Why Do Digital Advertising Agencies Have Set-Up Fees for Online Ads?

Feb 5, 2022 | All, Digital Ads, Digital Marketing

Why Do Digital Advertising Agencies Have Set-Up Fees for Online Ads?

This article sets to explain the importance of set up fees for online ads and why some digital advertising agencies charge them. At Cyrusson Inc. we charge something called the set-up fees for online ads. When we tell this to our prospective clients, two questions usually pop up. First, what is the set-up fees, and secondly, why do you charge them? These are valid questions, especially when they have spoken to other digital advertising agencies who do not mention such a cost. To question the necessity of such a fee and its importance makes sense. So, let’s first understand set up fees and why certain agencies charge them, and some don’t.

As the name suggests, set up fees are the cost of setting up a digital advertising campaign. It is the additional cost apart from the cost of media buying, ad placement, and the cost of running an ad campaign. This means that when a digital advertising company agrees to develop an ad strategy for your business, they must research, study your business model and analyze audience demography. They must also understand the feasibility of running campaigns on different digital platforms. Additionally, they must assess the durability of the campaign and predict its success. All this is usually a one-time affair, but with continuous evaluations. To do all this costs the agency money which is why they charge the set-up fees.

Why Don’t Some Agencies Charge It?   

There may be different reasons why some agencies charge this fee, while some don’t. Certain media companies don’t choose to charge because they have a third party automating the process. This eliminates some of the complexities involved in media buying and hence they don’t need a setup fee.

However, the most common reason why a media company chooses not to quote the setup fee is that the amount you pay for their overall service covers the amount they spend on “setting up” the campaign. They simply choose not to explicitly mention it because they understand that in a few months they can recover this cost from the overall campaign cost. This they can do because they keep high margins while quoting which covers all their bases.  

But, there is a problem with this approach.

When a media agency doesn’t separate the set-up cost, they essentially cut it up from the overall cost of the campaign. So, to recover the setup cost, the actual money that they spend on advertising gets compromised in some way or another. When that happens, the chances of you getting a lesser effective campaign are high.   

What we are trying to say this that no agency is essentially offering you a “free service”, some simply hide it under some ruse while some choose to name it explicitly.

The decision of whether you pay for the fat margins or not should depend on how you choose to advertise online. Do you want your ads to reach the targeted prospects? Or do you have the money to spend on a larger audience (that may not necessarily convert into sales)? This will decide whether you can pay for the fat margins that certain agencies are expecting from you. But if you want a targeted ad campaign on a tight budget, you will see how the setup fee doesn’t add to the overall spend in the long run.

Does Automation Help to Optimize Online Ad Spend?  

At Cyrusson Inc., we use automation to a certain extent. It stops us from overspending and optimizing ad placements. For example, in case the weather changes, with automation, the ads change automatically. But should we excessively rely on automation? We don’t believe we should.

When automation is not controlled or regulated, it can bring irrelevant traffic. That is, ads will go to the people who will never become customers. When this happens, it can unnecessarily lead to overspending.

Those who rely on automation do so quite blindly. That is to say that they use automated management systems for online ads and then simply forget about the campaign.  By doing this, they leave it to chance that traffic will get converted into actual customers. They do not actively manage the ads that boutique companies like ours do.

What Makes Cyrusson Inc. Different?  

We consider ourselves different from traditional media agencies that have only recently branched out into digital advertising. Our competitors are digital advertising agencies, that didn’t branch from a parent group but were formed solely to power the digital space. We consider them competition because their focus aligns with us. That is, they too focus on strategy.  

The reason our focus remains on strategy is that it is built by people (no automation here). We believe that any advertising and marketing agency is built on the expertise of its team members. It is these people who spend hours brainstorming strategies. Instead of relying on automation, our human think tanks do the work. And, if we may say so, they deliver expected results. Our team is built of people who undergo rigorous training, who get certified, and who constantly up their game.  

The reason why we do not consider traditional media houses as our competitors is because they haven’t invested in developing their strategic knowledge like the rest of us. In most cases, they jump into this bandwagon because people aren’t buying from TV, newspaper, radio, and Yellow Pages ads. Their approach is different as are their reasons. We believe that having strategic knowledge (which comes from experience, education, certifications) is important to survive this business. 

It is this thought process that differentiates us from the rest. While we automate ads as much as other agencies, we also believe in constantly reviewing automation. Our experience and strategic knowledge tell us that there isn’t yet any automotive process that can match human intervention. We believe that simply targeting traffic and customers isn’t the right approach in advertising. It is getting the right customers with the right traffic. It is this outlook that makes us ever-evolving and thus dynamic.

Does It Matter How Digital Advertising Results are Achieved?  

If you have noticed, we have constantly spoken about strategic knowledge and how it makes a world of difference in digital advertising. We strongly believe that simply achieving results shouldn’t be enough for clients. You should also know how those results were achieved.

So, if you are thinking that “as long as my website sees traffic, my office receives calls, and more people seem interested, it doesn’t matter how this happened”, your perspective isn’t right.

The truth is that more traffic doesn’t mean more business. Useless traffic may cost you more time and money.  

According to the Pareto Principle, 20% of your prospects are finally responsible for 80% of the business you eventually do. Alternatively, it also suggests that if you are getting more calls and seeing more traffic, it doesn’t necessarily mean more conversion. Doesn’t it then make sense to tailor digital advertising so that you can specifically target the 20% you will eventually matter for your business? If your team can focus on engaging with prospective clients who matter, their interactions will improve which will then drive more business.  

Yes, this does seem like a dream – maybe even an unrealistic one. Imagine only targeting people who will buy your products or services! The truth is that to achieve this a lot of work needs to be done in the background. Also, this can only be achieved by developing custom-made strategies. At Cyrusson Inc. this is what we do for all our clients.  

We believe that you should spend your money on gaining valuable customers. Instead of competing against automated, mass-market campaigns and systems, we deliver value-based online ad campaigns. Our solid fundamentals and desire to custom develop every campaign make us different.

We offer a host of services in digital marketing. From search engine optimization to business listings, web development to social media marketing and branding, blog development, and reputation management, our expertise is all-encompassing.

If you want to know more about our approach, feel free to contact us today. Call us or drop us a message, we will get in touch with you as soon as possible.

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