Buy vs. Build your Ad Agency’s New Business Database
Smart business decision to expect new business director to build a prospecting database?
Not long ago, Jeff, a twenty-something new business guy gave me a call. He was a new employee at a well-known regional ad agency. His management team had given him a group of industry categories that they wanted him to pursue, and had charged him with identifying likely companies and people he should talk to.
So, he called my company, The List about purchasing a customized database of corporate marketers that fit their criteria. Jeff determined that he could purchase exactly what his agency needed for less than $3,000 and have it in 24 hours. He said he'd call back with his president's approval.
A few days later, I called Jeff and learned that his president had told him it was his job to build the database. I told him I'd call back in 6 months to hear how he was doing.
Right on schedule, I called Jeff 6 months later. Not surprisingly, he had just been fired for not generating any new business. Why? Because he'd spent the entire time building the database (at the request of his president).
Let's do some simple math: Assume Jeff was paid $50,000 a year. Add in benefits and his total annual cost was probably close to $60,000. So, over 6 months this regional agency spent $30,000 building a new business database they never used.
Think of the losers in this equation: Jeff is out of a job; the agency lost 6 months of potential revenue; and, the management team is disheartened about the "failure" of their new business effort.
This is a common mistake made by ad agencies and other marketing services companies that illustrates the fallacy and drawbacks of building instead of buying. I encourage readers to do the math to avoid making the same mistake.
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