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How the Publicity Business Model Boosted their Profitability

Follow Andrea Desfarge’s fledgling PR agency, Publicity’s, risk-reward model to boost your business profitability

Monique Verduyn

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Vital stats

  • Company: Publicity
  • Player: Andrea Desfarges
  • Est: 2013
  • Contact: +27 (0)21 557 0213
  • Visit: www.publicitysa.com

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On her LinkedIn profile, Andrea Desfarges calls herself a ’different PR consultant.’ Having run her own high-profile agency in London for eight years, she returned to Cape Town and launched the simply titled Publicity in August 2013. One thing that is different about Publicity, in the rather cluttered world of PR, is its business model.

Related: Defining the Business Model

A business model that fits tight budgets

Many service providers are more interested in the reward and less interested in accepting risks over and above their standard retainer model.

Desfarges has challenged this by doing away with the retainer-based contracts, and adopting a more co-operative stance to share risk and rewards with her customers, and build confidence for a long-term relationship.

In a sluggish economy, it’s certainly not a bad idea to be the kind of partner that clients contract with to directly achieve business outcomes for and with the customer. It’s about taking a broader view of risk and pricing your services according to projects rather than long-term contracts.

“My aim has always been to keep Publicity small and keep it real,” says Desfarges. “In the PR industry, honesty is important, as is doing what you say you will. By sharing costs with clients and agreeing to share profits, we ensure that we keep our word.

“It’s not about over-promising, because under-delivering would directly impact our business. On the clients’ part, they have nothing to lose, nor do they get lumbered with an expensive retainer.”

Concept-driven PR

Another distinguishing feature of the business is its focus on concept- and ideas-driven campaigns which are integrated into customers’ existing advertising strategies and ensure that the overall look and feel of their brand remains strong.

Publicity partners with well-known brands on projects that usually include digital and design aspects, online marketing, media work and an integrated marketing idea that gives that initial boost of ‘talkativity.’

“We focus on fast activation through clever activities, usually run in public areas, that are made to target a select audience and engage with them through the marketing experience so that they have a personal interaction with the brand,” she says.

“It’s an approach that is particularly well suited to product and campaign launches that need to get sales and media attention quickly.”

Partnering with the right people

A recent success is Publicity’s Shop for Good project, an online retail store where profits go to The Children’s Hospital Trust which will use the proceeds to fund the upgrades at the Red Cross War Memorial Children’s Hospital.

Another is a family event at Cape Town’s Castle of Good Hope that is attractive to adults too, and holds much more in store for visitors than the usual face painting and jumping castles.

“It’s really about coming up with ideas and partnering with the organisations that can make your ideas work,” she says.

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Top tips

  • In a competitive industry, share risk and reward with your clients to attract business
  • In PR and marketing, focus on select audiences for bigger impact – effective marketing is niche marketing
  • Partner with causes and brands that your target audience cares about to get your client’s (or your) brand’s attention.

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Related: Win-Win: Strategically Partner With Your Top Competitors 

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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Business Model

4 Types Of Business Models To Suit Your Business Concept

There are four main types of business models, see which one suits your business concept.

Alison Job

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Different types of business models suit different types of businesses. A business model is the way that a company sells products to its customers. It describes how a business creates, delivers, and captures value.

What type of business model should you adopt?

A business model defines how the enterprise delivers value to customers, gets them to pay for that value, and converts those payments to profit.

There are four basic types of business model that any for-profit business will fall into:

  1. Manufacturer
  2. Distributor
  3. Retailer
  4. Franchise.
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Business Model

How To Pick The Business Model That Works For You

So, you’ve picked your lane.  You’ve decided what you want to do and why you want to do it.  You’ve picked something you’re good at.  You’re convinced the world needs and values it.  You now need to decide how to make money.  That’s where business model design comes in. 

Anthony Miller

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There are plenty of business model options for the same idea.  For example, let’s say your idea is to offer historic tours of Cape Town.  You could either do it yourself or hire professional guides to do it.  Or you could use mobile technology to provide DIY walking tours.  You could charge per tour or you could charge a membership fee.  There are so many options.  How do you pick the model that works for you?

The Lean Canvas is a great tool for entrepreneurs who are faced with this question. Adapted from The Business Model Canvas, it provides a simple, one page framework for brainstorming possible business models, prioritising where to start, and tracking ongoing learning.  It walks the entrepreneur through the business model process logically and ensures the key elements of a successful business are considered.

Related: Business Model Design – Picking The Business Model That Works For You

My co-founders and I have used the Canvas extensively at Simply – for designing our business model, and for communicating it to partners and investors. The only thing you know with certainty when you start a business is that it’s not going to turn out as you expect it to.  The Canvas evolves as you go – it was, and continues to be, a very useful guide in our journey.

Recognising an opportunity for disruption

We figured there was an opportunity to do something disruptive in the SA life insurance space.  It was clear to us that lots of people were either not covered or getting a rough deal.  Guided by the Canvas, we defined our first Customer Segment as adult South Africans, aged between 25 and 45 and earning between R5k and R30k monthly.

We then identified the 3 big Problems – specific to that segment – that needed solving:

  1. Most of the people in our segment have some form of funeral cover, but very few have life or disability cover.
  2. The cover they do have is often expensive relative to the benefits provided (i.e. a very small % of the premium goes towards the risk costs).
  3. There is no simple, intuitive way to buy good value life, disability and funeral cover online.

Developing a value proposition

Next came the Value Proposition.  We believed we could use technology, digital marketing and human-centred product design to deliver simple, online life, disability and funeral insurance at a great price.  We felt we could be for life insurance in South Africa what Takealot has been for retail.

We thought the world was moving far faster than incumbents realised; that millennials were ready to buy life insurance online; that we could build for the digital world and be in the right place at the right time.

And the rest flowed from there.  I don’t have the time or the space to walk you through the other elements of the Canvas here, but you can probably fill in the blanks.  Suffice to say, the process was invaluable and enabled us to build our business around a clearly considered business model.  It’s early days, but the signs are good – we’re making a positive impact, having fun and keeping our investors happy.

Creating a Lean Canvas

So, how should you go about sketching your own Lean Canvas?  The team at www.leanstack.com suggest the following approach:

  1. Sketch a canvas in one sitting. While a business plan can take weeks or months to write, your initial canvas should be sketched quickly.
  2. It’s okay to leave sections blank. Rather than trying to research or debate the “right” answers, put something down quickly or leave it blank and come back to it later.
  3. Think in the present. Business plans try too hard to predict the future which is impossible. Instead, write your canvas with a ‘getting things done’ attitude.
  4. Use a customer-centric approach.  You may need to sketch one Canvas per customer segment.  Start with the Customer Segment and go in sequence.

The Canvas has brought clarity and a common language to our business model design process.  It’s enabled us to agree upon and communicate our business model effectively – both internally and externally.  It’s also allowed us to tune and adjust our model as our story has unfolded – an inevitability for entrepreneurs.  I highly recommend the Lean Canvas as a tool for designing your business model.  Give it a try – I think you’ll like it.

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Business Model

Want To Change Your Business Model? Answer These 3 Questions

Here are a few pointers on figuring out the best way to grow your business and keep it sustainable for years to come.

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To grow sustainably, is it better to take on projects that are frequent and reliable, or sparse but lucrative?

Q: I own a film and production company, and I shot 100 videos last year – 70 weddings and 30 corporate, totaling $330,000 in revenue. The corporate videos are more profitable, but weddings are always happening. I don’t want to turn off a constant source of revenue, but should I spend more time pursuing corporate events to grow my business? – Trevor R.

Welcome, Trevor, to the entrepreneur’s struggle! You build a great product or service, make good money and the next thing you know, you feel like you have to change your model. It’s the age-old question of scale: What’s the best way for your business to grow, and does that mean making less revenue now in order to have more sustainable growth for years to come?

Related: 4 Types Of Business Models

With the bulk of your time being spent on wedding videos, you probably feel stuck in the slow lane, watching better profits pass you by. But remember that scale is not just about margins.

Numbers can be deceiving, and you control what you charge for your services. While your corporate videos are more profitable right now, going all-in might not be the long-term answer.

To figure out the best route for your business, start with a clear vision of your ideal final destination. How much money – and profit – do you want to make per year? It might sound like a frivolous question (who doesn’t always want to make more?), but it will allow you to reverse-engineer your business model and help determine a practical answer.

Let’s say you want $1 million in gross revenue per year. At this time, it sounds like you charge about $5,500 per corporate video and about $2,400 per wedding video. That means you’d need to sell either 182 corporate videos or 417 wedding videos. (That’s a lot of videos!) Use those numbers to guide your vision. Next, consider scale, which depends on a number of growth factors.

First, creating value: Make sure you’re charging the appropriate amount for your services in order to reach your goals.

Second, anticipating growth: Where is the greatest opportunity, not just at the moment, but in the future?

And third, limiting expenses: How can you keep costs down so spending doesn’t outpace revenue?

Related: 3 Types Of Ecommerce Business Models

Answering honestly will help you create several business models. For you, Trevor, those models are (a) weddings and corporate, (b) weddings only or (c) corporate only. As a case study, let’s consider “weddings only.”

Last year, you worked 70 nuptials. Before you consider hitting pause on that side of your business, revisit those growth factors to figure out if you can make it more profitable.

  • Should you charge more for each video?
  • How many clients did you turn down last year?
  • Could you have taken them on if you had extra help?

Weigh the costs, and consider adding another videographer to the staff. If that seems financially impossible, look for ways to at least maintain your current output while trimming production costs.

For a small business, profitability is a mad science of focus, projections, and getting out of your own way. What makes the most money on a per-item basis is not necessarily what will make you the most profit in the long run.

Related: How to Make Your Business Model Go the Distance

Consider Amazon: It created scale by focusing on smaller margins. It’s a helpful reminder that there are different ways to succeed.

Understand what you can charge, how you should save and who is most likely to buy from you in the future. By simplifying the complicated challenge, you can jump on the fast track to growth.

This article was originally posted here on Entrepreneur.com.

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