10 Things You Pay for From Traditional Marketing Agencies

In today’s business world, it’s no longer the big fish that eats the small fish; it’s the fast fish that eats the slow fish.

In the same way the information revolution has changed how customers and market share are won, it has also reshaped the old systems that once governed how companies operate and how people work. The future of business is more flexible, faster, leaner and smarter.

This is not just about adopting a telecommuting policy or forgoing the purchase of that expensive copier. It’s about changing how business is done, both in philosophy and in execution.

The penalty of clinging to old business practices is losing clients that no longer can justify bills with unneeded overhead baked into them. As leaner and smarter companies emerge, the old juggernauts who are slow to change are quickly dying.

Marketing agencies

At the top of the scale of corporate bloat are marketing and advertising agencies. While not all industries can shed their physical offices and adopt a virtual model, the dominance of digital marketing coupled with the very nature of marketing’s day-to-day business operations afford these agencies a clear-cut path to modern efficiency.

However, in reality, few have changed. The majority of marketing firms hang on to these old systems of operations, passing on the burden of their expenses to their clients.

The traditional marketing firm still maintains an expensive posture to attract its clients.Why? Most find changing their methods of operations to be just as hard as adapting to today’s Web culture and the new rules of doing business. Too much has changed too quickly. In clinging to old methods – even those of its own self-promotion – the traditional marketing firm still maintains an expensive posture to attract its clients with their lavish offices and costly travel. These companies force work into physical locations, perpetuating the punching of clocks and shuffling of paper, while carrying years of old business operations in the form of debt, all of which must ultimately be paid for by the client.

There’s a reason why marketing companies are dying left and right, beyond becoming irrelevant in the digital age. Today's clients no longer accept invoices inflated by bloated operations, particularly when virtual companies can do more at a fraction of the cost.

The rise of the virtual company

It took time for companies like Amazon, Netflix and Apple to revolutionize and overtake industries that were once based in bricks and mortar. Replacing the physical form was a challenge in reconditioning the mind of the consumer and in reshaping traditional systems, such as fulfillment, customer service and exception handling.

2010 will see the emergence of the virtual company in full force.These initial obstacles were quickly overcome as consumers realized the advantage of lower prices by way of lower overhead, mutually beneficial partnerships and geographical barriers being torn down and giving way to an expanded market. Today, that same virtual model that started strong in the retail sector is being adopted throughout all applicable industries. As a result, virtual companies are growing at record pace.

2010 will see the emergence of the virtual company in full force. The convergence of technology, communication, new service-based companies and systems that meet the demands of companies that no longer carry the burden of bloated operations will allow more companies to work smarter, faster and from anywhere.

As virtual companies continue to refine their systems and clients continue to realize the value in receiving better service for less money, the virtual company will gain strength and overtake the outmoded traditional business models. This not only improves efficiencies but tears down geographical barriers to markets and talent.

As we enter the age of the virtual company, let’s review ten things you pay for from traditional marketing agencies:

1. Facilities

Office space is typically the largest expense on the books for marketing agencies. These obligations range from rented space in a shared office park to owning (and owing for) real estate, freestanding buildings and parking facilities.

Virtual marketing companies shed this expense because the nature of the business simply doesn’t require it anymore. Marketing is digital, and print is dying. All the infrastructure that was once housed in a physical location is now replaced by a range of new digital services. Communication is conducted through e-mail, mobile devices, video conferencing and client dashboards rather than on-site meetings and client lunches, the costs of which are ultimately passed back to the client.

The marketplace demands geographic barriers be removed to hire, collaborate and partner with the best talent in the industry. The virtual company’s employees work remotely within a virtual space that accomplishes anything that a physical location provides and more. They are mobile and available at a moment’s notice to meet with clients. Even remote offices, meeting spaces and presentation rooms can be rented by the day or hour, as needed, so as not to waste money on a fixed building that sits there to house all the bloated systems and conventions the traditional marketing company clings to.

2. On-site employees and physical work systems

For many office-based companies, the days of having people gathered in a building to work is gone. For these businesses, the act of keeping people around was just another form of time card punching, rooted in old systems founded on the demand for people to be present and available to coworkers and customers from 9 to 5.

Happy employees do better work, particularly the ones responsible for great creative work.Virtual companies don’t operate according to fixed 9-to-5 schedules. Instead, their systems and employees are faster, more flexible, working within tighter deadlines and using new, more robust project management conventions.

Telecommuting is more prevalent today than ever, for reasons that go beyond avoiding the cost of expensive office space. Happy employees are ones that are not trapped in cubicles, hustling through traffic, burning 30-40 hours and hundreds of dollars a month in commuting to a fixed place to do work that can be done anywhere. The fact is, happy employees do better work, particularly the ones responsible for great creative work.

Moreover, work systems based on having everyone in a centralized office all day are terribly inefficient. To see this, you have to look beyond hard costs and expenditures and consider the man hours wasted on meetings, scheduling, water cooler talk, Web surfing – the list goes on and on.

Replacing the physical office environment are proven virtual office management and collaboration systems like Basecamp, video conferencing, cloud computing and mobile Internet connectivity. Most importantly, the philosophy behind the work is based on maximizing project development efficiencies rather than filling up a 40-hour work week simply for the sake of adhering to convention.

3. Utilities

From security systems, electricity, heating and A/C to cleaning and facility repairs, the auxiliary costs of maintaining a facility can be extraordinary. This is an expense that virtual companies leave behind and don’t pass on to their clients.

4. Landline phone systems

In an age where business is a 24-hour, anywhere and everywhere proposition, corporate phone systems are an enormous waste. Everyone has a cell phone, and most working professionals carry smartphones. For many, the superfluous office phone collects dust, and voicemail systems are rarely used. In a time when most households are shedding the costs of landlines in favor of more flexible and leaner mobile options, many businesses still lag behind.

Agencies that continue to operate from a physical facility must pay to maintain and upgrade expensive landline systems, adding yet more extraneous dollars per hour to their clients’ bills.

5. Office furnishings

Expensive offices, conference room tables, desks, chairs, bathrooms, kitchens, interior decoration and even trophy cases displaying purchased accolades are omitted from the overhead costs of all virtual companies.

6. Computing infrastructure and LANs

So many companies still keep gobs of file and printer servers along with data backup systems, server redundancies, uninterrupted power supplies, routers, switches, cabling, internal e-mail systems – the list goes on.

For virtual companies, the idea of a LAN (local area network) has been replaced by cloud computing, with Web-based service providers, project management, collaboration systems, and applications. These systems are accessible from anywhere in the world, offer true collaboration with anyone and are always backed up and protected.

What’s more, project management in the virtual space allows for new and innovative work habits that promote speed, efficiency and flexibility in ways old companies employing old work systems simply cannot keep pace with.

7. Paper

So many of the slow, dying companies we see today still live in an office with paper circulating all the time. Believe it or not, nowhere is this more true than at your local marketing agency. Also included in this paper-filled world are printers, copiers, fax machines, shredders and a never-ending variety of supplies, all in support of paper trails that lead from the office to the client and back again before ending in nicely climate-controlled filing cabinets.

Virtual companies exist in a paperless world, and the best work circles around those that stay in a paper-driven office. The benefits of going (and staying) completely digital are immense. Digital documents are searchable, sharable, versioned, more secure and viewable on nearly any device. The more files that are kept, used and cataloged in digital format, the more efficiencies will increase overall.

8. Support staff and personnel

When agencies pay for an office, furnishings, phone systems, computing infrastructure and everything in between, they also require additional personnel, time and resources to support those systems, including office managers, receptionists, IT staff, cleaning crews, landscapers and security, to name a few. Thus, these already excessive expenses are further exacerbated and passed on to the client.

9. Restricted geographical barriers

If there’s one thing the Internet has brought to the economy, it’s the expanded marketplace. The business systems of virtual companies are not only set up to take on clients without most of the additional expenses suffered by traditional companies but to hire the best talent available anywhere.

Truth is, many marketing agencies are restricted to their local markets. While these firms would in theory jump on a plane to take on a client nearly anywhere, most find in practice that only local clients are cost-effective given the traditional systems still employed.

10. Debt

The result of all of this expense in a world that is quickly shifting to leaner and smarter operations is that this much of the excess is carried forward in debt that comes at a premium paid to a bank in interest. That ongoing obligation is passed to clients along with the cost of all other inefficiencies.

Virtual companies that start fresh, using smart, lean and flexible systems of operation don’t carry years of bad investments in outmoded, expensive systems on their backs. In fact, as traditional marketing agencies continue to lose clients and market share to these more adept modern firms, the additional debt taken on to stay alive will eventually lead to the extinction of the slow, bloated traditional marketing company as we know it.

photos: Flickr: Christ0ff, chrisdlugosz

Is Your Promotion Ready for Prime Time? Seven Make-or-Break Lessons in Staging a Successful Retail Sales Event from Amazon

With the holiday season just around the corner, talk of “Black Friday” and “Cyber Monday” sales have already become practically unavoidable. These two retail sale juggernauts have become so deeply entrenched in our cultural lexicon that they actually shape consumer behavior, as eager shoppers anticipate and plan around their arrival for weeks or even months ahead of time. But what if you want to go your own way? Can you conceive of your own unique promotion that will excite consumers and jump-start spending behavior on par with Black Friday? This was the very challenge Amazon attempted to tackle this past summer with their “Prime Day” promotion. Coinciding with the company’s 20th anniversary, Prime Day was a one-day sale that was promised to include “more deals than Black Friday.” Amazon flooded the marketplace with advertising in advance of Prime Day and whipped up great excitement and speculation among customers about what types of deals might be offered. However, when Prime Day arrived and the sales rolled out, the reaction was decidedly less enthusiastic, with many underwhelmed shoppers turning to social media to express their apathy, disappointment and even downright disgust. In the end, Prime Day was not the colossal failure that the Twitterverse would have you believe. In fact, just a few hours into the day, Amazon sent out a press release claiming that “peak order rates have already surpassed 2014 Black Friday.” Moreover, “Prime members have already bought tens of thousands of Fire TV Sticks, 35,000 Lord of the Rings Blu-Ray sets, 28,000 Rubbermaid sets, and 4,000 Echo devices in 15 minutes. The Kate Spade purse was gone in less than a minute. We also sold 1,200 of the $999 TVs in less than 10 minutes. And there are thousands more deals coming.” While Prime Day may not be the next great retail phenomenon, Amazon’s venture into inventing a new sales holiday offers several valuable lessons in the do’s and don’ts of crafting a successful promotional event:

1. Build buzz around your promotion.

One thing that Amazon did right was building up excitement in advance of the event. They ran advertising for weeks leading up to Prime Day, yet they kept the specifics about the deals that would be offered under wraps, leading to great speculation among Amazon enthusiasts about the kind of fantastic steals they might be able to score. Many of these shoppers even logged on early to try to capitalize on the sale. Any successful promotion starts with hype. You must have a plan in place to build excitement and get people talking so that once it begins, you have a eager customers ready and waiting to jump on board. Of course, hype is just that. It should be the drum roll leading up to the big finish. Otherwise, it’s just an empty promise that will result in disappointed (and distrustful) customers.

2. Deliver on the expectations you’ve created.

By far, the biggest point of failure for Prime Day promotion is that many customers expected much more than Amazon ultimately delivered. The majority of the complaints about Prime Day centered around the lack of perceived value or desirability of the discounted items. Typically, during Black Friday and Cyber Monday, retailers tease deep discounts on highly desirable items (such as TVs, gaming consoles and premium brand products) to get shoppers in the door, counting on them to scoop up other items that they want to unload in the process. But on Prime Day, the best deals centered around Amazon’s own tech gadgets, like their Fire TV stick, Kindle and Echo, while many of the other products that were included, such as dishwasher detergent, socks and even a 55-gallon barrel of lube, were much less attractive and left many customers feeling underwhelmed. Furthermore, Amazon front-loaded the hottest deals at midnight PST, so by the time most customers jumped online in the morning, everything had long been sold out. While Amazon has the numbers to prove they sold tons of item during Prime Day, there’s no denying that, for many customers, they did not meet the expectations that they established in the pre-sale campaigns, leaving the retailer with a major black eye in the court of public opinion. When planning a promotion, be sure that you live up to the hype you create. If your focus is on marketing the promotion instead of on the promotion itself, then you are setting yourself up for disappointed customers.

3. Remember: bigger does not always mean better.

Looking back at Amazon’s pre-sale campaign messaging, you will notice that they refer to Prime Day as being bigger than Black Friday and having “more deals.” Nowhere could I find any mention that Prime Day would be “better” than Black Friday, just that there would be more deals offered, which is a perfect example of the old adage that “bigger does not always equal better.” Item for item, Prime Day may have indeed had more to offer than Amazon did on Black Friday, but that didn’t matter to most customers. People don’t necessarily want tons of options, they just want the right ones. When planning your own promotions, think big, but also ensure that you do not sacrifice quality for quantity. Instead of focusing on offering a wide array of deals, go the opposite direction and think about personalizing your promotion. These days, with the abundance of traffic analytics and customer account data available, it’s easy to know what your customers shop for and purchase most often. Use this information to your advantage and craft customized offers that reward your loyal shoppers with discounts on the things they really want and need. And for goodness sake, notify them ahead of time that their favorite items will be on sale! This is definitely one area where Amazon really missed the boat. After all, who has more customer data and marketing intelligence than one of the Web’s biggest retail giants?

4. Don’t try to please everyone.

The fact that we are talking about all the complaints that people had about Prime Day is interesting in and of itself. After all, this is a sale we’re talking about! People are actually upset that the deals offered weren’t good enough! That’s the very definition of a First World problem and it shows that, no matter how hard you try, you will never please everyone. When planning a promotion, consider your customers and what they want, but don’t get too hung up on trying to include something for everyone. Doing this can force you to go to market with a campaign that is unwieldy and unfocused, and no matter how hard you try, there will always be someone who complains that they did not get what they wanted. Do your best to set and meet expectations, but also be prepared to hear complaints, and accept that this is part of doing business.

5. Motivation is key, and timing is everything.

One of the key reasons Prime Day was not a bigger success is that the motivation behind the event was driven by Amazon, not it’s customers. Amazon decided that they wanted to stage a huge promotion in the middle of the summer to celebrate their 20th anniversary. But what does that have to do with me, the consumer? Nothing at all, really. As Ed Stevens, CEO of Shopatron explains, Amazon’s chief failure was that they neglected to tap into any real time- or emotion-based motivation for their customers: “Prime Day will in no way replace Black Friday. The primary reasons for this include the amount of consumer discretionary dollars in July will not change. Consumers are most motivated to spend their money when it’s associated with an event, and most holiday sales are centered around a sentimental or emotional gift giving component…Prime Day is an unsentimental, ordinary sales gimmick akin to a car dealership having a Labor Day blowout sale.” Everyone knows that the key to making a sale of any sort is to instill a sense of urgency in the buyer. July is far removed from any major gift-giving holiday, so as a shopper, the idea of Prime Day as an early Black Friday is null and void. Unless there’s something I want for myself and happen to find an unbeatable deal on, I’m not likely to part ways with my money on this particular day just because a company tells me I should. When you’re planning your next big promotion, make sure the timing is right, and that you’re tapping into motivations that are relevant to your customer base. If you own a stationery shop, you can run a promotion timed to coincide with brides who are planning for the summer wedding season. If you run a sporting goods store, it doesn’t make sense for you to run a Valentine’s Day sale, but it does make sense for you to plan promotions tied to the beginning of each new sports season for adults and kids needing to gear up for spring baseball or fall football and so on.

6. Make it easy for your customers to participate.

Another one of the chief complaints about Amazon’s Prime Day was the way in which offers were presented: an infinite scroll of items presented five at a time in no particular order which continued on for hundreds of pages. Who wants to wade through that for the chance at finding something they might want at a price they might want to pay for it? If you’re going to run a promotion, don’t make your customers work hard to make you money. People love a good deal, but only to the extent to which it doesn’t cause them an excess of inconvenience. Don’t forget: there’s always a competitor lurking in the wings to give your customers what you fail to deliver.

7. Accept that you will have a target on your back.

With Prime Day well underway and customer reactions starting to roll in, Walmart jumped into the conversation by offering a number of their own “Rollback” deals. They were able to sit back and see what Amazon was doing and then respond in a way that would allow them to try to trump Amazon’s big sale – and for many customers, this move worked as they found (in their opinion at least) better deals on Walmart.com. What does this show us? That the first one to do something is the one with the target on their back! After all, it is always easier to follow rather than to lead. By waiting to see what Amazon had up their sleeve, Walmart was able to evaluate the situation and respond, instead of taking the leap and being first into the fray. This is a reality for any company that forges into uncharted territory, since it allows your competition to learn from any mistakes you make and build upon the path that you establish. Does this mean you should be reactive rather than proactive in your promotional strategy? Not at all. Many companies that were “first in” benefited from that position. eBay was the first company to do online auctions, and sites that tried to follow in their footsteps slowly failed and closed up shop while eBay remains a powerhouse. Sometimes, the first one in wins the day, but other times, they end up being the target that everyone else comes gunning for. Ultimately, though, it’s good planning and solid execution that are the differentiators between a promotion that soars and one that sinks.