n May 10, 1994 a four-man rock band from Los Angeles, California, released their debut album. The band’s name — Weezer. The album — The Blue Album; a ten track, 42 minute and 26 second, masterpiece that would go on to inspire artists for the rest of the decade and onward throughout today. The third track of this iconic album was entitled “The World Has Turned and Left Me Here”. This seminal coming-of-age track serves as a perfect comparison point for the state of agencies within the marketing industry in 2020. Just like Weezer in 1994, the world has turned and left the agency model behind. With large and small brands now demanding smaller and more collaborative teams to service their accounts, the industry is turning as marketing entities shift their business models to meet the growing needs of consumers in 2020. And although the majority of services provided by an agency of yesteryear rival the services provided by the future of marketing companies, there are a few distinct differences you should consider when choosing your next marketing partner.
“Marketing agencies are incentivized to recommend increasing your ad spend budget each month in order to maximize their revenue, which ultimately, may not be within your company’s best interest.”
Percentage of Ad Spend: If you’ve ever taken a meeting with a marketing agency before, you’ve probably heard the term “percentage of ad spend” when discussing fees associated with the marketing agency’s service. But what does it mean? Quite simply it means you must pay an agreed-upon percentage of your ad spend budget as part of your marketing agency’s management fee. For example, if you plan on spending $5,000 on Facebook Ads, and you agreed to pay your marketing agency 20% of ad spend, you’ll then owe the agency $1,000 once you’ve spent your $5,000 ad spend budget ($5,000 x 20% = $1,000).
So what’s wrong with this and why should we strive for something different? Well as a result of this model, marketing agencies are incentivized to recommend increasing your ad spend budget each month in order to maximize their revenue, which ultimately, may not be within your company’s best interest. Although increasing ad spend will likely increase conversions, the actual efficiency-driving metrics, CTR (click-through-rate) and CVR (conversion rate) are unlikely to change as a result of increasing your ad spend budget. This idea leads us perfectly into the next key difference you’re likely to see in an agency from yesteryear vs. your future marketing partner.
Market Testing & Validity When you were a kid you probably heard the expression “Never ASSUME because when you ASSUME, you make an ASS out of U and ME”. This hilarious proverb used to help children correctly spell “assume” also serves as a great jumping-off point for your business’ marketing strategy. In essence, you should never make any assumptions when putting together your marketing strategy. How could you possibly know which messaging, creative assets, audience targeting, and marketing channels are most effective before testing these theories? The short answer is YOU CAN’T; which is precisely why you need to consider this sentiment before choosing your next marketing partner.
Often times marketing agencies either forgo testing entirely or conduct tests throughout the duration of your campaign. The problem with the latter is you may have already started down the wrong path, so even by conducting smaller tests during the duration of the campaign, the overarching strategy of this marketing initiative may be flawed from the jump.
Another way of thinking about this would be to consider the typical agency model of “we offer everything, so tell us what you need”. This idea is fundamentally dangerous because, despite thinking you may know what you need until you test your assumptions, you have no idea what the most effective way is to market your product or service. So why am I talking about all of this anyway? Well moving forward, marketing entities need to prioritize testing several different variables and marketing channels in order to uncover the KPIs that drive remarkable and cost-effective growth.
In practice, this might look like testing 4 different messages, 2 creative assets, 3 marketing channels (such as Facebook/Instagram, Google, and Twitter), and 2 audiences with a $1,500 budget in order to figure out who is interested in your product/service, and where you can most cost-effectively reach them.
“So why pay for larger teams when you don’t know what half the team is doing?”
Transparency The last point I’d like to make about the future of marketing entities is transparency.
Like an Uber driver blindfolding you and driving you to the newest restaurant in town, marketing agencies will take you where you’re interested in going, but rarely reveal how you got there. This means that despite paying an arm and a leg for an agency’s services, once you move on, you’re back to square one and will need to do your own research to figure out how the agency got their results. This can be detrimental to your company’s future marketing efforts given the insight to be gained from previously executed campaigns.
So why pay for larger teams when you don’t know what half the team is doing? Well the short answer is; you shouldn’t. Innovative and forward-thinking companies are now demanding transparency and collaboration when choosing their next marketing partner. This means having smaller teams where each team member has a specific area of expertise and can clearly communicate their process with clients. Ultimately, this increased level of communication and collaboration leads to more effective strategy and results — thus earning your business more money.
Although this is just the tip of the iceberg, and there are plenty more differences between agencies of yesteryear and marketing partners of tomorrow, I hope this article provided a small glimpse into the changes you’re likely to see in 2020.
As a marketer, I am constantly searching for the newest and best marketing tools to enhance my company’s services and provide my business with the insights necessary to drive innovative digital marketing strategies.