Interview with an entrepreneur:
First-person Advertising Business
The site clogicsecure.com, as part of a joint project of the Community of Information Portals Promoting the Development of Small Businesses, continues a series of interviews with successful entrepreneurs who are ready to share their own experience in creating a business and help newcomers take their first steps in business.
"... a newcomer opening an advertising agency should understand that his colleagues who have settled here earlier will not give up their customers voluntarily, and they are always ready to fight for new ones."
Sistema RA has been operating in the market since 2002 and provides services and works in the field of marketing and advertising.
Oleg Georgievich, tell us about your first steps in the advertising business. Why did you choose this particular field?
In advertising then and now I am attracted by the creative component, the dynamic development of the advertising business, and a high degree of technological effectiveness.
I began to engage in advertising business in 1992, when I organized the Profit Group advertising agency and headed it with two partners.
During the first two years of work, I had to literally fight for survival, educate customers, lead to awareness and proper assessment of the effectiveness of advertising. In general, they worked hard for the business. Then the business began to work for us. And very successful.
In 2002, our opinions with partners on further business development were divided. I left my position at Profit Group and organized the Sistema KRA.
What difficulties did you encounter in the initial stages of doing business?
In the early 90s, with a general deficit, the services of advertising agencies were in little demand. Therefore, the main problem was the formation of the advertising market in the city, the creation and development of the media, the establishment of media relations - an advertising client agency.
As a rule, at the initial stage, until the company has developed its own customer base, it is difficult to get large orders.
Media advertising and direct sales bring no more than 30% of all orders - the rest is communications. It is difficult for a start-up company without ties to survive in the market.
And how did you solve the problem of orders at the initial stage?
When at the initial stage of development of the Sistema KRA we did not have enough connections to receive orders - we got up and went to potential customers.
They made their way through the guards, secretaries, general departments, sought meetings. So there were useful acquaintances, business relations, communications, orders, business reputation.
According to your estimates, what is the minimum amount with which you can start this business today? And what are the main expenses?
I believe that starting an advertising business from scratch is only worth it if you have the opportunity to invest a lock of 500 thousand rubles.
The main expenses will consist of:
- Office rent
- Salary (designers, sales managers, copywriter, financier)
- Technique - phones, computers, multifunction devices
Many argue that the money you invested in an advertising agency will pay off in about a year. If everything goes according to an optimistic scenario. Personally, I can give more than a hundred examples when people, having opened new advertising agencies, did not pay back their investments.
On average, the payback period of an advertising agency varies from three months to one year, depending on what budgets the agency can get.
How long have you paid back your initial investment?
At one time it was easier for me. Creating SRA "System", I had a successful ten-year experience in the advertising market. Therefore, I paid back quickly - within two months. But remember - this is an optimistic scenario!
What can you save on and what should you save on?
You can save on the office - the first time. You will mainly work "in the field", outside the office - with clients and partners. I do not recommend saving on the quality of personnel and equipment.
Experts argue that anyone who wants to deal with a large budget must produce their own intellectual product. In the advertising business, an intellectual product is branding (development of a trademark, elements of a corporate identity, etc.), event marketing, BTL. Do you agree with this statement?
In general, I agree, but I must add to this list the development of advertising messages for the media, outdoor advertising, any other advertising media, as well as media planning.
It is believed that the most cost-effective in the advertising business is creative. This means that the profitability of services for creating layouts, banners, logo design can reach 40%. Is it so?
In fact, the yield of the creative component can be significantly higher. Do not forget that the budget of any client is based on messages (ideas), like a house on the foundation.
Is there a seasonality in the advertising business?
In recent years, I stopped noticing seasonality in the advertising business.
There is a seasonal substitution of customer activity and their advertising budgets. Summer is coming - the budgets of some clients are reduced and the budgets of others are increasing.
Which specialists should be paid special attention to. How did you select key employees?
Minor employees do not exist. Any slack in the staff sooner or later will hit everyone.
I selected employees for a long time, by trial and error, experiencing difficulties and time. Often it seemed that he had assembled an almost perfect team.
But, alas, life shows that it was wrong - everything flows, everything changes, people too. And again, we have to select employees, create and strengthen a team, but at a new, higher level.
Many experts advise recruiting people for the main directions, and "attract rare freelancers for rare operations. Own, full-time creator usually" fizzles out ", that is, begins to repeat and work according to the pattern. A more multi-field system is better: while there are three freelancers" under the steam, "the fourth" nurtures "brilliant ideas for you . " (Elena Nazarenko's article "How to open an advertising agency").
Do you agree with this statement?
There is common sense in this statement; our agency, as well as many, uses the services of freelancers. To what extent and to what extent I cannot use this system. Each business is individual, as are the people who manage its business processes.
What can you say about competition in the advertising business?
Competition in the advertising business, as in any other, is quite high. Methods of counteracting other players and ways to attract customers are very diverse. So a novice opening an advertising agency must understand that his colleagues who settled here earlier will not give up their customers voluntarily, and they are always ready to fight for new ones.
Has the economic crisis affected your business?
Of course reflected. The business of our customers has decreased and advertising budgets have been approximately proportionally reduced. But it seems to me that the peak of the crisis is already behind. In 2010, changes for the better are clearly felt.
What advice could you give to novice entrepreneurs who are just thinking about starting their own business?
For beginners, I advise you to think carefully, weigh the pros and cons, really appreciate your strengths and resources, stock up on knowledge and patience. And if you have already decided, then go ahead! And good luck to you!