Here’s a picture of a shop near my office. Three weeks ago it was a Lamborghini dealership. Now it’s a place that rents small cars for $27 a day. I reckon that might be a pretty good reflection of where things are at. It seems most successful business models now drive profit through volume rather than margin. And I’m relatively sure there are more people looking to rent a car for $27 a day rather than buy one for a lazy half million dollars.
Look at the businesses making all the money – supermarkets, Google, telcos, the list goes on. They all sell lots of product for a small margin rather than fewer products at a large margin (perhaps with the exception of Apple, who seem to be doing both margin and volume).
And that brings me to advertising agencies. Most advertising agencies deliver a very bespoke product. It’s an idea or advertising campaign designed to suit a particular client’s needs. Even if it can be used to carry another client’s message, it’s contractually obligated not to do so. This means all the work you do in delivering a product (campaign or idea) amounts to one sale.
So rather than make one product and sell it thousands, perhaps millions, of times we make one product and sell it once. (Actually, it’s lower than once when you consider the ideas and campaigns we work on that the client doesn’t buy.)
Then on top of this, you have other forces working against the ‘way it used to be’. The internet has conditioned us not to pay for stuff anymore. It’s given rise to the Fremium model, and things like Fiverr.
Sure, in most cases, you get what you pay for. But it seems people don’t like paying for the art of a Lamborghini when they think they can do the same with a car for $27.
So what about you and that big idea you’re working so hard on? Are you only going to sell it once?