Why Agencies Charge So Much, And Why They Keep Pushing You To Spend More
Agencies are not evil, they are not lazy, and they are not out to get you. They are legitimately trying to run a profitable enterprise in a tough market, usually by providing their clients with exceptional value and results. Why then, are so many business owners fed up with their agencies?
A theory, from a team that has worked across all levels of enterprise advertising
The friction point is that agencies, as businesses themselves, are many times more profitable when they support enterprise level clients, who are typically engaged in war with their competitors for consumer attention.
Take a soda brand, we can call them Blue Cola. Assume Blue Cola enjoys millions of sales per day and is a billion dollar operation. At some point, a competing brand might launch Red Cola and start to eat into those sales. Very quickly, this creates a bidding war between the two for the word's attention. Agencies are the commanders in this bidding war, and for this purpose are more than worth their price. This relationship is symbiotic; the agency charges a % of media, so higher spend means more profit. Blue Cola benefits when they have successfully out-bid their competitors for every bit of space in the ads landscape, leaving only one brand in the consumer's mind.
Enterprises and their agencies are involved in this dance, perpetually spending millions to defend their turf. Agencies are incentivized to push for more spend, and enterprises are incentivized to comply, because the cost of losing the war is far greater than the cost of the ad spend.
Why this is bad for (small) business
This creates a gap in service for the American Small Business. Take a dentist in a rural area, for example. He only needs to spread the word that he exists, and is available to provide a much needed community service. For the dentist, a fixed spend to keep his calendar full is more than enough. But an agency must always push their clients for growth, a $100/month spend won't keep their lights on. The dentist is not a great client for the agency, so the agency shouldn't extend resources solving his problem.
In short, agencies are not set up to serve small businesses well. The incentives are misaligned. Small businesses need predictable, fixed costs to keep their operations running. Agencies need variable, growing costs to keep their operations running.
Where we come in
Biddable was built to fill this gap. Empowering dentists, founders, and all business owners to skip the agencies and run their ads directly.
Biddable lets you keep control. You set goals. You launch. You see what works. You decide when to scale.