Small Ad Agencies Turning To Revenue-Sharing & Barter Deals
In an advertising landscape dominated by giants, little guys have to take a different tack to make their mark. One such independent marketing and advertising agency, Anomaly, is an example. The New York firm teamed up with the Michigan State Lottery to help sell the space on the back of lottery tickets to advertisers. But instead of being paid the usual fee, Anomaly will share in 10% of the revenue generated by ad sales.
In a new twist, agencies increasingly are willing to accept payment in the form of an interest in how a product does...instead of the fees they normally charge.
Some agencies are even going a step beyond by taking equity in the client’s company as payment. That’s what Brooklyn Brothers agreed to do this year when working for a doctor who designed a new pill. The New York based agency will have an equity stake in the product in exchange for their creative efforts.
Bigger ad agencies followed a similar strategy during the dot-com boom several years ago, often taking stock as a form of payment. Unfortunately, many ended up losing on such trades when the dot-com stocks crashed. As in all trading endeavors, each party must realistically look at the potential risks and rewards of such transactions.
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