When advertising, you have two choices: Either you can prepare and pay retail for the advertising yourself or you can hire an advertising agency to do it for you. When you hire an agency, they buy your ad time and receive, automatically, a discounted rate from the media source, called the “agency rate.” Typically, the agency discount is 15%.The question then becomes, can you get those same savings, too? The answer is yes. If you create your own “in-house” ad agency, you can get the reduced agency rate. This is a strategy used by many large mail-order businesses as well as other companies who spend a substantial amount of money on advertising.
If you too advertise a lot, enough that saving 15% will make a significant difference, then you should consider starting your own in-house ad agency.
Here is how it works: When you buy your own advertising, you pay retail for the most part. But if you start a subdivision of your business, a subdivision that is an in-house ad agency, and you have that agency buy your advertising, and that agency, your agency, will receive that 15% discount. Nice, eh?
Photo by anniebee.
tj on June 24th, 2006 at 7:19 am
Not quite right, yes an in house agency will recieve the “15%” discount, but it will normally be a 15% off retail. Most agencies worth their salt see much deeper discounts than that, even up to 60% based on volume spending, consistency and relationships… Therefore, it is not always a great idea to go “in-house”