Adweek’s Interactive Quarterly
has an interesting article that should be a must-read for smaller agencies
that are starting to wonder why it’s so tough to show profitability in the
online ad game.
Entitled “Inside a $0 Billion Business,” the piece by Greg Farrell talks
about everything from billing models to personnel costs, and even discusses
what one exec at Think New Ideas calls “scope creep,” in which projects
gradually just get out of hand.
Software development and licensing costs are also discussed. The problem isn’t
in gross revenues, it’s in net income, the article says. In their desire to
expand rapidly and gain as much market share as possible, many players are
succumbing to the lure of the next big project or Web site without figuring
out exactly how much it’s costing them to do the work.
Check out the whole story here.