Disintermediation & the Irrational Fear of Non-Media Expense

Excuse me while I rant for a minute, but what is it about buying media that makes it seems so benign?

Here’s what I mean: companies spend tens or hundreds of thousands of dollars on media, often with little purpose or strategy behind it, because buying media – and media alone – is deemed “efficient.”

It seems to be religion in some circles that that the higher the percentage of one’s total marketing budget is dedicated to media, the more effective that spend. Carve away precious dollars to spend on frills like, oh I don’t know, say: good creative, and you may as well be suggesting wallpaper for the conference room.

A better white paper to attract qualified prospects? Forget it.
Re-designing the e-mail to improve click-through rates? Extravagant.
A custom landing page to improve conversions? Infrastructure.
A 4-way creative test to test message? Too complex.

Let’s say you’re about to spend $100,000 on an integrated online campaign. Would you spend $10,000 of that budget to design a custom microsite? Or you spend $5,000 a month on Google AdWords. Is it worth spending half that amount again to have your campaign professionally managed by an outside specialist? Even if that means a significant percentage of your overall budget will now be dedicated to (gasp) non-media expense?

Well naturally it depends. The fact is: investing in better creative, a more compelling offer, outside expertise, even just a fresh perspective, can pay off in spades.

Yes, these “frills” cost money. Yes, it costs more to work with an agency than it does to run a campaign in-house. But if it increases your out-of-pocket cost, say, by 25 percent, and your response rate triples, isn’t it worth it? By my calculations, that means you’re getting more bang for the buck, and that doesn’t even include the hidden cost (i.e. staff time) you incur when you run campaigns in-house.

I read an interesting article recently in which the author, a consultant, posited that today’s marketing agency is increasingly a victim of disintermediation – a global trend, fueled by the Internet, that eliminates the middleman in more and more business transactions. The example given was the gradual extinction of travel agents over the last decade in the face of competition from online travel sites.

To me, the comparison doesn’t hold. If I can buy my airline tickets online at a cheaper rate compared to working through a travel agent, I’ll do so every time. But that’s because my travel experience – my “return on investment,” so to speak – will be the same regardless. However, demand generation isn’t air travel, and a well-designed, well-structured, well-managed campaign is not a commodity item like a plane ticket.

Yes, you can buy online media direct and save yourself agency fees. But that assumes you’re buying media from the right vendor. And your offer strategy is sound. And you negotiated the lowest possible rate. And your ad copy will attract the right prospect. And your landing page (you do have a landing page, right?) is optimized to maximize conversion rates. And so on.

Resisting any expense that isn’t a media buy, I would argue, is fundamentally short-sighted. All self-interest aside, I submit to you that the decision of whether or not to work with an agency, whether CDI or any other firm, is not to be measured by what percentage of your overall spend is non-media-related, but whether hiring said agency will improve your return on investment, period.

Thank you. I feel better now.

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