The two big questions that ad agencies are asking: "How do we price new media and what type of services should we offer?"
Â A great resource to help find answers to those two questions is found in a recent released publication released by the American Association of Advertising Agencies (AAAA):Â Â "Understanding the Economics of Digital Compared to Traditional Advertising and Media Services," written by Joe Burton, COO of McCann Worldwide agency.
Mr. Burton explains,Â
"Our industry is facing the its most significant change since the invention of TV - the migration to Digital.Digital is unlike any other medium and should not be viewed using traditional benchmarks. The high-volume, low-dollar, high-complexity nature of Digital programs makes it the most labor intensive medium in the advertising industry
... Â these issues require resources and drive a cost of providing basic Digital services that is directionally double that of traditional full service agency fees, when expressed per dollar of the media spend."
Joe explores the key drivers that contribute to the higher costs of Digital advertising and media agency services when compared to traditional marketing services and he stipulates that "these issues require resources and drive a cost of providing basic Digital services which is directionally double that of traditional "full service" agency fees, when expressed per dollar of media spend."
There are small-to midsize ad agencies that are currently generating new business and income Â through new media.Â Â Here are a few similarities among agencies that are having success that may be of help:
- Agency principals are well versed in new media and are actively writing and speaking about it.
- Agency staff are also participating in new media and are conversant.Â
- Agencies are offering new media workshops, seminars and luncheons.
- They are "confidently" leading discussions about new media with prospective clients.Â
- Agencies can demonstrate their own participation in new media which is powerfully effective.
- Proposals are most often based on scope of work, a flat monthly retainer based upon an annual agreement usually at a blended agency rate of $125 per hour.
- Most that I am aware of are basing the pricing of a proposal on scope of work, usually estimating agency time at a blended rate of $125 per hour. Â Proposals are for a monthly retainer based upon an annual agreement.Â
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