The Real Reasons Totally Sane Marketers Willingly Pay Royalties to Copywriters … Despite the Protestations of Accountants, Controllers, and Others.
Yes … it makes total sense to pay a copywriter a fee for the service he/she provides.
No money. No copy.
No copy. No sales.
Not rocket science.
But why do many of the world’s most accomplished and successful direct marketers willingly pay direct response copywriters a royalty, mailing fee, or portion of the increase in revenue?
It’s an excellent question and understanding the answer will make you a stronger marketer.
Marty Edelston, founder of Boardroom, one of the most successful newsletter publishing companies on the planet, regularly paid copywriters tens of thousands in royalties. He went one step further, usually adding a note to the copywriter along with the whopping checks he mailed.
“Thanks for all your help with this promotion … more work coming up … let’s beat the control …” … or words to that effect.
The accountants, even at Boardroom, would wail and whine and wonder why on earth the company was sending these whopping checks to direct response copywriters. “After all,” said the accountants, “those copywriters just put words on a page and there are plenty of copywriters around.”
But Edelston and others at Boardroom understood the power of direct response copywriting. They only wanted direct response copy because they knew it worked. And they said, “We’re going to find and hire the world’s top copywriters and if that means we pay them hundreds of thousands in royalties, we’re going to write those checks.”
It’s a mindset.
Gary Bencivenga earned so much in royalties that he purchased a house in The Hamptons, living among the “Titans” of Wall Street. How much did companies ship to Gary Bencivenga in royalties? Only one person knows the answer to that question. But my guess? Several million dollars.
And the companies that hired Bencivenga gleefully paid him. They paid Bencivenga five cents, or thereabouts, and he brought them a dollar. PRETTY GOOD ROI THERE!
Boardroom was not, and is not, the only direct marketing company that pays royalties to direct response copywriters. Thousands of companies will pay a royalty or a percentage of the gross revenue to a copywriter … despite the protestations of accountants and others.
Why are companies gladly making these payments?
- It’s great for cash flow. Instead of paying a huge amount upfront with no guarantee of any results, you pay the copywriter based on actual real revenue that comes in the door.
- If things don’t work with the copywriter, the loss is minimal.
- The amount of the royalty is actually pretty small when you consider the potential revenue gain.
- The greatest return ever. You give me a dime … maybe a nickel … sometimes less … and you get a dollar.
- You gain the full and total attention of the copywriter who will be fully vested in the project and will work extremely hard to make sure you get as much revenue as possible.
- The copywriter will write a TON of copy in order to test and discover the appeal that works. The copywriter will establish controls … and strive to beat them … all to help you generate more revenue.
- The copywriter will more than justify the royalty by helping you with upsells, pricing strategy, downsells, cross-sells, list segmentation, and other ways to bring in more revenue.
- You keep a direct response copywriter working with you. I’m biased, I know, but it’s really difficult to find direct response copywriters who are reliable, driven, experienced, professional, proven, and able to motivate people to try your product or service by pulling their credit card out of their wallet or making a phone call.
- When I work with a client, I work across the entire funnel … everything from display ads to follow-up emails. You don’t have to hire additional copywriters.
- A direct response copywriter helps you find the customers who really want what you have to buy … and this builds the value of the company and maximizes the lifetime value of each customer.
Agora is one of the world’s top direct marketing companies, generating hundreds of millions in revenue. If a copywriter is not earning well over six figures in revenue from royalties, very soon after being hired, they get fired.
Imagine that conversation.
“I’m sorry, Toby, but we’re not paying you enough in royalties. You have to earn a lot more or we’re going to fire you.”
Every company is selling something and, as such, has salespeople. Most companies pay their salespeople on some type of commission basis and the smartest companies understand that if the salespeople are making money, they’re making money. Some of the smartest business leaders are delighted when their salespeople earn more than they do.
A direct response copywriter is a salesperson, selling your products or services to tens of thousands of people through words and images.
When Clayton Makepeace was writing copy for Weiss Research, his commission was 10% of gross revenue.
When a promotion or launch generated $3 million, he earned $300,000.
Yes, the accountants might have had brain implosions, but, based on the financial model at the company, it was a huge win. Weiss had $2.7 million in revenue they didn’t have before.
A client was earning a chunk of money selling an ebook and I had a 3% royalty off a VSL and other deliverables I wrote. That’s an outstanding deal … for my client … and solid for me. I worked especially hard on that VSL knowing that it might generate a good royalty for me plus great revenue for the client.
Paying a royalty, and sometimes a whopping royalty, usually requires a mindset change from the company and the people running the marketing and/or the company.
Most companies are not willing to make this mindset change but the ones that make the change can gain massive rewards.
Many of my clients just need one piece of copy and that’s it. The royalty model doesn’t apply here. But for clients who are super-serious about being super-successful, the mindset change is mandatory.
Let me use a comparison from my life. I lived in a southern city for many years. Great city … growing … prosperous … easy place to live, etc.
But, for many reasons, I really wanted to live in a ski town. So, I pulled up my roots and moved in 2016. My cost of housing increased. At first, I wasn’t too excited about writing that monthly check. But now that I understand all the many benefits of living where I live, I’m happy to write that check.
If I help a company generate $100 million in revenue and I get $3 million through a 3% royalty, that may seem a lot for me … but I helped you gain $97 million you didn’t have before.
Maybe this explains why so many successful direct marketing companies are willing, and even eager, to pay direct response copywriters a royalty.