Graphic designer using tabletShootOutLoud/Getty Images/iStockphoto
Like so many successful ideas, the founder of Siren Advertising found the right business model by accident. Max Entin's firm has found success by investing its own money in advertising campaigns, charging clients only for results. But he started off on another path entirely.
In 2006, Mr. Entin had started a software development firm to do outsourced work for clients around North America, using programmers in Europe. The firm grew, but with success came a larger payroll and soon he found that some of his graphic designers were spinning their wheels, waiting for programmers to finish their work. To make the best use of his staff, he launched into side-projects, eventually asking his programming clients if they'd be interested in letting his firm design and run their advertising campaigns. Since his firm was a new entrant into the advertising space, he offered an incentive.
"To get some of the business going, we decided to say hey, use our own money and take the risk on us," he says. "If it works out, just pay us a commission."
Not only did it work out, but it proved successful enough for Mr. Entin to start an advertising company that uses that same promotional tactic as its core offering.
Founded in 2009, the Toronto-based Siren has grown to 10 employees, and has run major ad campaigns for clients like Groupon, LivingSocial and Beyond the Rack. Mr. Entin says the firm also specializes in offering services to high-margin small businesses like dentists and veterinarians.
The firm works primarily with online advertising, including display (or banner) ads, Facebook ads, paid-search ads like the ones that appear on Google or Bing searches, as well as pop-up and pop-under advertising; Siren is also moving into mobile ads.
The Siren model of running campaigns first and billing second essentially means investing their own money in the project: Not just in the creative design of the material, but in the money that it costs to run the ad campaigns online.
"If our campaign works and clients end up making sales, we collect a commission on those sales. If it doesn't work, and they don't get any sales, then we lose some money but the client doesn't lose anything," says Mr. Entin. "We offer a zero-risk ad solution for our clients, which is very unique in this market."
The average initial investment the company makes to test a campaign is typically modest – between $50 and $5,000 – but Mr. Entin says the firm has run test campaigns upwards of $30,000. The firm typically knows within two to six weeks if the campaign is going to fly, or whether it's time for both parties to walk away.
"It's the ultimate win-win scenario, because the client is not wasting money on advertising that doesn't work," says Mr. Entin. "If they were paying someone a flat fee, they'd be wasting a lot of money."
Ivor Tossell has been writing columns about online culture for The Globe and Mail since 2005. A reformed web programmer, his writing on urban affairs, technology and culture has appeared in Canadian publications ranging from very glossy to downright inky. He lives in Toronto.