If you are
investing material dollars in marketing campaigns, more often than not, you
have considered engaging, or have engaged, an advertising agency to assist you
with those efforts. Those decisions
whether or not to manage your marketing campaigns with in-house teams vs. third
party agencies are typically not easy decisions. And, if you decide to outsource to an agency,
the selection process can be overwhelming, with the thousands of agencies out
there to choose from. This post will
help make those decisions easier for you.
In-House Teams vs. Third Party Agencies
The decision
to manage campaigns internally vs. externally often comes down to the following
things: (1) the size of your media budgets; (2) the complexities/channels of
the campaign; and (3) the skills of your team and the analytics tools you have
to work with. Over time, my leaning on
this decision has changed. I used to
want to run everything internally, to save the costs vs. an agency (which can
often be 15-20% higher including their fees).
And, I used to want to find disparate agencies with a specific expertise
(e.g., one agency for search engines, another agency for social media).
But, has the
advertising industry has evolved over time, my opinion on this topic has
shifted 180 degrees. Today, I am a
proponent of outsourcing this work to an agency, and preferably one
cross-channel agency that can manage all desired channels through one
partner. The reason for this are: (1)
the agencies have materially evolved from being single-channel experts to
multi-channel experts; (2) strategically, it is better to have all strategies
and budgets managed centrally, to easily shift dollars between channels and get
cross-channel attribution tracking all in one place; (3) the optimization
technologies the best agencies are using, and their direct relationships with
Google, Facebook, Amazon and others, are heads and shoulders better than
anything your internal team would be doing; and (4) finding a team of good
internal marketers is hard to find and manage, as opposed to leaning on an
agency’s team and their recruiting and training processes. Especially since the techniques that work
best each year can rapidly change, and you want to benefit from the most recent
learnings (not hire someone with yesterday’s playbook). So, don’t be a penny wise and a pound foolish
here, as a good agency should more than cover their additional fees, with materially
higher revenue performance from their efforts than you most likely could
generate with an internal team.
Step 1:
Identifying the Best Potential Agencies for Your Business
All agencies
are not created equal. Certain agencies
are expert in B2C and other agencies are expert in B2B. Certain agencies are full-service agencies
handling all services, and other agencies handle certain specialty solutions
(e.g., branding, creative, television, B2B lead generation). Some agencies are set up to handle huge
budgets, and other agencies are set up to handle smaller budgets. So, the first step is to have a rough idea of
your budget and needs (e.g., prepare to spend 10-30% of your revenue target on sales
and marketing activities), and the next step is to identify the agencies that
are best suited to support those budgets and needs.
For purposes
of this post, let’s assume you are like most B2C marketers and you need a good
performance marketing agency. That is an
agency that: (1) can handle most of your digital advertising needs (e.g.,
search, social, affiliates, commerce, display, digital video, connected TV);
(2) have a suite of sophisticated technologies, reporting and tools to optimize
the campaigns across channels; and (3) have an ROI first mentality, shooting to
drive clearly attributable transactions from the campaign at a profitable
return on ad spend (ROAS).
With that
being the goal, go to Google and search for “best performance marketing
agencies”, as an example. You will
stumble on a bunch of websites like Capterra, G2Crowd or other bloggers that
have ranked the agencies based on customer reviews or their research on the
subject. Or, you will find research
firms like Forrester that interviewed the best agencies and ranked them, as seen in
this chart, as an example.
That will help get you started.
But, you should also talk to your peers at other similar companies, to
see who they are working with. Or, get
recommendations from other colleagues. And,
if any agency says you are too small of an account for them, ask them who they
refer business to for smaller accounts, as they will have a good idea of the
best players in the space. This process
may result in a list of around 8-10 agencies to consider.
Step 2:
Create a Questionnaire and Interview The Best Targets to Ensure a Good
Fit
Just because
you think they are a good agency for you based on preliminary research, doesn’t
mean they really are a good agency for your exact needs. You need to ask probing questions of them,
like: (1) what is your minimum media budget, are we large enough to be a
material account for you; (2) what are your fees, can we afford your services
(keeping the fees under 10-20% range, depending on media budget); (3) what is
your industry expertise, do you have good references from similar companies
like ours; and (4) are you working for any of our competitors, do you have any
conflicts we need to worry about. This
part of the process will narrow down your list to around 3-5 truly best
targets.
Step 3:
Invite the Best Candidates to Pitch Their Services
The pitching
process will start with the agency better learning your budgets, history and
needs, and most likely will involve them taking a closer look at your current
campaigns in Google Ads, Microsoft Ads, Facebook, Google Analytics, etc. After 2-4 weeks, they should be have
completed their research and planning, and be ready to present their
proposal. In those presentations, pay
attention to things like: (1) the quality of their team (and making sure the
team on the pitch is the same team that will be on your account, to avoid
“bait-and-switch”); (2) their fit with your business and team (are they nice to
work with and share your common values, as you will be spending a lot of time
with them); (3) the quality of their strategic-level ideas (did the
presentation match your guidance of them and your desires); (4) their proposed
media mix; and (5) the quality of their optimization tools and cross-channel
reporting capabilities (because in today’s world, the best agencies are more
technology companies than anything else).
Step 4:
Pick the Front-Runner
Once you
pick your favorite agency from the presentations, it is time to take the next
step with them. That will include things
like: (1) speaking to their references (to ensure what they pitched and what
they delivered were in line, especially in terms of team quality and happiness
with efforts); and (2) negotiating the agreement and statement of work (to make
sure both parties are largely in alignment on the legalese and the plan). This can take several weeks to complete.
Step 5:
Formally Award the Winner
Congratulations,
you have formally engaged your advertising agency. Hopefully, the above process enabled you to
find a really great partner for your specific business, that can help propel it
to new heights. Now starts the busy work
of transitioning services from your old agencies or team members, sharpening
your pencil on the campaign strategy and media mix modeling, and setting up all
the management processes (e.g., timing of weekly meetings, desired KPIs on
daily/weekly/monthly reporting). This
part of the process is as important as the agency selection is, and will help
tee up the campaign for maximum success.
Now comes the hard part: executing the winning campaign that hits your
desired metrics, and managing your agency on a weekly basis (which I will cover
in a future post).
A Couple Useful Tips
Here are a
couple things to think about. If you
can, try to get part of their fee in a pay-for-performance structure. So, maybe half of their fee is fixed, and the
other half of their fee is incentive based.
And, keep that incentive uncapped, the more success they drive for you,
the more fees they can earn. And, do
your best to cap your total fees (e.g., not to exceed a certain percent of the
media spend), as these contracts can be very complicated and confusing, with
all kinds of fees which can add up quickly.
Especially fees around programmatic buys or the DSP platform. If they can find high quality media in other
ways, it may save you money here, so push them for direct buys with publishers
or leverage their bulk buying power, where you can.
Concluding Thoughts
Hopefully,
we have taken the daunting process of selecting an advertising agency and
simplified it into an easy step-by-step guide—one that will result in a
well-experienced agency to handle your specific needs, both in terms of team
and tools. The relationship between your
business and your advertising agency is one of the most important relationships
you will have; they are the team that will dictate how quickly you will scale
your revenues, hopefully on a profitable basis.
And, in today’s high-tech digital world, they are as much a technology
partner, as they are a media-buying partner, so pay special attention to their
capabilities in this regard. With a
little luck, now you are “off to the races” toward marketing success and
profitably scaling your business.
For future posts, please follow me on Twitter at: @georgedeeb.
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