Agencies and vendors–can’t live with ’em, can’t live without ’em. Some thoughts on how interpret the advice you get from these partners.
I have written and rewritten this part of the guide multiple times, trying to balance objectivity with the emotion this topic inspires.
Let me get it out of the way: b2b salespeople often drive me crazy. I get up to 20 cold email and LinkedIn pitches per day, and none of them are ever relevant. And I’ve worked with several “digital marketing” agencies that want to show up and collect a 15% commission to passively manage a few branded Adwords campaigns.
The martech and agency world is full of people more than willing to sacrifice the future of your business to the altar of their second Lambo. But that’s not what this post is about.
I’m going to assume that you have strong relationships with well-intentioned partners. And I’m going to tell you why you need to second-guess their advice anyway.
Advice From Martech Vendors
When you decide to work with a vendor, you’re making the choice to adopt the vendor’s frame of reference. You get the benefit of their expertise, but you also take on the risk of their blind spots.
Google Analytics is one of the best examples of this. Google, as an entity, was early to the digital marketing and eCommerce game. Many of today’s eCommerce leaders “grew up” analyzing GA dashboards, working with agencies to run Adwords campaigns, and potentially even learning about the industry from Google-produced training programs. I’m certainly guilty of all of the above.
Google sells digital advertising and was founded by computer engineers. Google’s products reflect this frame of reference; Google products aren’t very helpful in understanding audience behavior over time or how changes in the assortment impact marketing performance. And that’s fine…as long as you integrate other points of view.
eCommerce is a very vendor-driven business. As you move your way down the organizational ladder, teams or individuals are often responsible for managing a single vendor or channel as the entire scope of their role.
These individual contributors then run reporting pulled directly from their vendor and roll it back up to the top. Without intervention, the eCommerce leader’s perspective is often a synthesis of several vendor perspectives. And that results in major blind spots. Some factors that heavily influence the business are easily overlooked.
Vendors also love to bias reporting methodology in their own favor.
I remember sitting in a quarterly recap from a martech vendor and hearing that a campaign earned the brand 23x ROI. “Wow,” I thought, “this sounds wayyy too good to be true.”
It turns out that metric was based on a pre-post analysis, not an experiment with a holdout group. A pre-post analysis can easily be hacked to your advantage. Just pick a slow sales period for pre and a tentpole sales event for post.
Advice From Digital Marketing Agencies
A business relationship is only as good as the incentives you design around it. And the traditional agency model incentivizes a lot of bad behavior.
In the typical digital marketing agency model, the business pays the agency a percent of the ad spend the agency manages. And that encourages the agency to increase spend level by whatever means necessary. Ideally, that increase would come from business growth. But often, it comes from upselling and misrepresentation.
You run into trouble with agencies because they’re always pushing you to go big or go home. A common scenario: sales beat expectations last year because you had several hit items, or an unexpected PR win. The agency takes full credit for that growth and pushes you to scale even more this year. But you don’t “comp” the hot items or the free PR. This makes ad spend less efficient, and you’re stuck with a bunch of unsold inventory you need to fire sale.
Taylor Holiday shared a great take on the competitive advantage of hiring an agency. It only makes sense to work with one if:
- They can attract better channel managers than you can, or
- They can use their knowledge of multiple brands to provide you a competitive advantage
I 100% agree with this. But now that many digital marketing channels are fairly mature, there isn’t much competitive advantage a channel specialist can provide. Any “hacks” in ad targeting or setup are quickly shared on the internet, where the advantage is competed away.
Competitive advantage in a channel has to come from higher level strategy: creative iteration, understanding what part of your assortment works best in the channel and timing your marketing calendar to get the most out of less competitive moments in the auction.
A great agency will integrate itself into your team and help develop these ideas. But many agencies don’t even ask about your product assortment or your marketing calendar before the contract is signed…or ever.
The Vicious Cycle
It’s a vicious cycle: eCommerce professionals lean on agencies and vendors to drive the business, so they’re unable to tell the story of how the business works. Agencies and vendors give boilerplate advice because none of the eCommerce professionals they partner with are able to tell them how the business works.
This was a mutually beneficial relationship in boom times, but now it’s just toxic. To break this cycle, we need to develop the tools to really understand what’s going on beneath the surface of the businesses we run.
No one wants to sell a commodity, because you wind up competing on price, and the biggest guy almost always wins. But if you’re selling a product in a crowded category and running the same vendor playbook as everyone else in that category…how is that differentiated?
To create an advantage you need to understand how your customers interact with your product assortment, and leverage both to your advantage in whatever marketing channels you choose. And that’s what Modern Lifecycle Marketing will help you do.