Ad Agencies Bring Video
Ad Agency & Video in Boca Raton
How ad agencies are bringing production in-house
A LITTLE HISTORY
Traditionally ad agencies would attract clients for three basic reasons. The first is their creativity, the second was their knowledge of ad placement, and their unique relationships with media platforms. Believe it or not the creative services that ad agencies provided was free! Yes, I said it, FREE! All of the creative ideas and artwork that was produced was free. So how did they make money? Back in the day, ad agencies would qualify clients by their annual media spend. They would make a 15% commission on the ad buy paid by the media outlet.
For example, if Nike spent $10,000,000 on TV ads in a given year, their ad agency would make $1,500,000 in ad commissions. Nike would buy the ad space from their agency, and the agency would buy the ad space from the media outlet for 15% less what Nike paid.
Another way agencies made money was, they marked up all outside services that were associated with third party production services. Services like, video production, printing, audio production, model talent, castings, and so on. These mark ups ranged from 35% - 100%. These fees were justified because, just having these connections was a commodity. It was not like today where you could just hire the top people in the game and turn out an amazing piece of work. You really had to know somebody.
TODAY’S AD AGENCY
As technology advanced during the computer age, it became easier and easier for people to produce ads. Local magazines and newspapers began popping up, cable tv became a standard and things started to change. These smaller venues started selling ad space directly to the business owner. They also offered production services for free; however, the quality of production was usually very poor. This started to change the nature of the ad agency.
Fast forward 30 years and here we are. Everyone has a video camera in their phone, a color printer on their desk, access to social media and the web, and trade relationships have all but disappeared. Like in the 80’s when media outlets started selling direct, the quality of the ads were very poor, just like now. Nonprofessionals creating garbage for the public to consume. For about 10 years the quality of ads has really dropped and people have become numb to the noise.
So where does this leave the ad agency? Though technology and media outlets canceled their exclusive relationships with ad agencies, the one thing they could not steal was their talent and creativity. Thousands of businesses have felt the consequences of nonprofessional work, and this work has become invisible to the public. Now ad agencies, charge a great deal for their creative ideas, production, and every aspect of the relationship. In our firm, if we are thinking about you, you are getting billed for it. Ad Agencies operate more like attorneys and less like a traditional ad agency.
Ad agencies have also learned that if they bring production in-house they can be more competitive, more profitable, and have more control over the final product. At SM Media Group it is one of our best-selling points. When we invite new clients to our studio, they are impressed and excited to work with us. This also legitimizes our status among our competitors.
Business owners and marketing directors hold security, reliability, and predictability above creativity when it comes to hiring an ad agency. This dynamic has emerged due to the number of freelancers or imposters that have flooded the industry. Many small to mid-sized businesses have been burned by this group. These companies have experienced, unreliability, substandard work, branding damage, copyright infringement, and sometimes theft. Business owners are realizing that saving a few dollars in the short term could cost many multiples of that savings in the mid and long term.
TAKING ADVANTAGE OF NEW TECHNOLOGY
Ad agencies have taken advantage of new technology, and they masterfully wield it to execute their creativity! An ad agency that includes in-house video production will usually deliver superior ads next to those that do not. Not to be confused with video production companies, ad agencies have all of the messaging, researching, market knowledge and creativity to develop a great idea where video production companies do not. This goes for all creative services.
The mistake business owners make is…if they need a website, they hire a web designer. If they need a logo, they hire a graphic artist. If they need video, they hire a video freelancer, and so on. What they need to do is hire an ad agency or marketing company that can create all the messaging, ideas, concepts, and direction for the business first. Then either the ad agency can lead on executing the creative work, or the business owner can hire freelancers to try to execute the unified vision. The point is, you need a professional to develop the ideas first.
If you are looking to advertise your business, find and ad agency that does it all in-house. You will be happy that you did.