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Pros and Cons of Establishing an In-House Ad Agency

Pros and Cons of Establishing an In-House Ad Agency

There have been several ads promoting books and reports on this
subject, or included as part of the contents in several mail
order books stating:

"SAVE UP TO 17% ON ALL YOUR ADVERTISING"

It's legitimate, practical and effective, but like so many other
promises, there are pros and cons involved. The pros are fairly
obvious. By setting up your own advertising agency and placing
your advertising under your agency name, most magazines will
allow you the standard 15% agency commission plus and extra 2%
cash discount. If your annual ad budget is $5,000 this amounts to
a saving of $850 a year, which is a considerable piece of change.

The negative side to this operation involves the initial cost of
establishing your new agency, which isn't very difficult, but it
might be considered time-consuming. To initiate an agency you
will have to have a name for it other than your regular business
name. Example: If your company name is Nationwide Electronics and
your name is John Smith, you could call your agency John Smith
Advertising or The J.S. Advertising Agency, The agency address
will have to be different than your company's, but this can be
resolved by renting a post office box the ad agency and using your
home or office address for the other. Next you will have to open
a separate checking account under the agency name because all
advertising payments will be issued thru your agency, and you
will probably be required to register your agency with your
County Clerk as a new business.

Once these details have been taken care of, you're ready to begin
placing ads. You'll have to have insertion order forms printed
with your agency name and address, and a separate form must be
prepared for each ad in each publication. When your advertising
schedule involves only a few publications, this will not be a
problem, but if you expand into 50 to 100 different magazines, it
can really cut into your time. Of course, if business gets large
enough, you can always hire a secretary to take care of that
chore.

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