The advertising business is an eternal companion of trade. And, as soon as the trade exists and does not think of dying, it will always need an advertiser. Especially the one who knows how to come up with new and effective moves.
The market is growing. It grows at a rate of over 30% per year. Both experts and advertisers themselves note that the growth rate of the goods market outstrips the growth rate of the advertising market.
Where to start
The amount of required investments is $ 60 thousand.
Payback period is 6-12 months.
In order to create a small advertising agency, you do not need big expenses.
A mini-agency can be placed in your residential apartment, which will not prevent the company from providing a full cycle of advertising services – (full-service). The full cycle of advertising services includes:
- creative,
- production,
- accommodation.
The agency will consist of two full-time employees, including the director. And there is nothing to be ashamed of, that is, this information should not be hidden even from the client. )
All specialists: a designer working on his computer, and a printing house are outside the company.
Your clients are small businesses. It can be different trading companies, beauty salons and fitness clubs, Internet providers …
Standard order – development of corporate identity, production of representative materials and souvenirs, creation of websites. “Focus on original souvenirs, as well as advertising services on local cable television.
How does business influence advertising?
As a rule, when an advertiser becomes larger, it “cheats” on its “small” partner and moves from a small agency to a larger one. We conclude that the agency’s earnings are directly proportional to its scale. A small structure remains small, earning little money per month. Remember: growing by increasing the number of small orders is almost unrealistic.
With the growth of the client base, the staff should also grow, because with a large number of freelancers, the company loses control. Regular employees need to pay monthly salaries, provide jobs, office equipment. This makes the business, which exists due to orders from small firms, unprofitable. Today, about 90% of small agencies keep afloat only due to the fact that they do not actually pay taxes.
How to turn from a small fish into a big shark
and get customers who can earn tens of thousands of dollars?
The very first and most important thing: the agency needs ready-made specialists. What do we mean by a ready-made specialist? This is, of course, a person with experience. But what kind of experience are we talking about? Of course, you understand that experience in this business cannot mean only the ability to draw and invent. Experience, in this case, is the ability to establish personal contacts and beg discounts from advertising space owners and contractors. And don’t laugh. According to authoritative experts, you should not even meddle in this type of business if you do not have access to the opportunity to place an ad in the media with a 15-30% discount. Or, if you are not able to negotiate with the printing house about 10-25% discounts. Placement and production of advertising is about 70% of the earnings of agencies. The rest is creative. Don’t count on it too much. incompetent photographers, designers and copywriters will not earn you the remaining 30%. Creatives are not capable of effective solutions.
Consumer behavior is unpredictable. The battle of the advertiser for their condescending smile or calf’s delight is reminiscent of the efforts of Ivan the Fool to make Princess Nesmeyana laugh or trying to win the game “Guess what’s in my pocket?”. The domestic consumer is absolutely unpredictable and does not fit into Western patterns. Even in the most developed advertising market in the world – in the USA – only one creative out of six that hit the market turns out to be effective. What to expect from native aspens?
The sad fact is obvious: experienced people do not go in crowds, do not knock on the doors of your offices, offering their services for a glass of vodka and a silver nickel. Good, honest and smart people are in short supply. Good advertisers need to be lured like capricious game, using all unthinkable decoys, whistles and other hunting tricks. To lure specialists to a new, unknown agency (to convince them to take a certain risk), the rates will have to be increased by one and a half to two times.
For a designer and a copywriter, you need to get four or five managers who would attract a sufficient number of orders, supervise projects, and advertise in the media. Thus, “heads” are unlikely to cost less than $30,000. In addition, an office of 100 square meters will be required. m at $400-500 per “square” per year. Accordingly, immediately upon entering the office, it will be necessary to pay $6.6-8.2 thousand for two months of rent. At the same time, representative furniture ($5-8 thousand) and high-quality equipment ($10-15 thousand) are bought. So the office will cost about $ 30 thousand.
What can the owner of the agency get if he spends $60,000 on it in the first month? If the market is growing, and the team consists of professionals and is highly paid, earnings can range from $60,000 to $80,000 per month “dirty”. Calling more precise figures in such a matter as advertising is hardly reasonable.
How much the owner will see “clean” money depends on how far he is willing to go in the difficult task of “tax optimization”. This largely depends on how often he will have to resort to “kickbacks”, namely: to give bribes to managers of advertiser companies, which is systematically required to obtain advertising orders. Profitability can range from 10% to 30%.
At the same time, it is almost impossible to sell a small agency. This has not happened in Russia. If you decide to leave this business gracefully, then you can try to “sell” your customers. Agency, as a rule, make up 10-15% of the order value. You can, for a small fee, offer your clients to another agency, and convince the “Jews” themselves to place orders with this agency. If both of them agree, then you win.
The best thing in such a business is to develop connections – personal and business, then people will only go to you, lazily and stubbornly ignoring your (maybe more professional) competitors.