Why Companies are Firing Their Advertising Agencies

Why Companies are Firing Their Advertising Agencies

Author: Henrico Hanekom – Neuro-Marketer – © 2018

A new 0% commission model is transpiring.

Wondering if your company should be hiring an ad agency or getting rid of the one you have?

A rapidly changing advertising and communication landscape is demanding more from ad agencies than what the outdated commission-based model has to offer.

As opposed to publishing adverts to advert-blind audiences, brands realise that they should magnetise their offerings with emotion, personal values and a social cause. This will attract their ideal audience like a strong magnet rather than trying to force behaviour through advertising.

As a Neuro-marketer and marketing consultant I picked up on this interesting trend among corporate clients: They are firing their advertising agencies!

There are a few factors that contribute to this phenomenon:

1.      The advertising landscape has changed

First of all, do you realise that people are blind to adverts? They don’t see the regular adverts being published. Not even digital advertising guarantees you success. Consumers get content on demand and platforms are designed to create enjoyable user experiences. So while these platforms are handy to reach your audience, you face two specific challenges:

  • Because the digital communication landscape is very noisy, people are overwhelmed with the amount of information they receive. This is also the reason they are blind to adverts.
  • To limit their frustration with being overwhelmed with information, users install features such as ad blockers and don’t give their time & attention to adverts.

Therefore, even if your ads are noticed, they’re not enough to convince consumers of your worth anymore. As part of the new communication landscape, social media feedback is vital. What is said about you is much more important in terms of your public image than what you try to say about yourself. Now advertisers don’t have the luxury of saying just what they want, expecting everyone to believe them.

We switched from the traditional advertising era to a new one because we must look at advertising and marketing in a whole different way.

2.      The business model is flawed

Consider the traditional business model for buying media…Typically, the ad agency earns a percentage of client ad spend.

This remuneration model is flawed because the ad agency doesn’t have any incentive to be more cost effective on behalf of its client. Quite possibly, the ad agency may have an agenda to spend the money where it would get the most commission kickback. Therefore they spend as much as possible on channels that may not be truly beneficial for you, the client.

Companies now question this old model of doing and no longer see value in it…they ask “Is there not a better way to go about this?”

3.      The ‘In-sourcing’ crisis.

The above mentioned scenario leaves the company that depends on good advertising stuck between a rock and a hard place. Where to go with their advertising money? Where to find expertise and service?

CEOs, Sales Directors and Marketing Managers are forced to “in-source” advertising activities because:

  1. Ad agencies no longer offer relevant value as described above and
  2. The employment mandate in South-Africa necessitates internal skills development.

Due to this, once a company has fired their advertising agency they have somewhat of a crisis to deal with: The Company lacks the up to date expertise and man power to execute the required advertising campaigns. Now what!? This situation has given rise to the 0% commission model…

Dawn of the 0% commission model

Through working with various clients in addressing their greatest marketing and advertising challenges it’s evident to me (Henrico Hanekom) that a new way of going about advertising is necessary. We call this new way of doing the “0% commission advertising model”.

Together with Megaphone Media, we developed an innovative model to address this challenge. Our 0% commision model is simple –we don’t charge a commission on ad spend. It’s transparent and centres around creating maximum value for you as the client!

Our clients love this model because:

  • They can show real savings to their financial directors
  • They can still work hands on and learn the skills side by side with our experts

As a result our clients now have the internal control of their campaigns without becoming inundated with the amount of work they have to do to replace an ad agency. The end result is very effective advertising at a much lower cost with the bonus of building skills in-house.

Author: Henrico Hanekom – Neuro-Marketer – © 2018

Henrico Hanekom is a Neuro-Marketer who empowers leaders in business to better influence their target audience so that they can reach more people with their message and generate more revenue. http://www.megaphonemedia.co.za