Why Do Digital Agencies Have Setup Fees for Online Ads?
July 21st, 2017 by
We often get the question from prospective clients of why we have setup costs for our online advertising programs. They ask this question because some of the companies that they speak with either don’t seem to have setup costs or don’t communicate a setup cost as such. Even those who say they don’t have setup fees have some costs associated with building campaigns, but the extent to which they are or are not thinking strategically on behalf of their customers is a big factor in whether or not they will indeed charge for it.
How Can a Media Company Not Charge a Setup Fee?
Often, media companies choose not to charge setup costs. Sometimes this is because they use a third party that automates the process for them, eliminating some of the complexity and control of digital media buying.
In other cases, a media company (TV, Radio, Newspaper or Cable outlet) may choose not to charge a setup cost because the difference between what they’re spending on advertising and what you’re paying is sufficient—they know they will make up whatever their actual costs are in a very short period. In other words, they may be keeping excessively high margins for what is, in essence, a commodity.
The challenges of these perspectives are not very different
In short, the advertiser—the merchant, the customer, the office—who is buying advertising services or other digital offerings doesn’t realize that in order to have those setup costs, the actual money spent on advertising has to, by definition, be lower. And, if the amount spent on advertising is lower, unless there are significant efficiencies in automation—which there seldom are—one will have a less effective advertising program.
So, there really is no such thing as a “free lunch”
When deciding how to advertise online, the most important thing to consider is whether or not your ads are going to be seen by your targeted prospects. With less money to spend on advertising, you have a choice of either targeting less precisely or displaying fewer ad impressions over time. With those two options, it’s easy to see how your campaign is less effective when a greater amount of the dollars are going to fat margins rather than the management of the campaign.
Automation can be good
In fact, we use automation to assure we don’t overspend and to do some interesting things like changing ads in the case of weather changes and special circumstances. But, there’s a dark side as well. For all the good automation does, it can also lead to irrelevant traffic, i.e. people who will never become customers but are still targeted by the automated ad buys. And, if not managed well, automation can lead to overspending the budget.
To allow automation to work efficiently, the companies that use automated platforms for management of online advertising must, in the main, set and forget the campaigns. They are hopeful they will be able to deliver results through automation, not through active management.
How Is Search Influence Different?
We typically don’t think of ourselves as competition to traditional media companies who’ve decided to launch a digital agency arm. When we think of competitors, it’s typically the traditional agencies— traditional marketing agencies and pure-play digital marketing agencies. The reason that we identify these as the potential competitors is that within their advertising programs, there’s typically a focus placed on strategy.
Strategy requires people. Digital and traditional agencies have grown over time based on the expertise of their team members. They are therefore able to deliver strategic plans rather than just automated processes. We have the people in place to deliver. Every one of our online advertising team members goes through a rigorous training process and must be certified in multiple areas of expertise before they get to own campaigns.
As traditional media companies have come to realize that people are buying much less television, radio, newspaper, and Yellow Pages advertising, they need a replacement product. They have seen the value of digital advertising as an item of sale. As an item of sale, it’s not something in which they have invested significant strategic knowledge and development. The agencies with whom Search Influence competes have invested in at least some strategic development in their teams, whether it be through continuing education, certification, or years of experience.
We are always looking for ways to optimize the potential of our clients and our team members, and that’s why we review automation systems with some frequency. We have yet to find one that delivers the results we can achieve with our human intervention. Of those we’ve tested, they may hit target budgets and costs per click (CPC), but they don’t deliver the same results. Again, what we’re after is not just traffic, not just customers, but the right traffic and the right customers. That said, we’ll always keep looking and exploring.
As such, while we often find ourselves selling against traditional media “agencies,” we do not think that, when it comes to digital, they represent real competition or the value we know we can deliver.
How Search Influence Helps Digital Advertising Clients
Our core purpose at Search Influence is to Optimize Potential.
So before anything, we engage in a thorough review of your existing assets, both digital and traditional analog media. We also engage in an equally comprehensive business review to assure we understand your goals for your possible future campaigns. This way, we can strategically map all of the relevant information to an effective digital campaign to deliver the best results.
When thinking about what goes into the business decisions around advertising, we know that it’s much more than clicks or even calls. It’s about the right click and the right call at the right time. The goal is to deliver that refined prospect to your business with the expectation that they will move from prospect to customer. Before we spend one dollar on Google or Facebook, we will have investigated all of the facets of your needs and how they might impact our execution of your campaign.
Why You Should Care How About How We Get It Done
You may think to yourself, “It doesn’t really matter how it gets done, as long as I get more traffic to my website, more calls, and more inquiries coming through.” The unfortunate truth is this: the wrong kind of contacts can cost you time and money.
As the Pareto Principle implies, 20% of the prospects who might get in touch with you are going to be responsible for 80% of the business you will ultimately do.
If you could tailor your marketing and advertising so that you only spoke to the 20% of customers who were going to drive the greatest value to your business, wouldn’t you have a much more successful business? Wouldn’t your team be more engaged if they knew that each client engagement, or patient interaction, was putting them with the right customers?
We know it’s a lot of work to get this right, and only when you work with a strategic partner can you have an expectation that you will get what you need as early in the process as possible. When we work with clients, whether they’re spending $1,000 or $100,000, we work strategically to assure them we’re delivering the greatest value possible for their advertising dollars.
Wouldn’t you rather spend your money on the most valuable customers? We think you should, and that’s why we believe that we are not competing with the mass-market automated systems that don’t deliver the kind of value you need. With a fundamental understanding of technology-enabled marketing and the expertise and know-how to back it up, we can be true partners to our clients regardless of their budget.
If you’d like to learn more about the why and the how, we’d love to hear from you. Please fill out our contact form or give us a call. We’ll be glad to review your current situation and come up with some strategic recommendations.