We’re back with another Mailbox Monday!
To have your question answered in this column next Monday, email me at [email protected].
Today’s question is all about copywriting royalties…
Next month I’ve been asked to do a private presentation for a mastermind group of copywriters, all about copywriting royalties and other pay-for-performance arrangements. This question is a perfect warm-up for that.
I’ll start with the question…
How do you track and make sure your clients pay you 100% of your royalties from copy?
The dirty truth about copywriting royalties…
What I told Regev is that you simply can’t track and make sure clients pay you 100% of the royalties you’ve earned.
Not without getting inside their business and actually working there. But even then, there are all sorts of ways a nefarious character could scheme you out of your well-earned cash.
And yet, nearly every project I’ve taken on since 2010 has had royalties as a component of the compensation package, and some even before that.
So what’s the deal? How do I make sure I get paid?
Option #1: Pick good clients…
There are a million-and-one reasons a copywriter doesn’t get paid. Even if they write a big breakthrough package. The client could under-utilize it. The client could intentionally not pay. The client could have horrible tracking in place. The client could simply not have set up the systems to stay on top of royalties. And so on, and so on.
The best direct response companies, though, tend to consider copywriters as some of the most-valued members of their team. They really want to take care of their copywriters. The boss has often been on the other side of the equation, and knows how it feels to rely on the client to pay those royalties.
And so they make it a priority. Not only do they prefer to work with copywriters who they can pay royalties to, they actually have systems in place to make sure every penny of royalties that is due gets paid out. They have a monthly or quarterly process for tallying up royalties due and getting that check in the mail.
They know the more they’re paying you, the more they’re making. And since they understand that, they actually want to pay you a ton of royalties.
Even so, all of that can be in place, and you can be dealing with a shady character. That’s why I pay a lot of attention to my gut (and asking around about reputation) to figure out who has high ethical standards for their own and others’ behavior.
If a client has a history of mistreating copywriters, I tend to avoid them.
And when it comes to royalties, if I sense anything negative is happening, I’m outta there quicker ‘n you can say pay-for-performance.
If you’re a direct response copywriter and you’re building royalties into your payment structure, you better have a set of criteria like the above that you use to evaluate clients.
Some of it will be asking the right questions. Some of it will be gut feeling. But you have to recognize that 99% of the battle of making sure you get your royalties comes from working with clients who prioritize them in the first place.
From there, all sorts of other tools could be used, such as sales reports, affiliate linking and back-office logins, and so on. But I don’t concern myself with that, because I choose clients I trust in the first place.
I have heard of some copywriters building an audit clause into their contracts. That is, they reserve the right to request a third-party audit of the client’s books, for the purposes of ensuring all royalty payments are correct. If the audit turns up nothing, the copywriter pays. If the audit turns up underpayment, the client owes those royalties plus the cost of the audit. The copywriters who’ve used clauses like this consider it a way to keep clients in line. Depending on who you work with, maybe it’s necessary. But again, it’s all about client selection.
Option #2: Create an alternative deal structure…
For many copywriters, I hear that royalties are not so easy to get. Because once you work outside of the direct response circles, many companies don’t consider copywriters to be salespeople, and so aren’t as used to paying for this skill on a commission or performance basis.
In this case, there are a ton of different opportunities for using your copywriting skills that can get you performance money, where getting paid works in different ways.
Many of these still require you to pick good partners. However they are great examples of thinking outside of the copywriter as a paid service provider who is only paid on work delivered.
Create your own business.
This is by far the biggest opportunity for copywriters. Most professional copywriters I know who make a good living at this have done this, in addition to or as a replacement for client work.
You can publish, you can source and sell products, you can do all sorts of things. Once you have the skills to sell with your words, the possibilities are practically endless. And if you’re concerned about clients paying you what you’ve earned, this eliminates that.
The downside is that starting a business certainly requires more commitment and a broader skills base than writing a sales letter, but the upside is tremendous when you get it right.
Create an agency and get paid for media buys.
An alternative model that I really like is the traffic agency model. I know plenty of folks who are good (but not great) copywriters who’ve followed this path. They work with all kinds of businesses, and manage their online advertising purchases. That is, they manage their Facebook and Google ads (and maybe some other networks).
This model usually involves getting paid some kind of setup fee, some kind of monthly retainer, and often a percentage of traffic purchased as well. As long as you’re delivering results, you can get paid based on the scale of the profitable campaigns you build for clients. And because you can see the amount spent on traffic and you bill the client based on that, you have a lot of control over making sure you get paid the right amount. And if they don’t pay, you simply shut off traffic.
This is a variation on the traditional ad agency model. A lot of people don’t know it, but most ad agencies don’t make much on creative. Rather, they buy media at a 15% discount, charge clients full price, and keep the difference. Big media roll-outs can generate massive fees for the agency.
Another alternative to this is the “preferred service provider” model for a number of different media. An example would be having a direct mail shop you bring your clients to for their mailings. You get a cut of every job they do, so your client doesn’t have to pay you for you to earn on performance.
In some cases, you could combine multiple elements above and be earning multiple slices of the performance pie.
Manage lead generation and get paid based on leads.
Another business model that puts you in the driver’s seat is building a lead generation agency. In some industries, it’s normal and customary for an external company to generate leads which are handed off to a company’s sales team.
So, for example, you could generate roof replacement leads, in a local market. You offer those leads to local roofing companies for some set price, maybe $50 per lead. They would either pay in advance for a set number of leads, or you would invoice after the fact for however many leads you delivered in a set time period.
There are a couple interesting variations on this model. Some lead generation agencies sell exclusive leads, where you pay a premium to be the only company that gets those leads. Others sell the same lead to a handful of companies simultaneously, who then can all follow up with the customer. I’d tend to go with the first option, because it’s how I’d like to be treated as the customer, but you have the choice as long as you’re clear to the companies you’re selling the leads to.
Also, this is a great business to set up on an area exclusive basis. So depending on the business and the industry, you could sell all leads within certain zip codes to one business, and all leads within other zip codes to another business, and so on. In certain industries, you could scale the same campaign to every city and town in the country, with different companies in every area paying you for the local leads you generate for them.
Sell your work based on usage fees.
If you are more interested in just running a small copywriting or creative services business, and you don’t work with big direct marketers, you can still get creative with how you structure your deals.
For example, there’s no requirement that you sell your services “work for hire,” which means the client is paying for you to create a work product and they own it. You could opt to structure your deals such that you maintain ownership over all work product, and clients are licensing the right to use it. They would then have to pay you on some continuous basis for the ongoing use of that work product.
For example, let’s say I write a magazine ad for a company under this arrangement. I could license the use of that ad to them for a fee of $1,000 per insertion, or some appropriate number. Which would mean that for each time they run it in a magazine, they pay me $1,000, regardless of the amount of sales it generates. They will keep running it as long as it generates adequate ROI, and I would have the right to demand payment for every instance.
Maybe a more common version of this would be the website building and hosting business. There are businesses that specialize in building websites for local and niche businesses. They create the website, working with the client. But the website is hosted on their server, rather than the business’s. So the website builder has control. The client usually pays a setup fee plus a monthly hosting fee to keep the website up, and that can keep coming in indefinitely.
Again, we’re talking creative deal structures here, but if you deal with a lot of clients who aren’t too keen on paying royalties, you may get some ideas that work.
Trade your contribution for equity.
Finally, one of my favorite ideas is actually getting a stake in the business, in exchange for your marketing contribution. It’s few and far between that you can actually end up with a deal where this really makes sense. But if you do, it can completely change your life.
Mark Ford, under his pen name Michael Masterson, has written about how he used his copywriting and marketing abilities to get into multiple business partnerships, including his current partnership position in the Agora publishing empire.
I once worked with a copywriter who had, at various times, owned parts of a seminar business, a mutual fund company, one of America’s biggest online banking success stories, multiple financial publishing companies, and a huge real estate project. He seldom put down cash to get in on these deals — rather, he contributed his marketing prowess.
These are really BIG opportunities that highly-skilled marketers have taken advantage of, but this can happen on a smaller scale, too. Just about every business out there needs marketing, and I’ve heard of consultants and copywriters getting small pieces of even local non-direct-marketing businesses just to consistently be helping them bring new customers in the door.
The biggest thing you need to remember…
Just don’t get stuck in a rut where you think you either have to work with a big direct marketing company, or not get royalties. Get creative, and think of yourself of a business problem solver who deserves to get paid based on the contribution.
Depending on what your contribution is and to whom, find a way to make it attractive to pay you on a performance basis.
And simply make that the condition on which you show up and work.
Then, find good, honest, ethical people to work with — and give it your all!
Yours for bigger breakthroughs,