How to choose your digital marketing agency?

How to choose digital marketing agency?

Each business needs customers and the best way to get their attention is with marketing. That’s why picking the right partner to help you out with your marketing efforts is not an easy feat. If you pick the wrong agency, the time you wasted on choosing it won’t be the only issue here. All the worse for you as your quarterly (and probably yearly) business goals likely won’t be met.

Then, the money- and time-saving question is: how to choose the best digital marketing agency to suit your needs.

There are thousands of digital marketing agencies to pick from and each is a little different. The offering differs in the services they provide and their quality, how they communicate with the client, project management style, and if they meet deadlines and costs.

And every business relationship has a number of ‘moments of truth. They are either adding or removing trust from the relationship. Such a moment of truth can be a question from the client about why did the number of conversions go down this month. And if the answer is well thought through like ‘the budget remained the same while the upcoming Christmas season has caused all CPCs to go up’ will add trust. If the answer was ‘oh I don’t know, we can’t see any reason behind it in the data’ then it will remove trust from it.

Every business relationship has a number of ‘moments of truth’ that either add or remove trust from the relationship.

#businessrelationship #marketingagency

Why am I writing this if I work in an agency? Because I had a chance to see a multitude of agency-client relationships go in every possible direction and understand why it happened. I was a part of them as either an account manager, analyst or the sales rep. I was even on the other side, having worked with agencies in my previous job. Talking to people from other agencies has also helped get a better understanding of how they work and what sort of issues they run in with their clients. Having combined all these, I hope this will guide you nicely through your decision making process.

The biggest motivation for both potential agency clients as well as agencies to read further is to learn how to find the right fit. Signing with the wrong agency or client can be costly for both sides and in order to avoid it, you should vet each other. As an agency your best chance to get leads that are a good fit is by educating the market. What does that mean? Showing step by step how you work and what do you expect from your clients, so that they can decide whether this is what they want or not. Everyone will benefit from learning how to best work within the agency-client relationship.


Table of contents

  1. Experience
  2. Account management
  3. Reporting
  4. Agency budget
  5. Takeaways

Experience

You want to work with someone who you can rely on and trust.

How do agencies build trust? Through case studies. The more and better the case studies, the more reasons to trust will they build from the customer.

Case studies may be showing amazing results from the campaigns the agency ran for its clients. The best ones show not only the results but also the process. Remember that results differ in the difficulty of achieving them. Sometimes the ad account is already performing so well that only a small optimization can lead it towards achieving a return on ad spend of 10x.

When looking at a case study, remember that results differ in the difficulty of achieving them. That’s why the best ones show not only the results but also the process.

#marketingagency #businessrelationship #casestudy

The devil is in the details. The more detailed the case study is, the better. Showing the state of things when starting, the process of work, wins and losses, end results – is the best type of case study you can get. Remember not to focus on the numbers, follow their logic and process. Think if that logic and process would lead to getting great results again and again or if they just got lucky. This way you can learn the following:

  1. What was the starting point? In terms of numbers, not just percentage points because achieving 1000% more conversions isn’t a reliable token if the client only had 2 to begin with. This gives you a better perspective on what exactly was the achievement. Ask for numbers, not just percentages.
  2. The process – how did they work? Was it an iterative process? Were there sprints involved? If so, then how long were they? What were the responsibilities on each side of the deal? How long was the relationship? Why did the client leave? Ask if the employee from that case study is still working at the agency and if you can have them work on your project. Ask questions, don’t just take a case study for granted and be impressed by the numbers. That’s what the agency wants you to focus on, the great return on ad spend and goals met. If they start sounding odd and troubled when you start asking these questions, it is probably because they don’t want you to know these details as they wouldn’t help closing you as a client.
  3. Wins and losses. Everyone can show you wins. That’s easy and looks best to potential clients. Only confident agencies are willing to show their losses because they know that being transparent results in trust. The trick is to turn them into wins through learning, not repeating them and not wasting too much time and money on the lost experiments.
  4. End results are the biggest selling points in every case study. For example, we decreased spend by 25% and got 50% more conversions, the client was so happy! Sounds amazing, give me the details. How did you achieve that? What particular channels and tactics did you use? How can this be translated into the strategy you’d execute for my business?

Industry experience

Industry experience is a really big thing for most of the clients I had dealt with. Having experience with a given business model, i.e. E-commerce, Mobile Apps, SaaS, B2b, or any other is one thing. But, if an agency has experience with a particular industry like, for example, diet supplements, it’s of the greatest value to the potential client.

Experience is a shortcut – it cuts down on research and experiment time because you already know what works. This is good for both clients and the agency, because you benefit from lots of past knowledge and aren’t paying for research time, but also the agency won’t resent you for having to spend so much time researching and planning strategy.

Once you’re speaking with an agency, ask them about that. If they can give you some names of companies they worked with in your industry then great, you can ask for more details. Things like what channels did you use? What markets did you target? What sort of results were you able to achieve?

A case study would be perfect, but having been in an agency for years, I know how difficult it is to get a client to agree to publicly describe the project you’ve done with them. Sometimes, they agree to share their name in it, other times the agency will just say that they worked with a company in the B2B Business Intelligence sector.

Agency’s profile on Clutch

Being able to see what their clients had to say about them is a big advantage. You can do it if the given agency has a Clutch profile. In order for them to have the profile public, they must have at least 3 client reviews. So if they do have a Clutch profile that should be a boost because they had enough happy clients to get it public. We are lucky to have 11 reviews and an average score of 4.5/5 on our profile. Each review has 4 grades that contribute to the final rating – Quality, Schedule, Cost, and Willingness to refer, rated on the scale of 1 to 5, 5 being the highest. There is also a project summary and a feedback summary, as well as details on the company that gave the review.

Reviews on Clutch.co have 4 grades that contribute to the final rating - Quality, Schedule, Cost, and Willingness to refer, rated on the scale of 1 to 5.

LinkedIn

Another area where you can check more details about the agency you are considering is LinkedIn. Why go there? Because that’s where you’ll find a list of their employees. This way you can have a look at the people that are likely to work on your project and check their experience and level of seniority. That will give you insight into the size of the company, where the team is located, what are their titles. You can even go deeper to check their experience and see if they are juniors who just started their career in marketing or seniors that have seen more than a handful of campaigns in their days. This is the list of all the people working at Ladder.

Audit

There is one more way an agency can showcase their experience before earning a single dollar and signing any papers with you. The magic word is audit.

By getting read-only access to your data, the agency can see what has been going on in your Google Analytics, Google Ads, Facebook Ads, Mailchimp or any other platform you want them to help you with.

The way I always pitch is that we do this audit to show our expertise and the potential customer to decide if we know what we’re doing or we’re full of crap and they don’t want to talk to us. We don’t charge for this audit but we don’t offer it to everyone.

The audit is supposed to show our understanding of your business, point out things like missing tracking or lack of good practices in things like bidding or campaign optimization. Then, show what do we suggest focusing on in month 1, 2 and 3 and why. That way, we can already start building expectations from the client to understand what we think is the biggest opportunity for us to work on and why. All this based on their own data. This is adding value and building trust in a way that is impossible to match with any other part of the sales process we use.

Now, if you sign an agency without them even seeing your data and completely relying on your own words and ideas, it’s like buying a car without a test drive. I know it can turn out well because the car brand is great and trustworthy, but I wouldn’t recommend it. Fun fact, I decided to buy my car after a 5 minute test drive. Literally, stopped looking for any other car because it blew me away. On the other hand don’t expect too much for free. The agencies that are willing to work for free are either desperate or expensive, in which case you will pay for the free work in the end. Just like you wouldn’t get a car from a dealership for a month before you make up your mind if you want to buy it.

Account management

Communication with an agency is going to either make or break the relationship. It sounds like a cliche but I’ve seen it too many times to tell you otherwise. There is literally no in-between. The account manager responsible for the given client either is in charge of the relationship or isn’t. Being in charge of it is important because as a client you hire experts that you don’t have in-house. They are supposed to use their expertise to help your project out and use your help to make it so.

Too many clients try to steer the relationship their way and boss the agency around. I have never seen that end well. Most of the time when that happens and the agency does what it is told to, the results are below expectations and the blame is put on the agency. We learned the hard way that this is not going to end well for anyone. This is also something that we look out for during the sales process to vet any clients who seem like they just need more hands to do the work they order. As long as the client can agree on the direction and tactical execution should be left to the agency, the relationship should be in a good place.

As a client though, you should ask questions like who will I be communicating with? Best case scenario is that there is a single person that will be in charge of managing your account. Your single point of contact and if need be, they will bring more expertise to the meeting by inviting more team members who can explain more complex issues. This is the state of things that we’ve come to and have been using for some time now here at Ladder.

You should expect the account manager to be an active member of the agency team, not just a messenger passing information from you to the internal team and vice versa. Having so much context makes the account manager the best person to help with the direction of the relationship and strategy for reaching client goals. If the account manager would only send information back and forth, a lot of the added value they could bring to the table would be gone.

At Ladder, we have our growth strategy team play the role of account managers. They not only get the message to and from the client but also are in charge of the strategy, growth modeling and budget allocation. This makes them the centerpiece of the project as they have the most context from both the client as well as the agency team on what’s going on in the project. Therefore, they are in the best position to propose the optimal course of action.

What should be a yellow flag for you? When there are multiple points of contact and the information you are getting from them is different, for example project focus, deadlines or reports. That sounds like a mess and is not helping anyone. The agency is spending too much time on communication and fixing the issues that occurred, while you sit there worried if they know what are they doing, perhaps even start thinking whether you picked the right agency. Confusion, chaos and lack of ownership are all yellow flags that when combined should become a red flag.

To put this into perspective, there is a way to visualize having multiple points of contact. If you have one POC – you have one direction. If you have two POCs and they’re as little as three degrees off from one another in terms of direction, that translates into 5.2m of separation after 100m of travel. The further they travel, the further they divest from one another. Eliminate extra variables and you can eliminate the virtual certainty of misalignments.

Reporting

Paying for a digital marketing agency’s services is an investment. You shouldn’t consider it as a fee which will get you X services but as an investment that will push your business forward. As an investor, you want to know how your investment is doing and when it will turn a profit. Just like a stock investor who checks the news about the companies they invested in and the stock price to see if they are profiting or losing, you should check your agency’s results.

This may come as a form of a campaign report showing the most important KPIs like amount spent, number of conversions achieved and cost per conversion. On top of that, it is important that the agency is able to tell how these numbers came to be. What has caused them? For example, by showing your funnel and that a decrease in CPC has caused them to get more clicks which at a stable conversion rate have turned into more conversions. All that thanks to a new campaign they launched a week ago. This sounds like a thorough understanding of the funnel and a good enough explanation.

What to watch out for when looking at the reports given by the agency? Vanity metrics, the numbers that don’t mean anything. For example, total website traffic. Will you profit from it? If you are selling ads on your site then sure, but none of our clients do that. Therefore, more traffic is a vanity metric unless it is used as a metric to show a more robust idea. For example, the conversion rate testing has improved the conversion rate and therefore now the agency is focusing on getting more traffic to the site to make better use of it. It sounds like a solid plan.

Vanity metrics, like total website traffic or click-through rate, are the numbers that don’t mean anything. Alone, they’re not going to give you a hockey stick growth.

#marketing #growthmarketing

What about click through rate? Alone, it seems like a nice metric because people are clicking on your ads, especially if you are above a certain benchmark or see a big improvement. Alone, CTR is not going to give you hockey stick growth though. Is the traffic that comes to your site from these ads with improved CTR staying there and converting? Or bouncing after 4 seconds because this isn’t what they were expecting?

The best way to present every metric in a report is by showing how it is tied to the bottom line. That’s what you care about at the end of the day as a client and investor. You want them to improve the overall state of your funnel and to see it translate towards more revenue.

How I always like to present a report is by showing each stage of the funnel, if it has improved or declined and explain why. Unless we don’t know, then say that we are looking into it and ask if the client might have any ideas. That starts with ad impressions, then clicks, website sessions, conversions and total ad spend. In between you can calculate things like CTR, CPC, conversion rate and cost per conversion. That way you give the client a comprehensive overview of what their funnel looks like. In turn, that helps you show what area of the funnel do you want to focus on improving and why.

An agency can even go one step further on reporting and provide a model. We have started doing this several months ago and both the clients and prospects love our growth models. They help us predict how different changes to the funnel will reflect on the bottom line. Then, we can calculate the sensitivity analysis between things like CPC and CTR to understand if an improvement in one of them is going to have a larger effect on the rest of the funnel than the other. As the famous statistician George Box said:

All models are wrong, but some are useful.

Red flags to look out for

What are some things to look out for when you look at the reporting of an agency? The ownership of the ad accounts for example, this is a big red flag. You should be the owner and provide edit access to the agency. I have seen an agency use their own ad account for clients and after the relationship ended the client was left with nothing. We always use the clients’ ad accounts and explain what we do and why so that they can take it over if they want to.

If you work with a marketing agency, remember that no matter what, you should be the owner of an ad account and only provide edit access to the agency.

#marketingagency #b2b #businessrelationship

A yellow flag is irregularity in reporting. Things like sending the report on an irregular basis like for example sometimes weekly, sometimes biweekly or even monthly. The best cadence is to send a weekly report with a little analysis and a more in-depth report on a monthly basis to explain the entire month’s worth of work and data. Even better when the client has 24/7 access to the place where the report is stored. We like to use Google Data Studio for this purpose. It integrates well with the most popular tools and channels plus the client can access it at any time they want.

Agency Budget

There are 3 ways agencies can model their budgets.

  1. Success based – the more they sell, the more they earn, which is preferable for smaller companies but also poses a high risk for the agency.
  2. Media spend percentage – where the agency is working on a budget and the more of it is spent, the more it will earn. This may lead towards the agency spending more than it should in order to earn more.
  3. Flat budget – where you come to an agreement on what is the monthly agency fee. This is the model we use at Ladder.

Some context on each budget type before we go further.

Success-based sounds like a good idea, but then if the agency achieves the results you’re probably overpaying, if they don’t achieve the results they’re being underpaid, neither is sustainable. Also what if they hit the goal because of something you did? What if they had no chance of hitting the goal because of some change in company strategy, or because the website went down? or because of something that nobody could have predicted like covid? Very hard to make them fair, and usually ends up being demotivating rather than motivating.

Media spend percentage. This motivates the agency to keep spending more. However not too many agency clients are aware of the fact that there is a Diminishing Marginal Returns effect which means that the more you spend, the less effective it’s going to be. Being incentivised to spend more budget is not going to be the best motivator to keep the spend as effective as possible. Most businesses experience seasonality which means budget fluctuations month over month. This means that the agency team will be ramping up and down throughout the year in order to accommodate the budget fluctuations. Some team members will either not get back to the team as they’ll be engaged in another project and the context will be lost, while onboarding new ones will not be as fast as effective.

Flat budget. Offering a flat fee means that there are risks on both sides. The client may be overpaying for a service they can get elsewhere. So they need to investigate further and analyze their opportunity cost of going with agency A instead of B or C. The agency however is risking that the project will balloon fast and the flat budget won’t accommodate all of the costs involved. Another risk for the agency is that the client will be very demanding and expect immediate turnaround times which will also cause additional costs. Of course all of the above scenarios can lead to a renegotiation of the terms but that takes additional time and effort to be done, which means additional costs for both sides. A flat budget is likely to include a set amount of work that’s being done on a particular project each month. The agency may disclose what this amount is and give reports of it to the client, or sell a black box where the client doesn’t know what exactly are they paying for and what are they getting. For example the client pays $5,000 and gets 100 hours of work on most months while on the slow months only 60. At the end of the day we believe this is the most balanced and fair way of paying for an agency and that’s why this is what we offer as Ladder. We are transparent on what packages of which service does a client buy from us and what is included in there from the deliverables and time spend perspectives.

Each of these can be renegotiated throughout the relationship based on the results and state of the relationship. If things are going well and you are very happy with the agency’s work, then prepare for an up-sell. This way, an agency adds more services to the contract in order to do more work for you and in turn charge you more. The happier you as a client are with the agency, the more likely you are to agree to that up-sell. That can be compared to owning a car. The more you like it, the more are you likely to invest further money into it, like for example taking it to a car spa, protecting its paint with extra foil, or getting new wheels. You wouldn’t do that to a car you’re not happy with, would you?

Back to the agency fee and prices. I watched a really good presentation given by Chris Do on pricing design work and creativity. Now, you may say that this is a digital marketing agency we’re talking about here. Do they not use creativity and design? Yes, they do, that’s why I thought this example is worth bringing up.

Why do some agencies charge $4,000 and others $40,000 for the same services? The answer blew me away.

Because for the $40,000 you don’t just buy the services they provide, you also buy their processes, experience and most importantly, a lower probability of failure. Big brands can’t afford to risk any failure as that could turn into bad PR and in turn, millions of dollars of lost revenue and a stock market price drop. An agency is going to cost you at least 50% more than having those employees in-house so the sum has to be worth more than the parts. Is their process and methodology really going to double the output?

Why do some agencies charge $4K and others $40K for the same services?

The latter doesn’t only provide you their services, they provide you their processes, experience, and most importantly, a lower probability of failure.

#marketingagencies #b2b #businessrelationship

Having said this, depending on your company size and how big of an impact any PR fail can have on the business, you should know which price zone you are in.

Let’s imagine for a minute that you are on a call with the business development guy from the agency you’re thinking of hiring. They give you a proposal and explain what services they will provide. Next, they show you a price for them. How will you know if this is a good or a bad price? The obvious answer is that you compare it to other agencies.

Another answer is understanding what does the price consist of. What components go into it? Is it a black box with a price tag or can you get a deeper understanding of what exactly are you paying for? The more details you can get on the contents of the box, the better. A big yellow flag is when they are not willing to tell you why this price is what it is other than list the services that go into it.

A much better practice is to list out all the particular services and give each of them a price tag, so that you as a client can decide if they are worth it. That way the agency is building trust through transparency.

An important thing to keep in mind when analyzing agency prices – they will never be as low as a freelancer. Why? Simply because there is much more overhead in an agency. Things like marketing, sales, office, HR, recruitment are all paid for through the agency services and therefore must be reflected in the final price. What you get for that price is more experience, processes and communication that are going to lead to a higher success rate. Now, how advanced an agency is across these items depends on how much work they have done in the past and will be reflected in their clients’ reviews.

Takeaways

Picking an agency is like picking the right marketing strategy – very difficult. Especially that there are thousands of options to choose from. I hope that the above framework will help you make the right decision when the time comes for you to hire an agency.

I write it from the perspective of the agency but with customer satisfaction in mind. Having seen relationships go in many different directions. I’ve been able to notice what elements contribute towards a successful relationship and which do the opposite.

Few last points to help when picking and working with an agency:

1. Develop a shared vocabulary – make sure that everyone is speaking the same language

2. Make it clear what “success” looks like – what metrics are most important to your business and are those metrics something your agency has a direct, linear effect on.

3. Change is the only constant – talk to your agency up front about how you will both adapt to changing realities in your business and data – no one can see the future, don’t try to build a tactical plan past what you can see.

4. Do NOT tinker with your agency’s work – the only difference between “zero data” and “obscure data” is the spelling. If you tinker with your agencies campaigns, you will make the data useless

5. Last, but not least – listen to your agency. If all you want is someone to push buttons at your direction, hire a college student. If you want experts to help grow your business, be prepared to let them take the reins and to listen to their recommendations. They know more than you – that’s why you hired them.