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If you invest money in marketing campaigns, more often than not you have considered hiring or have hired an advertising agency to help you with these efforts. These decisions of whether or not to run your marketing campaigns with in-house teams versus third-party agencies are usually not easy. And if you decide to outsource to an agency, the selection process can be overwhelming. This article will help you make those decisions easier.
Internal teams versus third-party agencies
The decision to manage campaigns internally rather than externally often comes down to: (1) the size of your media budgets; (2) the complexities/channels of the campaign; and (3) your team’s skills and the analytical tools you need to work with. Over time, my leaning towards this decision changed. Before, I wanted to manage everything in-house to save costs (an agency usually costs 15-20% more). I also used to want to find disparate agencies with specific expertise (e.g. one agency for search engines, another agency for social media).
But, as the advertising industry has evolved over time, my opinion on this subject has changed 180 degrees. Today, I am in favor of outsourcing this work to an agency, preferably cross-channel, capable of managing all of our needs. This can be explained by the fact that: (1) agencies have moved from the status of single-channel experts to multi-channel experts; (2) strategically, it’s better to have all strategies and budgets centrally managed, easily move dollars between channels, and get cross-channel attribution tracking in one place; (3) the optimization technologies that top agencies use and their direct relationships with Google, Facebook, Amazon, and others are better than anything your in-house team would do; and (4) finding a team of good in-house marketers is difficult to find and manage, as opposed to relying on an agency’s team and its recruiting and training processes. The techniques that work best each year can change quickly, and you want to benefit from the latest learnings (not hire someone with yesterday’s manual).
So don’t be a wise penny and a crazy pound here, because a good agency should more than cover their extra costs, with noticeably higher revenue performance from their efforts than you could most likely generate with an in-house team.
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Step 1: Identify the best potential agencies for your business
Not all agencies are created equal. Some agencies are B2C experts, and other agencies are B2B experts. Some agencies are full-service agencies handling all services, and other agencies handle certain specialized solutions (eg, branding, creative, television, B2B lead generation). Some agencies are created to manage huge budgets, and other agencies are created to manage smaller budgets. The first step is to get a rough idea of your budget and needs (e.g. be prepared to spend 10-30% of your revenue goal on sales and marketing activities), and the next step is to identify agencies best suited to support those budgets and needs.
For the purposes of this article, let’s assume you’re like most B2C marketers and need a good performance marketing agency. This is an agency that: (1) can handle most of your digital advertising needs (eg, search, social media, affiliate, commerce, display, digital video, connected TV); (2) has a suite of sophisticated technologies, reports and tools to optimize campaigns across all channels; and (3) have a return-on-investment mindset, aiming to drive clearly attributable campaign transactions with a profitable return on ad spend (ROAS).
With this objective, go to Google and search for “best performance marketing agencies”, for example. You’ll come across a bunch of sites like Capterra, G2Crowd, or other bloggers that have ranked agencies based on customer reviews or their research on the subject. Or, you’ll find research companies like Forrester that have surveyed the top agencies and ranked them, as shown in this table, as an example. This will help you get started. But you should also talk to your peers at other similar companies to see who they work with. Get recommendations from other colleagues. And if an agency tells you that you’re too small an account for them, ask them who they refer companies to for small accounts because they’ll have a good idea of the top performers in the space. This process might result in a list of about 8-10 agencies to consider.
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Step 2: Create a questionnaire and poll the best targets to ensure a good fit
Just because you think they’re a good agency for you based on preliminary research doesn’t mean they’re really a good agency for your exact needs. You should ask them probing questions, such as:
1. What is your minimum media budget? Are we big enough to be a hardware account for you?
2. What are your fees? Can we afford your services?
3. What is your industrial expertise? Do you have good references from similar companies like ours?
4. Do you work for one of our competitors? Do you have any conflicts we need to worry about?
This part of the process will narrow your list down to about three to five top targets.
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Step 3: Invite top candidates to showcase their services
The pitch process will start with the agency that will best learn your budgets, history, and needs, and will most likely involve them by taking a closer look at your current campaigns in Google Ads, Microsoft Ads, Facebook, Google Analytics, etc. After two to four weeks, they should have completed their research and planning and be ready to present their proposal. In these presentations, pay attention to things like:
1. The quality of their team (and make sure the team on the field is the same as the one that will be on your account, to avoid bait and switch)
2. Their fit with your business and your team
3. The quality of their ideas at the strategic level
4. Their proposed media mix
5. The quality of their optimization tools and cross-channel reporting capabilities
Step 4: Choose the favorite
Once you’ve chosen your favorite agency from the presentations, it’s time to take the next step with them. This will include things like talking to their references and negotiating the agreement and statement of work. This may take several weeks.
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Step 5: Officially reward the winner
Congratulations, you have officially hired your ad agency. I hope the above process has helped you find a truly great partner who will take your business to new heights. Now begins the busy work of transitioning services from your former agencies or team members, sharpening your pencil on campaign strategy and media mix modeling and setting up all the management processes. This part of the process is as important as the selection of the agency, and it will help launch the campaign for maximum success. Now comes the hardest part: executing the winning campaign that hits your desired metrics and managing your agency on a weekly basis (which I’ll cover in a future post).
Some useful tips
Here are some things to think about. If you can, try to get some of the agency’s fees into a pay-for-performance structure. So maybe half of its fees are fixed, and the other half of its fees are incentive-based. keep this incentive uncapped – the more successful they are for you, the more fees they can earn. Do your best to cap your total fees (e.g. don’t exceed a certain percentage of media spend), as these contracts can be very complicated and confusing, with all sorts of fees that can add up quickly.
I hope I’ve taken the daunting process of selecting an ad agency and simplified it into an easy step-by-step guide that will result in an agency well-versed in handling 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; it is the team that will dictate how quickly you grow your income, hopefully on a profitable basis. And, in today’s high-tech digital world, they’re as much a technology partner as they are a media buying partner, so pay close attention to their capabilities in that regard. You are now well on your way to successful marketing and profitable business growth.
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