Benjamin Gabay

Marketing agencies must reinvent themselves or they risk extinction

Agencies are struggling to adapt to radical changes in client expectations.

Benjamin Gabay
Growth hacking
Growth hacking, traffic acquisition, product-market-fit, experimenting.

For the past three years, I have been assisting companies with their growth process and, more specifically, with their traffic acquisition. And with almost 100% of these clients, I've noticed the same thing: a feeling of mistrust... To such an extent that these clients, who could, nonetheless, do with the support, give up on finding new partners. Why? Because the return on investment is frequently non-existent. I would even go so far as to say, with great regret, that the larger the agency that works for them, the poorer the quality of the work done. When I looked further into this, I found that this movement had started taking root about ten years ago.

"These agencies have failed to adapt to radical changes in client expectations."

These agencies have failed to adapt to radical changes in client expectations and have remained stuck in an outdated mode of operation that considers service as a goal at the expense of value. More and more clients are disappointed and prefer to end the relationship.

Client frustration and disappointing results, it's time to review the marketing agency model. Any partnership that does not lead to value creation after four to six weeks does not, in my opinion, need to continue.

1) A business model not aligned with the success of the customer project

Clients show me quotes. They generally amount to tens of thousands of euros for actions with a highly improbable return on investment.

a. The difficulty of justifying a quote indexed to the amount spent on media interaction

This is the one I see most frequently. In addition to project management, the agency charges 10-15% of the amount spent on advertising per client. It is a perfect way to increase your margins without necessarily working harder. Why not just invoice for more days worked?

In short, the profit, indexed to the amount spent on advertising, is often to the agency's advantage. Not the client's!

Why spend 10,000 euros when a few hundred would be more than enough to test several campaigns, several ideas?

Logistically speaking, it's hard to spend 15 days preparing an offer as per client's brief explaining that only 1000 euros will be spent.

b. The ancillary benefits scam

In 2019, it is becoming the norm to track absolutely everything. And installing tracking and monitoring systems is expensive! Monitoring the success of a marketing operation, is, however, very simple to implement in 80% of cases. Execution time is usually estimated in hours rather than days.

The other day, I saw a Google advertising service quoted by a big agency for 25,000 euros. It included 4,000 euros for the installation of the tracking system even though it was an extremely simple site.

c. A result that often seems like smoke and mirrors

Bounce rate, reach, impressions, CTR, CPC, sessions, unique users... there are as many complex terms as there are reasons for misleading the client.

"how many times has the final goal been achieved? "

Yet usually a simple metric is what counts: how many times has the final goal been achieved? Do you want to generate subscriptions? So how many people subscribed? Or do you want people to download an app? So what is the number of downloads and account creations?

The other day, I saw a very large agency discreetly change the definition of a week-to-week conversion in its report. In addition to muddying the waters with technical terms, it no longer defined a conversion as "the number of subscriptions" but as the "number of unique visitors" to the website.

"calculating the performance of a marketing operation, however, is usually not very complicated."

In short, don't forget that, ultimately, calculating the performance of a marketing operation is usually not particularly complicated. The number of conversions and the cost per conversion will obviously be taken into account. The other metrics mentioned above only allow us to refine the diagnosis, to contextualise.

2) A silo view

"When the only tool you have is a hammer, every problem looks like a nail. "

Consequently, you will find "Adwords", "Data", "Inbound" and "Branding" agencies. But rarely multitasking. This is not to say that a branding agency will refuse to create content or advertise on Adwords, but they will have to rely on an "ecosystem" to go looking for skills they do not have in-house...

Of course, many people working in agencies will tell you that they can provide a wide range of services or that they are not interested in doing so because they are specialised in one area.

"FAIR ENOUGH BUT."

And yet I am convinced that they lack one essential thing: they do not have a holistic view of their client's business. To put it simply:

  • A paid conversion can swallow up an organic conversion (SEO), and an agency will not see it. It will not be of any interest to them, because that is not how they will make money.
  • An Adword agency will have a focus on acquisition but will be unable to monitor client retention. One may wonder about the benefit of acquiring the services of a spendthrift.

I am not questioning the honesty of the agencies, but I think their keys to understanding are wrong.

3) The key to misunderstandings

For example, up to now, acquisition has been equated with growth. To put it in a nutshell, here are the elements on which they act.

Yet this "static" view is being overtaken and replaced by a new way of conceptualising growth. So, it may be through acquisition, but could also be through activation, retention, or client recommendation. It is only made possible by having full command of the funnel below:

This view is more accurate, but suffers, in my opinion, from one major drawback. This is a funnel view that favours a series of "hacks" to optimise each step along the way.

At Germinal, however, we see growth as a system in which all the elements respond to each other: retention has a direct effect on the business model; recommendation on acquisition, and so on.

4) Extremely low velocity and aggressiveness

When you contact an agency, here's what happens, represented very schematically:

The agency where the solution and project approach is used

The client self-diagnoses their problem. It often corresponds to a problem of "growth" which translates in the brief as a matter of traffic acquisition.

The agency adapts to the brief and makes an offer. When the service is launched, the readjustments are minor. Overall, the client and the agency have agreed on a service that will be executed.

Whether the service is successful or not, the agency will have 1000 reasons to hide behind the brief. As for quality control of their work (even if it may be excellent), it is practically impossible for a person with limited experience to evaluate it.

Metaphorically speaking, this is a customer going into a pharmacy to self-medicate.

The (modern) growth method, where the approach is defined by the problem

A growth approach corresponds more closely to that of a doctor formulating hypotheses; discarding them (or not) as consultations progress: a problem is defined and then confronted with the hypotheses, which leads to experimentation and feedback.

The advantage of the "Growth" approach is that it is directly indexed to the success of its client.

"A multitude of tests improve the probability of success"

This approach leads to a multiplication of efforts by eliminating unnecessary costs since all testing budgets or risks are reduced. This does not mean that the overall costs are lower than with a conventional approach, but that they are better optimised and produce more results.

5) Should we stop working with marketing agencies?

The answer is no. I even think they are likely to produce a better result because of their hyper-specialisation. A significant number of agencies are perfectly respectable and produce a more than adequate result.

My purpose here is just to show that the model they have adopted needs to be renewed and that their business model makes it difficult to use a modern approach of agile experimentation.

Bad reputation, working in silos, interests not aligned with that of the client and methodological shortcomings are among the grievances that can be attributed to them.

Marketing agencies are not prepared for the years to come, that is clear.

My recommendations :

  • Only go to a specialised agency when you are sure that the said acquisition channel is functional.
  • Do not make a long-term commitment without tangible results after four to six weeks of engagement.
  • Request weekly reporting and ask for indicators of achievement to be defined.
  • Promote contracts with tacit monthly renewal.
  • Do not hesitate to ask specialists to review the results report.