Dell Makes $3million From Twitter Sales! Will this be a wakeup call for agencies?

June 25, 2009

dellOn Saturday, June 13 Slashdot.org reported that Dell had made $3,000,000 from Twitter sales.

“Dell has admitted to raking in over $3 million from advertising its products on Twitter. The PC maker has been using Twitter for two years, and employs proprietary software to track sales from users clicking through from Twitter links. Of that $3 million, the company claims that $1 million was made in the past six months, following an explosion in Twitter’s popularity. (72.5% of Twitter users joined in 2009.) The majority of sales have come through the @DellOutlet account, which posts six to ten special offers a week — with at least half of these being Twitter exclusives. Though the $3 million is a drop in the bucket given Dell’s $12.3 billion in revenue during the first quarter of this year, it further bolsters Twitter’s case for charging businesses.”

We now have documented proof that social media channels can and do drive sales. This should help dispel some of the myths that surround the world of social media. By rights it has earned its place alongside other media and channels on the communications plan.

The press release highlights some interesting facts that I believe are worth considering more closely:

  • Dell has been using Twitter for two years. That’s probably 28-18 months before most of us had even heard of it, or if we had, we did not pay it much attention. I may be wrong but, my guess is that Dell’s foray into Twitter did not happen as a result of an agency recommendation.
  • Dell have developed proprietary software to track sales of users clicking through twitter links. This tells me that Dell invested their time and money developing this internally.
  • Dell sends out 6-10 special offers each week with at least half being Twitter exclusives. This approach not only reflects their heritage of direct to consumer commerce, but also demonstrates great direct marketing discipline with tracking and measurement.

While they are correct when they say that $3 million is a “drop in the bucket” right now from a revenue perspective, who knows what it might grow to be in time to come?

I applaud their efforts and their tenacity. They did not give up after 3-6 months but kept working at it to make it work. They are now ahead of most, if not all, of their competitors. They have a track record, know what works and what does not, and are best positioned to take future advantage of the channel as it develops.

For those agencies that have yet to embrace social media as an integral component of their new business development strategy, this should be a wakeup call. Used both correctly and strategically, it can be used to improve your agency prospecting efforts exponentially.

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Another Social Media Wakeup Call For Ad Agencies!

June 17, 2009

wake up callOn Saturday, June 13 Slashdot.org reported that Dell had made $3,000,000 from Twitter sales.

“Dell has admitted to raking in over $3 million from advertising its products on Twitter. The PC maker has been using Twitter for two years, and employs proprietary software to track sales from users clicking through from Twitter links. Of that $3 million, the company claims that $1 million was made in the past six months, following an explosion in Twitter’s popularity. (72.5% of Twitter users joined in 2009.) The majority of sales have come through the @DellOutlet account, which posts six to ten special offers a week — with at least half of these being Twitter exclusives. Though the $3 million is a drop in the bucket given Dell’s $12.3 billion in revenue during the first quarter of this year, it further bolsters Twitter’s case for charging businesses.”

We now have documented proof that social media channels can and do drive sales. This should help dispel some of the myths that surround the world of social media. By rights it has earned its place alongside other media and channels on the communications plan.

The press release highlights some interesting facts that I believe are worth considering more closely:

  • Dell has been using Twitter for two years. That’s probably 28-18 months before most of us had even heard of it, or if we had, we did not pay it much attention. I may be wrong but, my guess is that Dell’s foray into Twitter did not happen as a result of an agency recommendation.
  • Dell have developed proprietary software to track sales of users clicking through twitter links. This tells me that Dell invested their time and money developing this internally.
  • Dell sends out 6-10 special offers each week with at least half being Twitter exclusives. This approach not only reflects their heritage of direct to consumer commerce, but also demonstrates great direct marketing discipline with tracking and measurement.

While they are correct when they say that $3 million is a “drop in the bucket” right now from a revenue perspective, who knows what it might grow to be in time to come?

I applaud their efforts and their tenacity. They did not give up after 3-6 months but kept working at it to make it work. They are now ahead of most, if not all, of their competitors. They have a track record, know what works and what does not, and are best positioned to take future advantage of the channel as it develops.

For those agencies that have yet to embrace social media as an integral component of their new business development strategy, this should be a wakeup call. Used both correctly and strategically, it can be used to improve your agency prospecting efforts exponentially.

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How to set your agency up for acquisition and get the best price possible!

June 12, 2009

(Part One)

You may be one of those agency founders that start out from day one with the intention of building it to ultimately be sold at some future date. On the other hand, you may be in the group who would contend that thought could not be further from the truth. No matter what intention you start out with in reality there is a very high likely hood that one day you will find yourself in a position where you want to sell your agency.

Whether it is to one of the large public holding companies, a private equity group, or even a management buyout, at that time there are two things that I am certain you will want to be present.

Those being:

  • Significant interest in the company from several buyers, in order for there to be competitive bids that give you more than one option.
  • The highest possible price for your agency. (With as much of it in cash up front as possible and a relatively short earn out, linked to reasonable deliverables)

Ideally, you need to start planning the sale three years ahead (two at the very minimum) in order to make sure that you have built and managed your agency to be as attractive an acquisition target as possible. Here is a brief list of tips to consider when starting down this path:

Three years earnings history. Virtually every prospective buyer will want to see financial statements for the past three years. Preferably audited already, and if not you can be sure rigorous due-diligence will be forthcoming. They will be looking for stability in your numbers. Large swings either way will set off a warning bell.

Competitive or above average operating margins:  Operating margins need to be competitive and preferably consistent or improving year on year. Your cost/overhead ratios should be within acceptable market norms and stable or better still, improving year on year.

Here is a special word of advice: Avoid crediting back any costs to improve your profit numbers, unless they are truly extraneous costs. If a potential buyer finds this type of activity in the initial prospectus, it can significantly undermine your credibility and diminish their interest in your agency.

Client stability with consistent organic growth. It is very important to be able to show that your core client base has been stable over the years and that you have been able to consistently deliver meaningful organic growth across the core client base. A financial history that shows clients coming and going or revenues that vary considerably year on year will affect the price they are willing to pay or worse still could help to sour the deal.

Clients they recognize and look good on the roster. I recently spoke to an agency founder who was approached by a private equity group about possibly being acquired. At the end of the initial meeting between the two, one of the PE group members commented “There is nothing to buy here. We have never heard of any of your clients”. It is very difficult to sell an agency that supports a plethora of unknown client companies. Ideally, you should at least have a mix of both in order to make your agency an attractive acquisition target.

Positive Client interviews/feedback: Should discussions progress to a more serious level of interest, most buyers will want to have the opportunity to meet with your key clients and discuss the client/agency relationship. They will be looking to determine satisfaction levels, strength of the relationship, perceived value delivery, and overall stability of the account. This could include both senior level and day to day client contacts.

In my next posting I will share additional tips that address new business, creativity, leadership and agency differentiation in the market place.


Creative arrogance can both help win and lose business. There’s a fine line!

June 4, 2009

Creative arroganceThe creative mind never ceases to both amaze and inspire me. Their innate ability to see everything in such a unique way and to come up with creative ideas that so effectively build brands, engender customer loyalty and drive sales. In so many ways we as agencies would not be anywhere near as effective without them. 

This posting however, is a rant about the dark side of the creative psyche. When their incredible self esteem and undaunting belief in their talent takes them into the arrogance zone. I was recently exposed to such an episode and it ultimately cost the agency the business.

The agency received a new business pitch brief from one of the largest consumer brands in the world. This was their opportunity to make an impact, show the client what they were capable of, and earn their place on the clients agency roster. Not to mention that if they won the pitch, it would probably have been their second or third largest client!

Because this was a re-launch of a previous campaign the brief was very specific about what the client wanted and expected. They specified which of the previous assets they wanted to keep, as well as the media in which they felt it should be delivered. Not the perfect clean slate for the creative mind, but an incredible opportunity none the less.

During the early days of developing the creative strategy the team started to veer sharply away from the clients briefing – disregarding many of the suggested guidelines and expectations contained within. I reinforced the need to go back and address the brief with the initial concepts, and then once that was achieved we could share an alternative strategy – one that the agency believed was the correct way to approach it.

The response from the team was arrogant to say the least, and sheer stupidity from a business perspective. In essence their response was:

We think that most clients are stupid and have no idea what they really need. We as an agency will not present work that supports an approach that we don’t agree with. We are only going to present work against the strategy we feel is right and ignore the client’s guidelines.”

To make a long story short. The agency lost the pitch. Client feedback was that work did not address the brief, was confusing, did not appear to support their go to market strategy, nor did it reflect the personality of the brand. No surprise given the circumstances!

The agency team response, wait for it…..”The client is just not very sophisticated and did not ‘get’ the work”. I guess sometimes agencies just cannot get out of their own way.


Delivering ad agency value and being paid for it.

May 28, 2009

ufo-masterlock-590x384I have often been challenged by other agency leaders about the apparent conflict between suggesting that agencies should provide value and be proactive at the same time as warning them about adequate resource management and cost control. In my experience it is possible to do both and do them well.

Most clients will pay for value if it is indeed value as defined or perceived by them. Too often agencies find themselves in a position where the client refuses to pay for work because they just do not see the value in what we are charging for. To us we have provided value and we deserve compensation. The bottom line is just because we put in the hours does not mean that we should be paid.

It all starts with listening. Listening to the client when they tell you about what they want, need and expect. Agencies are generally very poor listeners and overzealous talkers. We love to hear our own voices and opinions and quite often drink our own KoolAid. Take the time up front to listen to the client, ask questions and clarify anything that is not clear. Raise any concerns up front and agree on deliverables, timelines and outcomes.

Sometimes we are too eager to get started, do not ask questions for fear of hearing what we don’t want to hear, and think if we just go ahead and do it we will be fine. This is where the wheels start coming off. Here are some examples of how you can deliver value (as perceived by the client) and contain your costs:

  • Stick to the assigned budget. If the budget allows for 10 hours copywriting make sure the writer does the best they can within the time allowed. Not the best they possibly can, given no time limit.
  • Think first before assigning multiple creative teams to work on the assignment. Does it warrant it? Can you afford it? Would it not be better for both if you just assigned the team best suited through experience and talent to address it?
  • Take a close look at your client team. Do you have the right mix of junior and senior talent? I suggest you discuss expectations with your client, and point out cost implications if their expectations seem unreasonable. I have often politely said “okay, if that’s what you really want the cost implication is X. However, if we do it this way you will still get the same level of support and the cost is X-5”. Their response was to do it the suggested way.
  • Submit cost estimates ahead of the work not afterwards. Clients hate surprises and we seldom get paid for them.
  • Being proactive does not have to be costly. Here are a couple of approaches I have used successfully;
    • Each month assign a client to the agency and have everyone come up with proactive ideas for them. Invite them in for an afternoon and have selected people present their ideas.
    • Client CMO summit. Once a year get the senior marketing people from all your clients together for a day’s summit to share ideas etc.

Delivering agency value to clients and getting paid for it is not hard as you may think.


Existing clients, the cornerstone of growing a profitable advertising agency

December 18, 2008

MoneyTree2There is a way to deliver significant new revenue growth at a fraction of the cost of going after new client revenue.

When you enthusiastically sit down to develop your agency growth plan for the year, do you spend as much time talking about existing clients as you do new business development? Probably not as often as you should!

The analysts who cover the public agency holding companies know just how important existing clients are to growth of a successful and profitable agency. Not only do they look at recurring revenue but also at what level of organic growth did the agency deliver from those existing clients. And should they not adequately deliver, they penalize the holding company accordingly.

It is impossible to grow and be profitable without a stable client base that is also delivering increased revenue on an annual basis. Without it you just do not have the intrinsics to support a robust new business strategy. Yes in a few words, existing clients help you fund new business strain. Without it you need generous investors that are not concerned about returns.

Having said this, one of the major issues most agency principals face today is the fact that many of the key client service executives are accomplished farmers and poor hunters.

Agencies do a great job servicing the clients but are less skilled at identifying and growing new opportunities.

The result can be summed up in a client comment like this:

“Most agencies…. do not listen, do not seem to care about our business, lack creativity, get stale quickly and in general are not moving as fast as consumers and technology”. (Large beverage client)

More so than ever before our clients are looking to us to not only help them grow and be successful, but in many instances just survive the current economic firestorm. They are looking for new ideas and new approaches but they want to know that the accompanying risk is small and that you have done your homework. In my experience, what you do not plan against and measure does not get done. Every year we plug in a number for “Organic New Business Growth” and just hope that it happens.

You may have already found out the hard way but that’s just not going to cut it. If you are serious about delivering profitable organic revenue growth then I recommend that you:

Create an organic new business strategy for all key clients from which you have identified possible growth. This should include elements like;

  • Organogram of the company, including all divisions, key leaders with responsibilities and products etc.
  • Marketing/Advertising budgets, target markets, channels etc
  • Current agency relationships, key contacts both agency/client plus any legacy relationships etc.
  • Company performance status, competitive environment, key issues etc
  • Referral strategy using existing client’s contacts.
  • Assignment of agency responsibilities’ by person, action and time.
  • Monthly client team meetings to review progress.

An organic new business growth strategy will deliver significant new revenue growth, at a fraction of the cost of going after new client revenue.