a good photographer without regard of who hires him or her.
The idea of charging fifteen, twenty percent or more on outsourced projects is a procurement nightmare. With a cost-plus methodology, no agency is interested in competitive billing. In fact, when you are making a commission, the higher the check the better. I have audited agency billings that would make you cry and even laugh – but it’s not so funny when it is your money. The abuse in some cases is nothing short of gouging the company. And some of the agency contracts are specifically designed to remove the choice of purchasing control from your firm.
Their will always be a place for idea men and women. People who can create compelling campaigns to bring top-of-mind awareness and develop strong brands. But they should take a hint that today’s modern cost-aware companies are going to look unfavorably on those ad firms who do not first and foremost, employ a fiduciary responsibility to their clients.
Yours in Supply Chain,
Remember what the Aberdeen Group says……….
“For a typical enterprise, it takes an increase
of $5 in sales to equal the impact of
a $1 reduction in procurement costs.”
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