1. Click the image to read the published article
RetailerNOW Magazine – November/December Issue 2012
_______________________________________________________
First Some Humor..
Or Maybe Some Reality
Click the Link To See The Video That I Believe Explains My Blog….PERFECTLY
http://tv.adobe.com/watch/metrics-not-myths/bs-detector/
Mad Money
For Mad Men
Which 50% Of Your Ad Budget Is Your
Agency Wasting?
Most marketers may know the proverbial
saying from John Wannamaker – the father of
modern advertising: “I know 50% of my
advertising dollars are wasted, I just don’t
know which 50%”?
I’m writing this article because of the feedback,
emails and phone calls I received from last
month’s article: “The Death Of A Brand as We

2. Know It”.
The quote above speaks to the reality that many marketing programs are not easily justified on basic
return-on-investment measures, and that advertising in particular end up being a leap of faith because
it’s expensive and the direct benefits are VERY difficult to quantify, if at all….especially today!
A major, top 100 retailer called me about the article and through our discussion it became “painfully self-
evident” that he had no clue what was happening with his advertising/marketing strategy…except that it
wasn’t working anymore like it used to. As we talked, I related to him how I thought consumers were
“consuming media today”. I could tell, through his deafening silence, this was a “deer in the headlights”
moment for him. After I thought about our discussion for a few days, I became quite frustrated and angry
that his agency was NOT his best friend anymore because they were pushing old strategies and tactics,
making the same old MAD MONEY in the new retail world order.
For the record, I owned agencies in the 80’s and 90’s. We were extremely successful with clients like
Gerber, Pepsico, Ragu, General Mills and many small and large B2B clients. I have also directed the inside
marketing for several large companies, so what I’m about to share with you comes from both sides of the
isle…Agency & Client side.
You probably hire an agency for a few different reasons. Some of which are:
1. They have a track record of growing businesses.
2. The landscape and multiple channels for “messaging” are confusing and you need someone to
help guide and direct your stores messaging
3. You just don’t have the time to learn & invest in this confusing landscape.
So here are my thoughts, or should I say “RANTS” about how
your agency is not your best friend anymore, if they even were
in the first place.
Basically, ad agencies and marketing firms are glorified salesmen
and middlemen—they make their MAD MONEY off of MAD
MARKUPS and Commissions.
If you check ADWEEK, Advertising Age, BRANDWEEK, etc.
accounts are listed by "billings" or how much clients spend on
media each year…or how much YOU spent with them. When an
agency takes on a client, they usually handle creative, media
placement, consumer research, etc. For doing so, they mark
everything up, especially the media placement—usually by about 7%- 17.5% give or take. Why 17.5%? I

3. dunno. Maybe it’s the most agencies think they can get away with before anyone asks questions. In the
old days, at my former agency, we marked up ALL “costs” 15% and then we applied an additional mark-
up of 17.65% on top of that. That was then however, this is now and the “Ad” world is very,
very different today!
There are a couple different ways agencies get compensated for their “efforts”. These are:
Retainer Relationship.
This is when the client (YOU) pay the agency a flat monthly fee that covers all their internal costs and
sometimes basic media and maintenance. Outside costs are billed to the client either direct, or with that
awesome mark-up I mentioned previously. This relationship and its costs usually have some sort of
client/market exclusivity attached to it.
Project Based:
This relationship is what it states. The agency gives you a budget for a “project” you requested and you
are billed for those “agreed upon” costs. BUT, buyer beware, because many times these budgets change
because “you” or the “agency” made changes to the project and as such, someone has to pay for those
changes…and that would be “You”! Agencies LOVE this, because you’re already financially vested and
getting more for the project, especially if it’s your idea, creates incremental income. This is what we refer
to a “plum” assignment.
A combination of the above:
This is where you pay a monthly fee which covers the basics; open communication, strategy discussions
and some basic creative and then you pay for the tactics as you agree to them….Yep that 17.65%+ thing
Here’s my problem from the discussion I had with the
retailer. His agency was still selling him on traditional
media. TV commercials radio commercials and print –
ROP or circulars. They had a website, but the agency
did not help manage that or offer any “new media”
advice or strategies…OUCH! This is a MAD MONEY
approach to marketing for the MAD MEN. Ok, I agree
that we need to maintain some sort of a presence with
traditional media channels, but NOT as a primary
marketing medium anymore. Did you know that print
advertising revenues today equate to what they were
in the 1950’s? Why you ask? DUH, no one reads
newspapers anymore in this soon to be extinguished
marketing medium. The same is quickly becoming true

4. with traditional TV/Cable. Have you read the articles
about consumers “disconnecting” from cable?
In June Netflix streamed 1,000,000,000 shows with
NO commercials. My Cable lets me “catch up” on
missed shows with minimal or no commercials. My
DVR lets me skip through commercials….so who
makes out here? The MAD MEN armed with all that
data that promotes Reach & Frequency, but
increasingly, these numbers, in my opinion, are
becoming much more curious/dubious than fact.
Now what really gets me about this is WHAT agencies
are doing to our retail base. I would say the media
messages for Home Furnishings are as creative as
dirt; Yep, or worse. Anyone can create a 50%-70% off
everything, maybe change out the graphics with
some Presidents, a Turkey, New Year Hats, or an
American Flag. Add a Shamrock, some Fireworks,
some Holiday Themes along with a Back to School
Program and you have your “years marketing
plan”…and I just gave it to you for free!
Now we add to that some Dude screaming to Buy Now, Save Now…yada, yada and you have a recipe for
sameness and irrelevance. Come on people, if you yelled at your girlfriend or wife to “Do something
now”, etc., please write back to me with: How that works out for you…don’t bother, I already know!
Yep that’s what you’re paying for; a tired, overdone pedestrian tactics with no new strategic ideas just
recycled everything for every day. BUT what really upsets me is some of these agencies have multiple
clients in multiple markets and guess what? They/You are paying for this agency’s services: retainer,
project, etc., and guess what they/you are getting for your investment? The same strategy, same creative
and the same lame results they sold to their Client “A”, but with a different voice over and end tag. Why,
because each client is in a different market (MSA) and they don’t see the recycling. I call that “churning &
burning”, more MAD MONEY for them, need I explain more? I could make an ugly “price off” commercial
with moving pictures, copy and voice on PowerPoint and it would be equal to or better than what you’re
paying these agencies for! (I have a PowerPoint presentation with all of these attributes on my LinkedIn
profile. It took me 3 hours to make - HERE)
So, have I hit a nerve yet?
When I was in the business, our platform was to “teach our clients” everything we knew, as we expected
them to teach us everything they knew. By doing this, we created a true partnership. The free flow of

5. ideas andcritiques forced us to think smarter, be different and very relevant just to keep their business.
We always challenged pedestrian ideas…always. We believed that our customer and our business with
them would get ambushed with better ideas, better creative and better results if we did not consistently
“Set the standards by which the competition competes”.
Today, in our industry it’s not the case. MAD MEN are comfortable because their clients are NOT
informed or educated as to changing consumer dynamics, the changing media dynamics and so much
more that is happening at lightning speed in retail today. They want it this way! Why, because they
haven’t invested in learning the new paradigm and they’re comfortable with what they know and how it
has consistently delivered MAD MONEY to their bottom line. If this was not the case, they wouldn’t
accept “pedestrian” as your brand’s messaging strategy. I know this to be true, because 90%+ in this
industry have no strategy or tactics as it pertains to the internet because the agencies and the marketing
people don’t’ want to get out of their comfort zone for their clients.
NEW PEW Research (10-15-2012) Substantiates My Position As To How Consumers "CONSUME Media!
Read It HERE
So, you still don’t believe me? Check out your agencies internet/web presence. This is the client’s “first
face” of an agency, and it’s their primary calling card to potential new business opportunities. It shows
them who they are, what they do, how they do it and who they do it for; with case studies and more. I’ll
bet you their web and internet presence is old, tired, boring and non-inspiring. I’ll bet they have not
invested in their own business to bring it into the last decade, much less today, using all of the awesome
technology afforded to businesses today. This is the first flag, for if they don’t take pride in their own
brand, how can they justify taking your money for your brand? Ask them that hard question…why they
haven’t lead by example? (I’d love to hear the excuses and secretive rationale they would have for this)
I’ve written tons on the changing consumers; Generation “X” & “Y” and how they consume information,
where they get it from and how they interact with it. The problem is that this industry isn’t adapting to it
and I believe the protection of the Mad Man’s Income has a lot to do with it. OK, you, their customers
are also responsible because you allow this to happen because you are not educating yourselves!
The fact is: Mad Men want to keep you hooked on “Outbound (Traditional) Marketing” when in fact
today it’s about “In Bound (New Media) Marketing”! They don’t want to change, because they don’t
want to invest in the paradigm shift. That costs money and takes away from their comfy
revenues/profits. As such, by not leading by example, they only provide and recycle “what they know”
stifling new ideas, new revenue streams and new brand opportunities for your retail business.
OK, you’re saying you have Facebook, Twitter and Pinterest. I bet your agency charges you between
$500.00/month to $8,000/month to manage these for you. I don’t even want to talk about this, the
strategies & tactics implemented on these platforms infuriates me and I’ve already written a ton on
these subjects in this magazine or in our retail blogs.
So, Now what do you do?

6. (Step – 1)
Get a marketing person “on-staff” that is a
“REAL” marketing person, not a furniture
person that came up through the ranks, for
that’s all they know: furniture! This person
must have knowledge, experience and the
creative expertise to manage and direct the
efforts of your brand and the agency.
Yep, this will cost money to do, especially if
they are good at their job. But, if they are really
good, you will save a ton of money by not paying all that money to the agency. A great marketing person
directs the creative, the copy and the execution…saving those many hours that the agency previously
billed you for. Soon, you’ll find much of what you paid the agency for can be done in house, limiting your
agency to great creative and strategy on demand.
Make sure this person’s success and failures are tied to the agency’s success and your lift/profitability.
This person should be extremely knowledgeable about how old media is bought and placed as well as
new media and future “trends”. They should spend their time “focused” on inbound marketing, the
creative, the channels and the results. Knowing the product is NOT a requirement, that’s for the buyers
and merchandisers. Knowing how to get the product to the right consumer and create leads to your
salespeople is their job description. Their compensation should be tied to your business success and not
limited, but open ended. The more you succeed, the more they should succeed.
(Step – 2)
Demand transparency.
Know what everything costs, how you are billed, what you are billed, their mark-ups, everything. They
know your profits/margins, it should be reciprocated. All concerned should be fully vested in each
other’s success and profitability. That’s what a partnership is.
Yes your agency, if they’re any good, needs to make money. They should be paid for creative, brand
platforms and copy. If they do it right, they should be paid handsomely for it. If you’re paying for strategy,
you should pay them for a strategic plan and its results. A strategic plan should have everything in it. It
should be a complete landscape with the S.W.A.T & P.E.S.T analysis. This should be reviewed in every
quarterly meeting and updated immediately after those meetings with any changes relative to
competitive environment, the economy, new products and more. A strategic plan is not about media
buys, the media schedule, costs and placements. That part of the plan is about tactics, NOT strategy.
Strategy is NOT everything is on sale…that platform is a cop out and if that’s all they’ve got, fire them.
Their compensation should be tied to your business success and not limited, but open ended. The more

7. you succeed, the more they make. Yep, it’s sort of like piece work in furniture, the more you make the
more you make.
There is so much more I could RANT about here, but we have a limited space to do so. We have many
tools available to retailers to help educate them to develop a strategic plan and they are free on our
website: http://www.social4retail.com in the About Us & Our Retail Blog.
I could write a book about this for I am passionate on setting those standards by which the completion
must compete….and you should be too!
Back To Blog Page
About Bill Napier: Bill is a specialist in creating, guiding and deploying
successful marketing B2B & B2C solutions integrating traditional marketing
strategies with the web and social media. He has worked in the home
furnishings industry for over 12 years, as the chief marketing officer for
some of the industry's largest manufacturers and creating some of the
largest promotions ever launched within the industry. Contact Bill
at bill@social4retail.com, (612) 217-1297or www.social4retail.com.