The End of Traditional Ad Billing

Ian Lurie Aug 10 2005

Most traditional advertising agencies bill their clients for a percentage of total advertising buys. So if you hire an agency and they buy, say, $100,000 worth of television time, you’ll pay them about $10,000.

What’s their incentive? To buy more advertising, and do cool, creative stuff that wins awards. They have very little incentive to take a long, hard look at whether a specific asset in a particular medium generates any real return for your business.

Even worse, some pay per click and online marketing firms have taken this model into the Internet world. They charge clients a percentage of their total spend, or a fee-per-keyword. So the more they spend for you/the more keywords they use, the more money they make. Where’s the incentive to generate real value?

future and past sign

It doesn’t have to be this way any more. Internet marketing is completely measurable – see my previous article about this – and therefore ROI driven.

You can even track the effectiveness of ads in other media. Here’s an example:

I pay for a television ad. I then set up a special offer code – when folks see the commercial, they can go to my site and enter to offer code to get a special deal. Voila – I know every sale generated by the commercial.

Or, I can set up a slightly different web address – say, – and send people there, and use a 301 redirect to reroute them. Then I track traffic to that site and at least know whether anyone’s responding to my ad.

Next time you sit down with your marketing agency, ask them how they’re measuring ROI, and give them the above examples. Demand accountability.

tags : conversation marketing