What the European Crisis does to US Advertisers
May 11, 2010
The disaster occurring in Europe right now does and will affect the US advertising market. Let’s look at it from a very simplistic view, Publicis and WPP are both based in Europe, Publicis in particular is very close to the problem. This doesn’t matter generally speaking, but in reality it will matter (yes we already know that Omnicom will be doing the same, as they are generally in the same areas that the other holding companies are).
Europe is roughly 2 years behind the US in this economic crisis, we as Americans have already started a new asset bubble, started pumping resources into this and slowly within the next 4 years or so we might achieve normal employment levels. Europe however is still on a triple black diamond ski slope.
The Euro eventually will tank compared to the dollar, so they are going to be viewing the US market as something to “suck money out of” to help pay for ongoing deficits in Europe, That means that Publicis is going to be taking “more than normal” out of US operating profits to continue operations in Europe.
That means that US advertisers will be paying a higher rate than what would necessary be the case due to the higher rate of money transfer from the US to Europe. IE: if you are using Publicis or WPP, the chances are you are going to get highly screwed in the next few years.
In laymen’s terms let’s assume that the Publicis advertising agency wants to continue to fund an office somewhere in France, the office is no where near break even but of course they must really pay for those gold plated door handles, so what they will do is take money from New York to continue to fund the office in France until the office is finally self sufficient.
For this they will tax their US clients a few percentage points higher than what would normally be charged.
Enjoy the new reality.
Detroit Recruiter : Picking on Detroit is a cheap shot
May 6, 2010
As promised, if someone sends in a well thought out rebuttal, we will post it. Below is a complete cut and paste of the e-mail.
Usually I just take your rants in stride but today; not so much. Picking on Detroit is at best, a cheap shot and at worst, unconscionable to those of us still here trying to go about our lives. We can’t do it if we have to constantly explain what is and isn’t true about metro-Detroit.
You’re a smart man. You have to be smart enough to realize that Detroit is not the whole region and Detroit is not some bomb-filled hell. We got hit hard and we got hit first. You are starting to see the same things happening throughout the U.S. You will continue to see it until the agencies start hiring again. Oh, snap, they are hiring here in Detroit!
McCann Erickson just hired 50 people in the past couple of months. Team Detroit is about to hire about the same. GlobalHue is about to do the same. What do these agencies have in common? THEY ARE ALL IN METRO-DETROIT! It should also be noted that none of these agencies are actually located in the city of Detroit.
I recruit for agencies throughout the U.S. so I know that there are plenty of other places that are struggling. Oddly enough, we’re picking up like crazy around here this year. Before the rest of the country.
Why don’t you actually come here and see for yourself? If you have the guts to come near the bombed out city, I will actually show you the sights. If I had a nickel for every candidate who said “I had no idea how nice it was”, I could retire tomorrow.
Something went terribly wrong all right: the U.S. stopped making things. I think we all saw what happened when the financial sector imploded last year. Would you call New York an area in decline?
Rant complete.
A Detroit Recruiter
Something terribly went wrong - Detroit
May 4, 2010
Generally when an area is in decline, companies move out buildings go vacant. About 2 years ago Media Bistro published an article stating “is Detroit ever going to have an advertising agency come back”. In a perfect world the answer is yes. Because as the cost of labor goes down, property goes down, companies move in to take advantage of it and then within a decade or two you see a reversal. Akin to outsourcing within the United States as compared to picking a location in India.
That ISN’T what happened in Detroit, what happened there was something akin to a nuclear bomb going off in the city leaving nothing but a Chernobyl wasteland that is toxic to anything that enters the city limits, and Detroit isn’t the only city to face this.
Las Vegas is suffering from a similar disaster, just in the earlier stages of it.
The problem is multifold, but primarily the problem is these cities don’t know how to advertise themselves and CEO’s are concerned about raising their children in a city that has a staggering crime rate.
A pitch for a city to attract a company has to include a 2 prong approach. The first being the technical reasons one why a company needs to relocate there. Cost of labor is low, property prices are low, taxes are low, city officials are willing to “do what needs to be done”, the labor pool is ideal for that business.
But that’s not the real reason they re-locate there, it might be a huge reason, it’s the legitimate reason, but it’s not the real reason.
You have to convince at most 2 dozen people in any big company to relocate their company. Board of Directors and upper management… That’s it… if you wanted a monster sized firm with 10,000 employees to move into your city you are not going to actually sell them via advertising on the technical merits.
Remember most of these CEO’s are established, many of them will have school aged children at home.. or even recent grads.. meaning that the lingering feeling of them still at home is still ever present.
You must sell them on it’s a good place to live.
Virtually every single ad agency created spot regarding “relocate here” or “move your company here” is filled with the same spec sheet. Low Taxes, skilled labor, etc..
Not one in recent memory says “your kids will thank you” or “most kids that graduate from school here go on to college” or the primary concern, it’s a safe place to grow up.
Christine Barlow and Creativity
April 3, 2010
Sometimes we people that work in the advertising agency business are so caught up in what would be defined as creative that we completely miss the point. There is an individual I met recently, made such an impression on me that I decided to write this up. Her name is Christine Barlow and she is located in Wilkes Barre , PA.
She doesn’t work at an ad agency, she doesn’t work in the industry at all. But she does create ads and expressed an interest in adverting. Her fear on why she never entered the industry “I am afraid there is too much math”
When I asked her to define that, she said “well I need to make sure that my ad is making the client money, and the math behind it sometimes makes it more difficult than just making cool ads”
The simple fact that the reason she isn’t entering advertising is because she cares about client ROI clearly states what is wrong with our industry. The individuals that actually care if the client is making money are the ones that are avoiding our industry like the plague.
Enjoy our new reality.
Starting your own advertising agency in 2010
March 25, 2010
In 2008, we published a “starting your own advertising agency” post, we figured we would update this to how much things have changed in 2010 … amazing what 600 days could do.
this is the complete post from 2008, under each paragraph is the update:
There are really 2 ways to start an ad agency (or any company for that matter). The first is to convince Michael Dell to fork over 4.5 billion dollars and build one from scratch. The second, is to look at what you have in your bank account and what you can muster yourself and go on your own. With the thousands of people that have already been fired / laid off .. the first option isn’t really an option. So I am going to outline how to setup a legitimate business under $2,000 $1000 dollars startup and under $500 $275 a month…. everything included… minus the income (you are going to have to earn that with your clients that you will get). Virtually all of the steps that you will see outlined below is ROUGHLY the route I took when I started my firm.
2010 UPDATE: We all saw how starting the 4.5 billion dollar approach works, in short it doesn’t as Enfatico is shut down. Also in the new 2010 version, we going to even cut MORE costs from both the startup and monthly, in other words technology is going to make it even less expensive to start your own firm, by a considerable amount.
Please note that the way this is written, you need to cover just under $500 $275 dollars a month in expenses just for overhead (not your salary.. just things like phone and rent).. The funny thing worth noting… this part is the easy part.. the hard part comes when you complete all the steps in this process… and you are open for business…
This document will outline some of the steps you will need to go forward with. This isn’t of course “all inclusive” but it should be one hell of a start.
1 – Find your natural strength – it will be a benefit that companies need that other agencies cannot provide or don’t provide. You need to be a NEEDED difference in this recession / great depression part II.
This has not changed at all, you still need to be able to have a skillset that others cannot provide.
2 – Business Plan – Write down what your firm will be doing, how it will grow, how you will pay your bills, how you will get your clients, if you need help with this the SBA.GOV site is an excellent place to start. I don’t suggest having someone write it for you. The reason is if you are not skilled enough to figure out how to read and write a business plan for your own business… then you really have no business running a business. The directions are clear as day… just use common sense, the SBA.GOV site and Google examples and concepts.
This has not changed as well, you need direction and as much advice as possible.
3 – Accounting – SAVE EVERY RECEIPT … every penny that goes out and goes in must be accounted for.. otherwise you’ll be paying taxes on money you never earned… because you didn’t record the expense associated with getting that income. If you choose the Linux route.. you’ll notice about 300 programs there for accounting … all for free…. choose one that makes sense.
Again, this hasn’t changed
4 – File company structure / get bank account / ways to collect money — In my opinion you are a complete idiot if you start a business as a sole proprietorship.. if something goes wrong… someone sues you for anything… they can take your house.. your car.. everything you own or will own… maybe your first born… file some sort of protection for yourself. You might want to consult with a lawyer on this… or do it yourself if you know what you are doing… there are tons of online services that do this.. I myself am not a lawyer.. but examples are LLC structures, Sub Chapter S Corporations.. you need some sort of company structure .. and not just your name out there as a sole proprietorship that screams “please sue me and take my house” …. use Google for the research or call your lawyer.. don’t .. I repeat DO NOT go to step 4 before taking care of this first. It’s imperative that you do this first. The initial costs for this are minimal. I have budgeted $300 dollars for step… it might be more or less depending on your State and if you do it yourself or have a lawyer do it. Please do your homework on the company structure.. there are huge differences in taxation and liability surrounding this. Also worth noting, about now is when your company needs it’s own checking account… shop around for a bank that you trust … also some of your clients may want to pay online rather than via check… considering the stage in life you are in… we suggest paypal… you’ll want to revisit this later in life when you grow.. but for now it’s your lowest cost entrance to collecting funds online via credit card. Sign your bank account and paypal account under your new LLC / whatever company structure you choose name. You are no longer John Doe… you are “whatever company, LLC” moving forward.
This hasn’t changed either
5 – Pick a location, you need to report to work.. even if it’s just yourself. Some people disagree and say working from home is fine. I STRONGLY disagree… companies won’t take you seriously if you meet and greet them in your kitchen… Show some effort and risk on your part.. Contact your local Realtor or search online (even the local classifieds) to see what offices are up for occupancy. In a mid-sized city of about 100,000 – 300,000 people… and due to the current economy.. you should be able to find a clean, safe 1 room office in the neighborhood of a few hundred dollars a month where low cost High Speed Internet is available for your… in 2005 (in the middle of the housing boom) I found a clean single office location in a good part of town (Philadelphia Metro Area) for under $300/month… last I heard that office is going for $200… It wasn’t the Taj Mahal but it was clean and respectable for clients to come in and see. Some of my very first clients I met there… Sign your lease under your new LLC / whatever company structure you choose name. You are no longer John Doe… you are “whatever company, LLC” moving forward.
This HAS changed, due to how deep this recession has become, the chances are that you will find rent at 30% lower than you would be able to back in 2008. That 300/month single office rent is now most likely hovering around $200
6 – Bandwidth – You cannot run a modern office without a high speed internet connection… in fact based on this plan.. your phones won’t even work without it. We suggest high speed Cable… the bandwidth peaks at about 20 Mbps… plenty fast for a small (or even mid sized office).. the plans start off at about $80/month… (again depending on your location and service provider). DSL is much slower when you factor in step 6. Again, Sign your bandwidth agreement under your new LLC / whatever company structure you choose name. You are no longer John Doe… you are “whatever company, LLC” moving forward.
This HAS changed as well, bandwidth is slightly cheaper than before, shop around but most likely you will see about a 10% discount on average.
7 – Phones – I can’t stress this enough… if you grow.. their will be hell to pay if you get the wrong phone system… an IVR system will cost you thousands… Use Voice over IP.. I selected Packet8 for my services… it has everything you need (like transferring extensions)… plus as you grow and add extensions.. you are going to be much better off.. a basic phone costs about 150 dollars… and 50 bucks a month for unlimited usage (25 for metered.. as in 300 minutes a month) as of last year .. you’ll want the unlimited (more on that later).. but please shop around… I strongly suggest NOT to call your local telephone company for this… they are still on some sort of retro time warp in terms of pricing and features.. (all the bills, none of the services). I strongly suggest NOT to start off your company using your cell phone as your only number… 5 years down the line.. you’ll have 200 employees.. and you’ll still have people calling your personal cell phone. There is nothing wrong with that other than the need to separate your personal life and work… trust me on this.. your husband / wife / kid will thank you for taking this step now. Again, Sign your phone system under your new LLC / whatever company structure you choose name. You are no longer John Doe… you are “whatever company, LLC” moving forward.
This CHANGED big time, a small advertising agency doesn’t need that system anymore, it needs Google Voice. The entire phone system should and can route to any phone that you want, this allows for growing as well, if 10 years from now you have 100 employees.. just forward it to whatever phone system you want. The good news about Google voice is that it’s completely free and will work with your existing cell phone or whatever phone you choose. In fact because it’s so strongly integrated online, you can use click to talk features directly from your website.
8 – Computers – Ok… this is where it really is nonstandard for many in the work environment.. this isn’t 1985 .. and Microsoft Windows or Apple isn’t the only place you can get what you need. In fact going down the route will lead to disaster in the long run in my opinion. Get yourself a machine with enough horsepower budgeting $400 … and try to get it with Ubuntu Linux (or any Distro).. there is a valid reason for this.. really valid. Linux has been with us for a long time… but recently in the past few years.. it has made some serious inroads into the desktop environment and for good reason.. it’s easy to use, stable and 100% free… literally free.. but the OS isn’t what makes it cool.. it’s this neat “add and remove programs”…that literally goes out.. grabs new programs for you free of charge.. and installs them.. like a photo shop competitor called the gimp (saving you $1,800 dollars) or open office instead of Microsoft Office… (saving you about $500 dollars) or awesome video editing software for free (there are at least 40 differing programs like that… select whatever makes sense for you)… saving you at least $1,299.00 dollars .. as that is what Final Cut Pro costs currently. Yes there are Windows versions of many (but not all) of these programs… but the point is that Linux is geared towards this… it’s sort of running native when they run on Linux.
Total Saved by taking this route rather than a Apple or Windows Machine? At least $4,000 dollars per desktop..
This has not changed 1 inch, in fact Linux distros have grown dramatically in ease of use.
9 – Office Furniture – This is where you need to really think about it… head to store that sells simple and low cost office furniture … and use that for now. You’re talking 100 bucks for your desk.. 100 bucks for your chair… another 50 bucks for a small filing cabinet and some cubbies to put your stuff in. Remember you are starting out… this is an area that you can save some money (within reason.. don’t buy something that will break on you in a week… and make sure you buy a chair that has proper support.. you’ll thank me for that later as well).
This hasn’t changed
10 – Your initial marketing budget. This is perhaps the most interesting part.. see … the reason I wanted you to get that phone with unlimited calling…. was because that IS part of your marketing budget… you better be announcing yourself to everyone that you view as a potential client… also.. you need a website… .. you really need a website… a domain name can be purchased for as little as 8 bucks year.. and 5 bucks a month for hosting… this is a MUST have… the total cost is 68 bucks for your first year… .. it could be as simple as a wordpress.org blog …. You of course need a website and e-mail address to go on your business cards… that I budgeted $100 bucks for your business cards… you need something professional to hand out to people… on good paper… and done right.. business cards are the one of the lowest cost physical forms of marketing available. Virtually all webhosting plans come with a branded e-mail address…. [email protected] and [email protected] and [email protected] … you can make as many e-mail addresses as you want…. just don’t make a nightmare for yourself… design site as if you were not a tiny startup company.. but make your site look like what you WANT your firm to be 5 years from now. It will make you look more legitimate to your potential clients. There are about a million themes you can download for your wordpress website… find something that works for you.
This hasn’t changed either
11 – Unexpected things – Nothing every goes according to plan … I budgeted nearly 800 dollars in this for your personal needs — perhaps you need a killer printer — fax machine — whatever… the point is that there is money there for you (nearly 800 dollars) that could be allocated to your $100 dollar printer.. and $50 dollar fax machine or your city “employment tax of 50 bucks”.. whatever you need… and whatever we can’t plan for not knowing your business model and specific business needs. I would also consider looking into insurance for your business.. everything from renters insurance if a fire breaks out in your building to “if someone sues me” insurance… some areas require it.. some don’t… but it is suggested… I would be unsure of the fees for this… so do your homework and what you feel is right.
Total costs Monthly:
Your own Physical office location – $300/month $200/month
Voice over IP phone (unlimited) – $50/month
Google Voice = FREE
High Speed Internet Access – $80 $70
hosting – $60 (5 dollars a month * 12 months)
One Time – phone $150 FREE with Google Voice
Company structure (LLC, Inc, Etc) / $300
the total monthly cost went from about 450 now to 275 per month (mostly in rent and phone system)
the total setup costs went down from about $1,208 down to under 1000 (at about $994)
Now honestly this might or might not match your needs… this is just a guide that you may choose or not choose to follow… or take bits of it.. and put in your your own flavor and costs… but the plan above clearly gets you in an office, with a desk and chair, a phone, internet access, computer, business cards, a website, branded e-mail address and even a rudimentary marketing plan…. the only thing missing now is your source of income (new clients) and what exactly are you going to do to earn their money……. in essence.. it’s your turn to fill in the blanks.
Also new things that weren’t even open to you back in 2008, you now get a 35% discount on your health insurance due to tax credits, and eventually that ramps up to 50% by 2014, but you might want to spend some time reading up on the health care bill, what you saved in rent and phone might be able to help you to get health insurance moving forward!
Monster.com : Advertising Agency vs SEO jobs 511 vs 894
March 15, 2010
In a stunning reversal of past fortunes. There are now more SEO jobs available than Advertising Agency jobs as based on a Monster.Com survey. Even DraftFCB has a position open for Management Director of Search Engine Optimization, a position that requires 15 years of experience, effectively leaving it open for about a dozen individuals in the United States… and all people that used to trade ideas via Usenet back in circa 1994 when Altavista.digital.com was the largest Search Engine.
No, I am not kidding… there might be a total of 12 or so individuals that have been doing SEO since before Google was even invented… leaving them with a payscale of at least the mid-to-high six figures or more per year to hire and work full time for an advertising agency such as DraftFCB rather than their own gig… which many of them now do.
Draft’s better off buying an existing SEO firm in that case. Because it’s either $3,000,000 (for the 6 years needed for that guy to build an SEO team)… or $3,000,000 to buy an existing SEO firm and bypass the 6 year waiting period before the proper team is built and running.
Might as well add that they must be mentioned by Google for SEO reviews … leaving it down to such a small handful such as Roger Wehbe president of Yooter InterActive (myself), Aaron Wall owner of SEObook.com, Michael Gray, David Naylor, Chris Ridings, Danny Sullivan and a handful of others (many that were moderators at the now-defunct threadwatch.org site) …many that don’t practice SEO anymore, but they do report on the industry and it’s trends…. yea it’s a small community that would meet that skillset and criteria.
But that’s not the point of this article, the point of this article is simple, there are more Search Engine Optimization jobs open than advertising agency jobs…
Enjoy the new reality.
FL-2 - Advertising Agency closed by Bank seizure
March 9, 2010
Evidently the Denver Based FL-2 advertising agency has been closed by bank action. Literally the ad agency was seized by the bank. The comment that started the research into the matter was posted here
Calls to FL-2 have not been answered or returned (understandably).
Generally if a company has secured loans in the form of company assets, if payments are missed or late the bank has the right to walk in there and effectively shut down the company and auction off assets.
That is what appears to have happened. We are unsure of the amount FL-2 owed, or even what bank took action against them. But this generally only happens for a large amount where liquidation is the most profitable option for the bank.
In other words the bank feels that FL-2 would never make enough money to pay them back, so selling all the desks, chairs and computers would net them more cash.
I hate this recession.
Ad Agency Sues Law Firm
March 8, 2010
A Nashville advertising agency claims a law office is using its “Get A Lawyer Get It Done” slogan without permission. You heard it right, an ad agency is suing a law firm. courthouse news is reporting.
Let’s get this right, an ad agency is suing a law firm.
You have the two lowest industries on the face of the planet engaged in a lawsuit, they should just switch to mud wrestling and get it over with.
The winner is allowed to use “Get a lawyer” in their creative and copy. Because of course people are just tripping hand over feet to get to either industry.
Great Stuff…
Agency Spy calls Indie Ad Agencies “Farm Teams”
March 3, 2010
Matt struck a chord and really miffed off a bunch of people (and got some praise) for this post here
Matt, common man you know better than that… that post is just pure link bait.
“Link baiting (or linkbaiting) is the latest buzz word in the SEO world and has come to be the preferred way to natural link building by posting something controversial or otherwise naturally linkable”
I have never known Matt to use Advanced SEO tactics for ranking posts, so clearly this one is just a shit stirrer.
For my two cents, dude you’re wrong. They are not “Farm Teams” in fact, you see more people exiting (either though layoffs or willfully) the big dumb agencies to start new firms.
Advertising isn’t rocket science… and you don’t need a billion dollars to make an ad or start your own advertising agency (in the case of Enfatico you needed 4.5 billion, but that’s a differing story).
People start their own firms because they feel that the big guys are missing huge opportunities, and a bunch of us… well the majority of us Indy firms feel that those bigger firms aren’t so big anymore… my firm, Yooter Interactive shouldn’t have clients like AOL if the BDA’s did their jobs…. they didn’t.. so they are denied the revenue that now my firm has.
It’s everything from niche markets such as Search and Social Media (ok, not a small niche.. but most of the holding companies completely missed the boat on it, it’s why they are forced to share the client with my firm or a firm like mine) … to just calling the client back as that appears to be difficult recently as the bigger agencies have laid off so many people the clients don’t even know who to call anymore.
Matt, honestly I view those holding companies as a farm team… they keep sending me clients (unwillingly) on a weekly basis… without those markets to farm I wouldn’t be in business.
Saatchi & Saatchi facing Review over “I love NY” campaign
February 26, 2010
Advertising Agency Saatchi & Saatchi is up for review on I LOVE NY acct. Division of Tourism included in the review. Much anger at rebranding effort within state tourism industry. The $17,000,000 dollar logo redesign and campaign is facing a hostile review.
It’s too costly, and evidently it (the campaign) didn’t work. From our understanding this is really a hostile review… The chances of Saatchi continuing the account is “slim to none” from what we were told.
No response from Saatchi on the matter as of yet, but if the review is hostile we don’t expect Saatchi to defend.
Story is breaking…..
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