Display Ad Agencies 2.0

How to consciously refuse a high closed fees to earn no less, and be able to expand.

The newage. agency works with open fees. In this article, co-founder of the agency Alexei Lyah will tell you how we switched to this format, earned no less, and at the same time got the opportunity to expand.

How do advertising agencies in Eastern Europe earn?

In media advertising, the main part of the income lies in the price difference. You bought cheaper, sold more expensive and try to find a balance so that the price suits the client and you can earn. Most often, at the first contact, the client is shown the minimum cost at the expense of profit, and over time it is gradually increased.

What does this mean:

  • the quality of advertising placement suffers;
  • the total cost for the client increases;
  • hidden schemes develop, market opacity.

Alternative — open fees

Until a certain point, we worked the same way as everyone else. Although you tried to adhere to morality, the temptation is still great, and you begin to find excuses. This has bothered me and the newage. team for years. As a result, we offered clients a fully open fees. With such a scheme of interaction, we are interested in obtaining favorable conditions for the client and placing him an effective advertising campaign. This is how it works.

  1. We, as experts, help the client to agree on the terms of advertising placement. Often, joint work with the client allows us to agree on the most favorable conditions that we ourselves would not have received for the agency.
  2. We are motivated to work efficiently and strengthen channels not where we earn more, but those that really work better.
  3. We agree on a fee for all services, and the client understands what and when he pays. If some of our services are irrelevant to him in this campaign, he does not pay for them, and we do not do extra work.

This approach makes it easier to work with auction and programmatic systems, which in general develops the market, as it allows demand to determine the price. In addition, this motivates us to grow expertise in order to compete in the market with the quality of services. And in general, open fees drive and improve the industry, without muddy schemes, kickbacks and other rubbish.

As a result, open fees allow you to make advertising campaigns of better quality, while the parties are more motivated to work! Which in general is the main goal.

How to measure the quality of placement with an open fee

For most of the clients, we have refused the closed fee. At the same time, it is worth recognizing that our open fee is not at all small, and clients initially perceived this ambiguously. But when we showed the results of the work, questions often disappeared.

At some point, we realized that in order to work effectively, we must work twice as hard. And the increase in the volume of work required an increase in the fee. Therefore, we devoted the whole of 2017 to optimizing our actions, automated and templated a lot of processes. This allowed the same team to do more and keep the fee for clients at the set level.

Now the newage team is investing as much as possible in improving the quality of media campaigns. We have developed a Comprehensive Analysis methodology that allows you to comprehensively evaluate the effectiveness of advertising.

What we did during the transition to open fees

We have taken a number of steps to increase efficiency and not increase fees for clients.

  1. Processes were automated and templated as much as possible. For example, we developed a dashboard that displays most of the processes in the agency.
  2. Introduced checklists for most processes. Acceleration and automation increased the chance of error, and they are unacceptable.
  3. We coordinated with clients what kind of work is needed and useful specifically in this campaign, so as not to do too much.
  4. Prepared clients and contractors for the transition to the new scheme.

Hard, but necessary work, on which we pored over in 2017 and which is now bearing fruit; it allowed us to do more and better with the same team! It is important that we began to receive more data that helped to improve client campaigns.

How we automated and templated our approach

To streamline processes, we re-examined all of the team’s processes and minimized the duplication of work. Then we restarted and merged the ecosystem of working files:

  • media plan,
  • documentation
  • bookings,
  • performance report.

As a result, our media plan has become the basis and with the click of a button you can make reservations for sites, prepare a report file, a file for preparing click links and pixels for each site, and much more.

Затем мы глобально усовершенствовали отчет по рекламной кампании. Сейчас наши специалисты собирают отчет по кампании за 15-20 минут, так как все максимально шаблонизировано или тянется по API. 

We also worked with PBR (Post Buy Report). We have always had and still have large and complete PBRs for the client. The main part is taken from the prepared places in the report, as a result, 20-30% are the conclusions themselves and the analyzes are done by hand.

Conclusion: what did the transition to open fees for clients give us

It is important that this approach to pricing, although it significantly reduced our fees percentage, significantly increased our volumes, and added customer confidence. Thus, increasing the size of customers and their number. Today we work with more than 5 advertisers from the TOP 30 advertisers in Ukraine. With a total number of more than 20 clients from different categories and lines of business.

Moreover, we understand that this scheme is not completely ideal, and we are always ready for a dialogue with the client, we are ready to transform, and most importantly, we are ready to be effective! We understand that fee is not always relevant to the work and time that the agency spends on a particular campaign (that’s why we are always in dialogue with the client), now we are developing various cooperation options together with clients:

  • project work, when we clearly announce the cost of our services for the complex of works that we will do;
  • hourly sale of services (as in IT), but unfortunately, this is still a difficult scheme for us, since it is difficult to calculate and evaluate resources in advance.

In any case, we are moving in a direction that is beneficial to the client and allows the agency to earn money and improve its work.

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