Growth Hacking

The business of marketing agencies, reinvent themselves or die...

Agencies have not been able to adapt to the radical changes in client expectations.

Benjamin Gabay
12/5/18

For the past 3 years, I have been assisting companies in their growth and more specifically in their acquisition. And on almost 100% of the clients, I make the same observation: a feeling of mistrust... So much so that these clients, who need to be supported, give up finding new partners. Why is this? Because the return on investment is very often non-existent. I would even go so far as to say, with great sadness, that the larger the agency that accompanies them, the more the quality is degraded. When I asked around, I realised that this movement had taken root about ten years ago.

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These agencies have failed to adapt to radical changes in client expectations and have remained stuck in an outdated mode of operation that considers service as a goal to the detriment of value.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

Customer frustration and disappointing results, it's time to review the marketing agency model. Any partnership that doesn't lead to value creation after 4 to 6 weeks is, in my opinion, not worth pursuing.

1) A business model not aligned with the success of your company.

Clients show me quotes. They usually amount to tens of thousands of euros for stocks with a purely improbable return on investment.

a. The difficult justification of the estimate indexed to the amount of media spent

She's the one I see most often. In addition to project management, the agency charges 10 to 15% of the advertising amount spent per client. It's a perfect way to increase margins without necessarily working more. Why not simply spend more days invoiced?

In short, often the interest of agencies is indexed to the amount spent on advertising. Not yours!

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 prepare for 15 days an answer to the client brief explaining that only 1000 euros will be spent .

b. The ancillary benefits scam

In 2018, it is in the morals, it is necessary from now on "to hunt down everything". And the installation of tracking is expensive! In order to control the success of a marketing operation, it is however very simple to implement in 80% of cases. The execution time is generally counted in hours rather than days.

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

c. A result that is often a trompe-l'oeil

Bounce rate, reach, impressions, CTR, CPC, sessions, unique users... as many complex words as there are reasons to mislead the customer.

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

Yet usually a simple metric counts: how many times has the final goal been achieved? Do you want to generate registrations? So how many registrations have been achieved? Do you want to download an application? How many downloads and account creations?

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

"calculating the performance of a marketing operation, however, is generally not very complex."

In short, don't forget that, ultimately, calculating the performance of a marketing operation is generally not very complex. We will obviously remember the number of conversions as well as the cost per conversion. The other metrics mentioned above only allow you to refine the diagnosis, to contextualize.

2) A silo view

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

Thus you will find "Adword", "Data", "Inbound", "Branding" agencies. But rarely multitask. This is not to say that a "branding" agency will refuse to create content or advertise on adword, but it will have to rely on an "ecosystem" to seek skills that they do not have in-house...

Of course, many people working in agencies will tell you that they are able to 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. Simply explained:

  • A paid conversion can cannibalize an organic conversion (SEO) and an agency will not see it. It will not be of any interest to them, because that's not how they will make money.
  • An Adword agency will have a focus on acquisition, but will be unable to monitor client retention. However, one can question the interest of making an acquisition on a pierced basket. Indicating this is simply sawing its branch.

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

3) Misunderstanding keys

For example, until now, acquisition has been equal to growth. To schematize, here are the elements on which they act.

This "static" view is being overtaken, however, and replaced by a new way of conceptualizing growth. It can thus go through acquisition, but also through activation, retention, or customer recommendation. It is only made possible by mastering the whole of the following funnel:

This view is more accurate, but suffers, in my opinion, from a major drawback. It is a funnel view that favors a series of hacks to optimize each step of the funnel.

At Germinal, we rather see growth as a system in which each element responds to the other: retention has a consequence on the business model; recommendation on acquisition, etc.

4) Extremely low velocity and aggressiveness.

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

The agency where the solution and project approach is used

The client self-diagnoses his problem. It often corresponds to a problem of "growth" translated into his language during the brief by a concern for acquisition.

The agency adapts to the brief and makes an offer. When the service is launched, the readjustments are minor (even if they are not experienced as such). Overall, the client and the agency have agreed on an offer that will be executed.

Success or not of the service, the agency will have 1000 reasons to hide behind the brief. As for the quality control of its work (even if it can be excellent), it is practically impossible to judge this by a person with little experience.

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

(Modern) growth method where the problem approach

A growth approach corresponds more to that of a doctor formulating hypotheses; discarding them (or not) as consultations progress: a problem is defined and then confronted with hypotheses leading to experiments 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 overall costs are lower than with a traditional approach, but that they are better optimized 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 hyperspecialty. Many agencies are perfectly respectable and produce a more than adequate result.

My point 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 and interesting approach called "growth".

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

It is clear that marketing agencies are not prepared for the years to come.

My recommendations:

  • Only go to a specialized agency when you are sure that the said acquisition channel is functional.
  • Do not make a long-term commitment without tangible results after 4 to 6 weeks.
  • 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 read the results report.