As you know, advertising is the engine of trade, and today not a single entrepreneurial activity can do without it. The volume of the advertising market in the world exceeds 500 billion dollars a year. This has led to an abundance of advertising agencies all over the place. Despite the huge supply, the demand for quality advertising services is high and trends indicate that it will continue to grow, and therefore the opening of an advertising agency is a promising direction that can bring considerable profit.
First of all, you need to decide what the advertising business is. As a rule, this is an organization that performs the following functions:
- distribution of outdoor advertising;
- promotion of a client’s product or service in the media;
- conducting PR campaigns, including political ones;
- organizes an advertising company in the network;
- SMS marketing.
All these services are usually provided by advertising agencies. However, you can start a business with one specific service. This will reduce costs, and if desired, it will be possible to expand the business after making a profit. The most common option today is Internet promotion due to its effectiveness and popularity.
However, a narrow-profile agency has its drawbacks. So, clients who need a full-fledged advertising company are unlikely to agree to contact several small advertising agencies, most likely they will choose a company that can provide all services at once.
On the other hand, for a small narrow-profile agency, the costs will be minimal.
Pros and cons of the advertising business
Before starting a business, it is worth soberly assessing all the advantages and disadvantages so that there are no surprises in the future that will lead to bankruptcy. The main advantage of the advertising business is that it quickly pays off if the workflow is well organized. In just 3-5 months of work, you can fully return the invested funds and reach a net profit.
This is explained by the high demand for such services. Everywhere, businessmen are opening large and small enterprises that need to promote their services.
Also, the pluses include:
- high cost of advertising services;
- the ability to start a business without large financial investments;
- stable income with regular customers;
- the ability to conduct business from anywhere.
The advertising business can be especially successful if its owner is able to generate creative ideas and has an out-of-the-box thinking. This will interest customers and help win their loyalty. After all, the more original advertising company, the greater the result it will give. Therefore, it is important to gain the client’s trust so that he regularly contacts your agency for advertising campaigns.
The main disadvantage of the advertising business is the high level of competition, especially in large cities. Therefore, at the very beginning of activity, especially if you have organized a small company, it is recommended to cooperate with small and small organizations – this will allow you to earn a reputation and make a portfolio in order to look for larger customers in the future.
Types of advertising agencies
Starting a business, you need to choose a specific niche. Large agencies combine many different functions, while smaller organizations provide only one of the services.
All types of advertising business can be divided into:
- Advertising agencies of a full cycle – providing customers with a full range of services to promote a product or service. They conduct a full market analysis, after which they develop an advertising campaign strategy. Such agencies also have their own production facilities for the production of outdoor advertising and other materials, as well as arrangements for their placement. Large advertising agencies may also involve subcontractors in their work.
- Specialized advertising agencies – work with certain customers or target audience, or perform specific functions (parts of the full cycle), but do not carry out full advertising campaigns. For example, some organizations are engaged in the production and placement of outdoor advertising, others specialize in advertising design or organizing promotional events. Usually such teams work in cooperation with other organizations.
- BTL organizations are engaged in promotional events and actions.
- Mediasellers are organizations that buy and sell advertising space.
Also, advertising business owners can choose one of two ways to work:
- promote one client in different directions;
- develop a base of many clients.
According to the first scheme, an extremely small number of advertising companies operate in Russia, with the exception of special advertising agencies that politicians create for election campaigns.
In the West, on the contrary, this method is used extremely often. Companies prefer advertising organizations to focus solely on their business rather than splitting into multiple companies. Usually large conglomerates such as Pepsi, Coca-Cola, etc. organize their own advertising agency.
Experts recommend not to define the scope of their activities, but to start squeaking customers. This will determine whether you will promote one large business or earn money by providing services to small, small customers. You can earn in both cases.
The advertising services market is constantly evolving and growing in volume. Supply and demand are growing. Business cannot be called seasonal – there is a demand for services at any time of the year, even despite the seasonality of some types of businesses whose owners apply for services. Usually, if the client was satisfied with the services of an advertising company at the first contact, he constantly uses the services of the same organization. Since the need for advertising is in every type of activity, there is no shortage of customers in the advertising business.
Although it is not so difficult to enter the business – the market is no more than half full, you will need to have creative thinking, ingenuity and originality in order to gain a foothold in the market. Ideally, a business owner should have some understanding of the field, otherwise it will be quite difficult for a novice entrepreneur to understand the matter, but not impossible.
The main competitors should be considered large advertising agencies that carry out the full cycle of the advertising company. At the same time, it will not work to attract customers with a low cost. Since advertising is a creative sphere, organizing your own business needs to be approached accordingly. As for the cost, at first set it at a level slightly below average.
Absolutely all businessmen will be potential clients, but be prepared that the newly opened and unknown company will be approached mainly by small and medium-sized clients. The owners of large companies usually choose serious and large advertising agencies with many years of experience.
Drawing up a SWOT analysis allows you to immediately assess all the opportunities and threats to your business. As they say, forewarned is forearmed. And you can foresee all the nuances at the planning stage.
Advertising Business Opportunities:
- the emergence of new advertising technologies and the way of promotion (you must always be aware of trends in modern advertising);
- a large number of suppliers;
- gradual expansion of the range of services provided;
- prerequisites for the development of the information industry;
- a large number of different niches (which means you can occupy your own and suffer less from a high level of competition).
- changing consumer tastes and attitudes;
- a large number of competitors;
- a constant change in the cost of services – a rise in price and a reduction in price;
- an increase in unemployment, a decrease in the number of businessmen and, as a result, the need for advertising services;
- tightening laws governing the advertising industry.
These are external factors, you can work with them and you need to respond to them, but you cannot change them. The situation is quite different with internal factors, on which the business owner has a direct influence. Both strengths and weaknesses need to be taken into account. Strengths include:
- provision of exclusive services;
- deep understanding of business and market situation;
- a wide range of possible services;
- competitive prices;
- high quality of services;
- competent advertising policy;
- small costs;
- providing discounts, promotions and gifts for regular customers.
- lack of reputation
- unknown company name;
- dependence on suppliers;
- low level of employee motivation;
- the difficulty of finding qualified workers.
Since seasonality practically does not affect the course of business, you can find customers at any time of the year. This means that it is advisable to ensure the work of the organization constantly, at least 5 days a week according to an 8-hour work schedule. The optimal working time is from 9 to 5 or from 10 to 6.
This will provide several benefits at once:
- no need to plan shift work;
- no need to apply for a part-time job and pay overtime;
- All employees can work as one team.
Since organizing the production of promotional products on your own at the first stage of the business is expensive and unprofitable, you can attract contractors to perform some operations, for example, printing posters and banners, making outdoor advertising.
Organizational and legal aspects
First of all, you need to choose one of the forms of organization – LLC, IP or CJSC. The easiest way is to open an individual entrepreneur, but if there are several founders, it is better to stop at an LLC, it is not advisable to open a CJSC.
Indicate the form of UTII taxation or simplified taxation – these forms will allow you not to go broke at the beginning of the launch. However, for simplified work, it is necessary to register a cash register.
You also need to select one of the OKVED codes:
13 – market conjecture research and determination of public opinion;
22 – production of printing materials;
25 – other printing activities;
74.40 – advertising activities;
81 – activities in the field of photography.
It is not necessary to select all of them; moreover, only a few of them are listed here. Decide on a specific line of business and range of services.
Obtaining a license to provide advertising services is not required. But it is best to study local regulations for the provision of advertising services, as well as the procedure for carrying out such activities. For example, placing advertising posters in some places requires special permission.
It is also necessary to notify Rospotrebnadzor of the start of activities and obtain all necessary permits. In this case, permission from the Fire Supervision Authority will be required. By the time of official registration, you must have a lease agreement or documents confirming the ownership of the premises.
It will not be superfluous to have your own seal, on which the logo will be placed.
In the marketing plan, it is necessary to prescribe the services provided and the target audience. Experts recommend drawing a potential client as a specific person. This will make it easier to understand who exactly you will be working for and how to meet the needs of these people.
For advertising business, you can choose the following items:
- Comprehensive service implies a complete advertising cycle, including market research, advertising campaign planning and its implementation. Or stop at a specific service, for example, promoting a business on the Internet or preparing printed advertising products.
- Orientation for owners of large and medium-sized businesses.
- Setting average prices for services.
- High quality and efficiency of advertising campaigns.
- Advertise your own business.
It is advisable to engage in advertising your own business on your own. If employees have not yet been recruited, the owner can consider an advertising campaign. It is desirable that it includes:
- cold calls on a pre-formed database;
- advertising in newspapers and specialized magazines, on radio and television;
- creating your own website and its promotion on the Internet;
- creation of a thematic community in the social. networks;
- distribution of promotional offers with a price list.