Yes, there are bad agencies out there. No, they aren’t all bad. Here is how to hire a digital marketing agency without getting burned.
This content first appeared in the No Best Practices newsletter on 09.10.2023.
Agency vs in-house is a hotly debated topic in the DTC space, especially when it comes to media buying. Some brand operators claim that all agencies are scams, or that an agency can never match the level of buy-in that an in-house team provides. Of course, agency owners have a different POV.
The truth sits somewhere in the middle. As a brand, it’s easy to get burned by an agency relationship. But when these relationships go south, much of the blame lies with the brand.
This is a two parter, because I want to spare you from a 3k+ word newsletter 🙂
This week I’m going to walk you through some common reasons why brand-agency relationships fail in the media buying space, then tell you what you need to do to set the relationship up for success.
Next week I’m going to talk about when to hire an agency vs go in-house, and where agencies (and marketers) can add value in a world where more and more media buying is becoming a “black box”.
To kick it off, here are the 5 reasons that client-agency relationships commonly flame out, and how you can avoid them.
Lack Of Product-Market-Channel Fit
Some products and business models simply don’t work on Meta. A good agency or a good creative strategist might be able to turn soft KPIs into a winning business. But no one can turn straw into gold.
Good agencies probably won’t work with you unless you’ve proven out the business model. Bad agencies (see point 5 below) will take your money for three to six months and bounce.
Some agencies and consultants are specialists who will help you work through the validation process. But you’ll have to be willing to be extremely flexible in terms of creative, framing, offers and promotions.
How To Avoid This:
Learn Meta ads and try to validate product-market-channel fit yourself before hiring an agency. You don’t need to scale to the moon, just prove that you can spend a few hundred dollars per day profitably, or somewhere near your CPA target.
Make sure the unit economics of your product make sense. If you need to achieve a ROAS of 4x+ to break even…that’s probably not going to happen. That target assumes you’re generating demand somewhere outside of the Meta ecosystem. Are you?
Invest in getting some objective eyes on your product, offer and ad account performance. Now is a great time to mention that I’m on Mentorpass and I’m going to raise my rates at the end of the month. So book me now if you’d like my POV on your product-channel fit and Meta ads strategy.
When you pay an agency a fixed monthly fee, you’re going to receive a fixed(ish) bucket of services that take place over a fixed(ish) number of hours. That is the only way an agency can stay in business.
Think about it: how long could you stay in business if your customers could keep products they were unsatisfied with and keep requesting additional SKUs for free until they were happy?
Do you trust the agency to achieve your objectives with minimal hand-holding? If not, then it’s probably the wrong fit. And if you’re expecting to have hours of live communication each day, you probably want a full time employee (FTE) or a fractional growth marketer, not an agency.
To accomplish this, you need to provide clear guidance. That means a clear objective and KPIs that don’t change weekly. If you’re blitzscaling one minute and all about contribution margin the next, the agency can only react, and their failure to meet your whims is your fault.
How To Avoid This:
Get real with yourself: am I looking for all the benefits of a FTE without the cost? That’s going to skew your decision making and turn you into a very frustrated, bitter person.
Write down your goals for the next year, and for the next three years. Write down a simple, high level list (no more than five bullets) of what you’ll need to do to achieve those goals. And then write down your goals and key KPIs for paid media.
Wait a few days and share this list with other members of your leadership team, investors or trusted advisors. Ask them for feedback: Does it make sense? Does it match their perception of your goals? If the answer is mostly “yes”, you’re ready to delegate. If not, back to the drawing board.
Lack Of Internal Resources
You need a steady supply of ad creative to profitably grow your revenues with Meta ads. If you can’t provide that creative, or only have a single batch of assets from a brand launch shoot, you are going to struggle.
A media agency can tell you what’s working and provide guidance on what creative to shoot, but they’re not responsible for producing raw photo and video assets. Some agencies provide creative services, but it often comes at an extra cost.
Make sure you’re clear on your total budget vs the services the agency is providing for their proposed fee.
How To Avoid This:
If all you have is some photos of the product you ripped from Alibaba, that’s not going to be enough to produce winning ads. Your lowest budget (but still effective) option is to shoot photos and videos of the product yourself, with an iPhone, outside in natural late afternoon light.
It’s always worth walking the agency through your asset library and creative calendar and asking if you have what they need to win.
Make sure you’re 100% clear re: who will be accountable for shooting raw content and who will be accountable for cutting the content into ads.
Be aware that finding your winning ad is never a “one and done” proposition. Expect that you’ll need to return to these paid resources several times.
Poor Brand-Agency Fit
You have to match your agency to your brand’s size, funding model and stage of growth. There are generally three types of agencies:
- Big Brand Agencies: work with brands who have broad physical retail distribution, multichannel marketing strategies and decades of history and awareness.
- Blitzscaling Agencies: work with brands who have the funding, infrastructure and desire to go from $0 to $10M in annual revenues (or more) in a year.
- Bootstrapper Agencies: work with bootstrapped brands who are using performance marketing as their primary growth and customer awareness channel
Blitzscalers and Bootstrappers operate under the assumption that paid media will be driving the lion’s share of demand. Big Brand agencies, not so much. This is where smaller brands get into a lot of trouble.
How To Avoid This:
Get clear about your growth goals and financial position. Are you trying to grow profitably, or simply grow as quickly as possible?
Pick an agency based on your current stage of growth, not where you want to be in the future. The agencies that work with today’s biggest brands are rarely the ones who helped them get big in the first place.
Try to source referrals from a network of your peers.
Agencies aren’t all out to get you but…some agencies are out to get you.
They’ll lock you into a three to six month retainer, deliver the bare minimum for the lowest overhead, and then move on to the next. This is more prevalent in spaces where the clients are less educated on digital marketing, like small local businesses.
A few red flags that you’re dealing with a churn and burn agency:
- The sales rep is really charismatic but light on the details, while the account person you speak to is flat and…also light on the details.
- They don’t let you speak to an account person before signing the SOW or dance around when asked who will be doing the day-to-day work on your account.
- The majority of clients on their clients page don’t actually work with them anymore, or never did. Yes, this really happens.
- And if the agency founder has the zoomer ramen haircut and tweets about crypto or buying storage units.
- They use high pressure sales tactics, spammy outreach (like sending you $1 on Paypal or mailing you a brick*) and abuse the word “bro”.
*This one appears to be deleted from the internet, but IYKYK
How To Avoid This:
Learn enough about Facebook ads that you’re able to conduct a thorough diligence process. The bottom of this post has a list of free and paid resources for learning to manage ads.
If an agency uses one of the red flag tactics, run in the other direction. There are so many agencies out there. You don’t need to put up with nonsense.
Develop a network of other brand owners in your category, or other brands in your stage of growth. Ask them for referrals. Also ask them if they’ve had negative experiences with any agencies.
Don’t make price your number one criteria. You often get what you pay for. That said, it’s ok to have a budget–just don’t pick the best of a bad lot because your budget is low.
If your budget is really low, or you’re really reluctant to pay a percentage of ad spend, your best bet is probably DIY-ing with some input from folks on Mentorpass.