Sales/Marketing
How To Decide Whether To Place Ads Yourself Or Use An Agency
By By Rich Harshaw, CEO, Y2Marketing
May 21, 2008 - 6:20:00 PM

You may be wondering whether it's better to place your advertisements yourself or if you should even consider using an agency. That's a good question and one that doesn't necessarily have an easy answer. It depends on the needs of your company and what you're trying to accomplish. So for you to decide, let's use the good old Benjamin Franklin method. Remember the Ben Franklin method? That's where you get out a blank piece of paper and draw a line down the middle and write "FOR" on the left side and "AGAINST" on the right side, then simply list out the reasons FOR and AGAINST. In this case, we'll list all the reasons FOR using an ad agency, and all the reasons AGAINST using an ad agency. Whichever side ends up with the most points - FOR or AGAINST - wins. So let's do that to decide if you should use an agency or not.

First, let's start with the reasons AGAINST using an agency. Here are some reasons you might NOT want to use an agency and opt to do it yourself instead. Got your piece of paper out with a line drawn down the middle yet? Okay, let's go. Reason number one in the AGAINST column is cost. It costs you a certain percentage of your advertising budget to use an ad agency. For print and broadcast media, that percentage is usually 15%. If you spend $10,000 on a radio campaign, the radio stations will bill the agency just $8,500, and the agency keeps the balance of $1,500. It's their commission. Now that's not a bad thing necessarily. I'm just telling you that it's money that in some cases you may be able to keep for yourself.

Here's what I mean: If you call the radio stations directly and tell them that you'd like to spend the $10,000, they're most likely going to charge you the full $10,000, not just $8,500 like the agency. That's because the 15% commission is reserved for advertising agencies only. It's designed to keep you, as an individual advertiser, from getting a discount on your advertising. And it's usually pretty effective. But you can get around it. Here's how: Set up your own advertising agency. That's right, set up a different company with a different name and a different phone number. Guess what? That's all it takes to become an ad agency - a name and a phone number. It's not like becoming a doctor. You couldn't just rent out some doctor's office somewhere, buy a stethoscope, and call yourself a doctor. The only patients you'd be looking at would be in jail. But for ad agencies, it's not quite so strict. A name and a phone number is all that's required. You don't even have to have another office. Or an advertising degree. Or a certification from the American Association of Advertising Agencies. Just a name and a phone number and - BOOM - you're in business.

This allows you to buy your advertising at the discounted rate. Depending on the quantity of ads you place - and depending on your proficiency as an advertising guru - this could mean a substantial savings for you. So it's worth mentioning here and it's worth exploring. Heck, if nothing else - if you get nothing out of this article - go set up an advertising agency, do everything else exactly like you're doing right now, and save 15% on all your ads. That would be worth the time it takes to read these tips.

But before you get too excited about this 15% windfall, remember that we're only talking about the reasons AGAINST using an agency right now. And reason number one AGAINST using an agency is that you don't get to keep the 15% - the agency does. So, write underneath the AGAINST column of your piece of paper, 'Give Up 15% To The Agency.' So why else would you not want to use an agency? The only other valid reason I can think of is that the agency MAY not be competent. They might be very proficient at making pictures that look pretty and possibly win awards, but they might not actually know how to make money for you. That's a tough call and it's going to require that you have the right questions to ask to screen them. Which, fortunately, is what we're about to talk about - how to evaluate an agency.

Okay, let's talk about some of the reasons FOR using an ad agency. For starters, there's a lot of specialized knowledge that goes into making a good advertising buy. Just because you have to be certified to be a doctor but not to become an ad agency doesn't mean that you don't have to know anything to be an effective ad agency. There are a lot of things to understand. Now the purpose of this program is to help you understand as many of those things as possible, but don't assume that after reading these tips for advertising that you'll be an authority on the subject. Good advertising agencies usually have people who are experienced at knowing each of the different kinds of media, and how and when to most effectively buy each of them. They have experience that says, "You know, I don't think newspaper would be such a good idea for this particular product, but maybe direct mail would be." They have people who know how to negotiate the best rates and buy for the maximum effectiveness. In short, they really understand advertising.

That might sound a little generous based on what I said earlier in this program about knuckleheaded ad agencies. But let's make a distinction right here. The ad agency has two specific - and different - functions, generally speaking. The first one is creating ads; the second one is buying ad space or what's known as media buying. Media buying is a pretty big study. You need to get enough of an education that you can talk intelligently with an ad sales rep or an ad agency. But for you to learn everything you need to know might not be worth your while. Let me summarize: a working knowledge of media buying will be adequate for most people.

But when it comes to the creating the content of the advertisements, this is where you've really got to know your stuff. You don't have to be able to necessarily create your ads, but you do have to be able to look at what's been created and objectively critique it. Here's why. Ad agencies are notorious for creating bad stuff. Stuff that looks good, but doesn't sell. Stuff that impresses artists, but doesn't impress buyers. Stuff that emulates level 2 business advertising, but doesn't invoke any kind of response to action. See, that's a problem. And the bottom line is if the content of your ad is bad, it's going to ruin your chances for advertising success.

Okay, so that's FOR #1 - there's a lot of specialized knowledge that goes into placing advertising. Specialized knowledge that you may not possess. That leads us nicely to FOR #2. Remember that 15% we said you could save if you start your own ad agency? That was the good news. The bad news is that if the ad agency that you would otherwise deal with is any good at all, they can more than make up for the 15% that they earn as a commission. Think about it. If the ad agency commission is 15%, then they've only got to be 15% more effective than you are at buying the space to make it profitable. Just 15%. Let's say that you're an auto mechanic and you charge $50 an hour to work on my car. In an effort to save money, I decide that I'd rather do it myself. Of course, I don't know 1/100th what you know about fixing cars, but I go ahead and give it a go. Is my savings - not paying you the $50 an hour - really a savings? Of course not. The same could be true for that 15% you're trying to save. It could actually be costing you money.

I'll give you a few examples from my own archives. Let me tell you about one client in particular who we buy a lot of media for. We buy radio and fax broadcasting and direct mail. But they buy their own newspaper ads. Why? Because when we first hooked up with them, they were buying newspaper already and had taken the time to set up an ad agency like we just discussed. The newspapers didn't know that it wasn't a 'real' ad agency, so they got the 15% discount on all the ads they placed. And that was fine. Then when they hired us and we introduced other forms of advertising to them, they let us handle it. They correctly assumed that we knew more about radio than they knew and more about fax broadcasting than they did. But when it came to newspaper, they just hung on tightly to doing it themselves. They figured they knew how to do it and would go ahead and save the 15%.

Then we ran into a few problems. We were implementing a multi-media blitz in one particular city that had two major daily newspapers. I happened to live in that city for six years and I was very familiar with which paper was the most popular. Guess which paper the client bought an ad from with their own agency? That's right! The other paper that was less popular. When I brought this to their attention, they said that the advertising salesperson had said that nobody read that other paper and that they should buy the one they bought. Remember the evaluation questions for advertising salespeople! Bad-mouthing the other paper should have thrown up a red flag. So in the final analysis, what should they have bought? Answer: All of the empirical research and common sense information demanded that we buy both papers. The cost per column inch was low enough for both papers that the budget could have easily handled it. That way they would be sure to get maximum coverage. So in this case, the 15% savings cost them making the best media buy possible. Be careful!

So by way of review, FOR #1 of doing your advertising yourself is that there is a lot of specialized knowledge that you may not possess. FOR #2 is that the 15% you save may actually cost you money. FOR #3 then is that placing advertising can be extremely time consuming, especially if you do very much of it. It's easy for a business owner to get faked out and forget that his or her time is actually worth a lot of money. But the reality is, for most businesses, is that your time is best spent working on your CORE COMPETENCY. What's your line of business? Are you an accountant? Then spend your time honing your bean counting skills. Are you in retail? Then figure out the best ways to merchandise your store and buy the correct inventory. Are you a professional? Then work on your craft. Yes, gain a working understanding of advertising. That's the whole point of this program. But no, don't spend the time that it takes to become an expert at it. Outsourcing your advertising to an agency may be a smarter move.

Here's one of the time traps that most people don't see in regards to their advertising. They may call a newspaper or a radio station and ask what the rates are. The salesperson then gives those rates or faxes over a proposal. The business owner (or fake ad agency) looks at the rates, decides what size ad to place or what kind of schedule to go with, and places the order-then smiles while thinking about the 15% he or she is saving. What they don't know is that a skilled advertising agency can in many cases negotiate either the price down or the number of spots or the size of the ad (what you get) up. We do this for our clients all the time. We never take the first proposal and just go with it. We always take the time to make a second call and a third call and hammer them for a better deal. We don't always get it, but we always know exactly what to ask for. It's called negotiation. And it's certainly worth more than the measly 15% the client could save by placing it themselves.

So back to the Ben Franklin close. You were going to make a list and write the reasons FOR using an ad agency on one side of the paper and the reasons AGAINST using one on the other side. Now if you've listened to my advice, you've most likely got more reasons FOR than you have AGAINST. In other words, you've concluded that it might not be such a good idea to place your advertising yourself. Is that true all the time? Well, not exactly. Here's when it might actually be a good idea for you to place your own advertising. If you are a small company and you don't do all that much advertising. Many agencies won't even give small-budget clients the time of day anyway. If it won't take up too much of your time and your confident in your negotiating ability, then go ahead and make up a new name and get a new phone number and start placing ads. Otherwise, you might be better off leaving it to a professional. In that case, again, you've got to have a good enough working knowledge of ad placement so that you can evaluate the job your agency is doing. And most definitely you want to have a big say in the creative design and writing of your ads based on what you've learned from the Monopolize Your Marketplace Program.



Rich Harshaw is the CEO of Dallas, Texas based Y2Marketing, a National Marketing consulting and Fulfillment Agency with over 1000 consultants that implement its unique MONOPOLIZE YOUR MARKETPLACE system. For more information, please log on to www.y2marketing.com

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