Understanding how to effectively vet a marketing agency is crucial for success in the direct-to-consumer space. Numerous marketing agencies exist, but not all deliver value proportional to their costs. Some overprice and underdeliver, a situation you might find familiar. Let’s dive into the essentials of selecting the right agency for your needs.
Understand Your Goals and Budget
Before embarking on the journey to find a marketing agency, clear goal setting is essential. Ask yourself: Do you aim to improve your performance marketing, boost brand awareness, increase website traffic, enhance search rankings, grow social media followings or do something else? Understanding your objectives helps you align with an agency capable of delivering those specific results.
Budgeting is equally important. Assess your financial resources, current revenue, and profitability. Be realistic about what you can invest in marketing and advertising campaigns. Considering industry standards for marketing spend as a percentage of revenue is a helpful benchmark.
Types of Marketing Agencies and Their Specializations
Different types of agencies cater to specific aspects of marketing. Here are a few common types:
- Media Buyers focus on purchasing advertising space effectively but they often do not own creative.
- Social Advertising Agencies manage ads on social media websites and often have a hand in developing creative assets, like user-generated content and graphics used in the ads.
- Pay-Per-Click (PPC) Advertising Agencies specialize in managing paid search and online advertising campaigns, like Google search ads.
- Amazon Agencies navigate the complexities of marketing and selling on Amazon.
- Email Marketing Agencies focus on creating and managing email marketing campaigns that drive sales and engagement.
- Full-Funnel Marketing Agencies offer comprehensive services covering every stage of the customer journey.
Pricing Structures
Agencies charge in several ways. Here are a few of the popular structures:
- Flat Fee: A consistent, predictable cost, ideal for specific, well-defined projects.
- Percentage of Ad Spend: Common in media buying and PPC, where agencies charge based on the advertising budget they manage.
- Percentage of Revenue: Aligns agency fees with a share of the revenue attributed to the agency’s performance.
- Other Models: Some agencies offer customized pricing based on project complexity, duration, or specific client needs.
Be careful engaging with agencies that charge a percentage of ad spend or take a revenue share. I almost always recommend avoiding a rev-share pricing structure, as these fees at scale can exceed what you would pay from hiring someone in house.
Percentage of ad spend also should raise caution. Often, these agencies know that as long as you are happy with your return on ad spend, marketing efficiency ratio or customer acquisition cost, they are incentivized to spend as much as possible to the detriment of performance. For example, let’s say you work with an agency that charges 5% of ad spend and you tell them that you want a return on ad spend of 3, or 300% of revenue compared to what you spend on ads. If this agency approaches the end of the month and sees that the current return is higher than your expectation of 3, they would financially benefit by ramping up ad spend before the end of the month to the extent your return on that ad spend falls to 3.
Evaluating Agencies
When vetting agencies, consider the following:
- Leadership: Who runs the agency? Do they have in-house marketing experience or formal marketing training? Do they know the 4 Ps of the marketing mix? Do they understand buyer personas and customer journeys?
- Portfolio: Examine their past work. Look for evidence of successful campaigns and satisfied clients. Don’t just look at case studies; these can cherry-pick results. For social media agencies and media buyers, you can find out which brands they’ve worked with and search ads they may have run using the Meta Ad Library. For email marketing agencies, you can use Milled to review emails they may have sent for other brands. For Amazon agencies, you can evaluate the historical performance of listings they’ve worked on and brands they’ve worked with through tools like Helium 10 and JungleScout.
- Industry experience: Agencies with experience in your industry or with similar business objectives are more likely to understand your unique challenges and opportunities. If you operate in the direct-to-consumer space, I highly recommend you find an agency with experience in DTC marketing.
- Reputation: Check for client testimonials and online reviews. Interview previous and existing clients. Authentic feedback from other businesses can provide insights into the agency’s reliability and quality of work.
- Fit: This is perhaps the most overlooked piece of vetting a marketing agency, as a key ingredient of success is whether they understand the your business, your customers and the problems you’re trying to solve. Are they a good fit for your brand? Often times, agencies juggle multiple clients and spend little time developing a deep understanding of the unique needs of their clients. Ensure the agency’s values and working style align with yours. Ensure they ask the right questions to understand your business.
Selecting the right marketing agency requires a thorough understanding of your goals, a realistic budget, and careful consideration of the agency’s leadership, specialization, pricing structure, past performance, reputation, and fit. A well-chosen agency can be a valuable partner in your success…but a bad one can do more harm than good.
