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Traditional Advertising Agencies Have Conflicts Of Interests

Let us just examine our own logic for a moment:

If an advertising agency is compensated based on a percentage (it is usually 15%) of what I spend, what incentive do they have to find for me inexpensive, effective, leveraged advertising that is cumulative and gets me more and more business with less and less expenditure like any effective campaign should?

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The obvious answer is: none at all!  The fact is that there is a built-in conflict of interest in the way that advertising companies are compensated: it is not in the ad-agency’s best interrest to do a good job:
In this alrtice in Adweek by Brian Morrissey:

“I think traditional ad agencies have very little contribution to make,”  Bryan Simkins, a marketing specialist at FedEx, told TNS:

“They are mostly driven by their compensation models which are made for closed media. Those models don’t apply in open media.”

Not only is there a built-in probelm with the compensation method, there is also another inherent conflict of interests: ad agencies typically target a vertical market or two: that is they represent primarily a certain type of business: for instance doctors, manufacturing, retail…

But if I have more than one client seeking the same market share, who do I represent best?

In my opinion, they not only must separate what you pay for advice from other compensation if you are to get good advice, they must also be exclusive to you for your market, or you cannot, and should not trust their advice.

A much better model is one where you pay for a bundle of services to a consultant who represents you exclusively.  The consultants job is to do the best he can on your budget.  If he is successful, you will be successful and spend more.  If he represents you exclusively in your market, your bread is buttered on the same side: if he does not do a good job, he cannot profit from your market, and vice verse.

This is why we recomend things like organic search as apposed to PPC (pay-per-click), and blogging over print.  Viral video distributed on the intrnet can greatly leverage the effects of advertising with video.

But don’t belive me: use your logical mind: you are a businessperson, and you are not stupid.

Here at http://socialmediasystems, we believe that our model is better.  What do you think?