Basic print advertising-oriented agency business. In this simple agency business, you’ll provide local businesses a resource to create ads and submit them to newspapers and magazines. You may also design and print brochures, catalogs and similar printed materials.
Here’s what you’ll need to know:
Some basic advertising knowledge is necessary. By this I mean, you should have a general understanding of how advertising is used by businesses to sell their products or services. If you don’t have a creative background, so you can design ads for your customers, search the Yellow Pages in your local phonebook for Commercial Artists or Freelance Artists or search the Internet. Aligning yourself with these resources is mandatory in order to produce ads for your clients.
You’ll also need copyrighting sources that you can find the same way you find artists. Of course if you have the ability to write your own copy and design your own ads…that’s a big advantage.
How you make money:
In this simple ad agency business, your profit comes from two sources: When you create ads, brochures, catalogs or any printed materials you will get paid for your creativity and the production of the materials. Most agencies quote flat project prices to clients based on their estimate of the number of creative/production hours needed. Depending on your skills and local rates for creative services, you can expect to be paid between $35 – $200 per hour.
When you place ads in newspapers and magazines for clients, you will earn the standard 15% ad agency commission on each ad each time it runs. Publications have two ad rates: Retail and Ad Agency. If your client placed their own ads they would pay the Retail Ad Rate, while recognized agencies pay the Ad Agency rate that is 15% off the Retail rate. If you graduate to a larger ad agency and can offer clients TV and Radio commercials as well as Internet advertising services, then your production profits and commissions grow considerably.
The one thing to understand about running an ad agency is that those commissions you earn from placing advertising for clients are residual. If you create an ad that runs in every issue of a publication, you’ll earn a commission each time the ad runs – while you’re working on other projects and business development.
Are there any downsides to ad agency ownership?
Yes, just like any business you have to protect yourself from loss. The biggest risk in running an ad agency is non-payment by clients for ads running in publications. Typically, an ad agency will obligate itself for a client by purchasing ad space on the client’s behalf and when each ad has been published the agency will invoice the client to be paid. It’s important to understand that as an ad agency owner when you place ads for clients, the publication is contracting with you…not your client, so you are responsible to pay the media bills. If a client doesn’t pay you, for whatever reason, the publication will still expect you to pay the media bill. I made sure my agency would not be in that financial position by requiring advance payment on ads to be published. I lost a few clients with that policy, but that later turned out to be a smart move because they went out of business and left another agency to pay their media bills.
The only other downside to this business is long workweeks. Sometimes in order to meet ad deadlines it will be necessary to put in late-night hours and even work weekends and holidays. However, hard work is where the profit lies and you’ll eventually have the ability to take leisure time off while others are putting in their 9-5 hours at a job they don’t like.