Thoughts on Online Advertising Agency Today

I have been doing online marketing on my own for the past 3 years since i left my last sales job at a advertising agency. The reason why i left is because i felt there was something wrong with the current agency model.

Current advertising agency model:

The current model of business that most agencies run on today is

  1. Agency acts as middle man between you and Google/Yahoo to run your campaign.
  2. Agency collects a fee that is either a % of your advertisement spend or a flat monthly fee.
  3. Agency runs campaign and gives you monthly report.

Now why am i against this?

The reason i am against such a model is simple. Say you spend 2k per month on Google. Most agency charges a maximum of 30%. Simple math, you are paying $600 a month to the agency bringing advertisement expenditure to 2.6k per month.

Yes spending 2.6k may seem a lot (maybe a little to some) but the key point to focus on is exactly how much the agency earns which is $600 a month.

$600 a month of earning

Now being a business owner yourself, i think we should ask a simple question. Just what kind of work do you expect to get by paying $600 per month?

  1. The agency has to pay the sales person (a basic + comm of maybe 4-10%?).
  2. The agency has to pay the admin staff
  3. The agency has to pay the campaign manager
  4. The agency has to pay their overheads and most importantly,
  5. The agency has to pay their owners!

Now think about how your $600 pay all this people and ask yourself if you are the agency what would you give your customer?

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