Have marketing agencies become a racket?

In 2006, I founded a company in the roofing sector. At that time, people did not have much confidence in construction contractors. Bad reputation, unreliable, and above all, "the construction guys" tended to charge extras for things that did not really make sense. We worked pretty hard to stand out and build a solid reputation. It paid off.

In recent years, I decided to launch a few businesses online. I hired marketing agencies, consultants, “experts”…and at the same time, I educated myself. I consumed as much content on digital as the Pope could read the Bible. I learned, tested, etc. Ultimately, I realized that construction companies, in general, are far more organized, efficient, and reliable than companies operating in the web sector… and that’s normal! The web is new and it changes ALL THE TIME.

Automated Marketing, SEO, Facebook Ads, Remarketing, SEM, Pinterest, Youtube, Blogs, CRM, Google Adwords…
The list of social media and potential strategies on the web to grow your business continues to expand every day. How can an entrepreneur like you know if they are being ripped off by dubious billing methods or simply due to the incompetence of a digital agency without having to become a scholar as I did for 3 years? Good news, it’s not that complicated, but before giving you advice, I would like to emphasize something super important: Have marketing agencies become a racket?

A business that desires to grow in the age of social media must have basic knowledge and/or the help of a trusted person. There are tons of training available, including those from Olivier Lambert.

We can also take on challenge mandates to analyze your contracts and your campaigns – and it’s not expensive.

If you want details about your website, to know if you made the right choice, if it is performing well, fast, etc. We can give you a hand for free if you send us a web challenge request. The article here is more about digital advertising campaigns.

Let's start at the beginning: your contract.

The duration of agreements.

Many contracts bind you for a minimum period on certain services – for example 6 months – and that’s normal. For example, setting up an Adwords campaign takes much more time initially: client meeting, strategy, keyword selection, creation of display banners (even if it’s not that useful…😉), etc., than over time, when it’s mostly technical adjustments and A/B testing that will be performed on a regular basis (according to best practices).

For certain Adwords campaigns, especially if they are well set up, agencies may sometimes only start making a profit from the 3rd month. So, signing a 6-month – 1-year agreement for an Adwords campaign is legitimate… same goes for Facebook Ads campaigns.

It’s rather in SEO and content marketing that I disagree with taking long-term monthly agreements. Since it involves content and writing, a fee for the work done and not recurring makes much more sense. Very important, make sure you know what the penalties are if you want to cancel earlier.

The work performed

This is where it often gets complicated. Unless you have the dictionary of terms used in digital marketing at your disposal, you might quickly feel like you’re a “nobody” or negotiating with someone who doesn’t speak your language… and that is the case. Every field has its jargon, and the web is no exception. To be honest, it's the worst! Often contracts are overloaded with unnecessary details or that simply don't convey anything.

So here’s what I think the information you should find in your contract regarding the work performed:

• What are your goals and do they believe it is achievable?

• You would like to have 1000 unique visitors on your site for $1000 per month

• You would like to have 100 customers in your store for $1000 per month

• You would like to sign 1 new client for $1000 per month

Of course, an agency cannot be held responsible for that 100%, but it would be a good idea for them to tell you if they believe it.

For example, if my client Yannick from Toiture FCA asks me:

"Carl, I would like to sell 5 roofs per week at $5000, I have a budget of $500 to acquire a client, is that possible?"

My answer would be:

"Yannick, the cost per click on Google for the term “roof” is currently $5, so you could expect to have 100 visits to your site from potential clients. Let me check if your site is well-built first to ensure that once the “valves” are opened, your prospects won't have any difficulty contacting you. We could also run ads to visitors of your website on Facebook through your Pixel for about $150 per month. I think it’s worth a try, and at the end of the month, we'll look at your numbers together."

Ask for this information in your contract. You are responsible for determining how much you can pay for a new client / make a sale. This is what we call determining your CPA (Cost per Acquisition).

What are the steps in their process?

For example:

1. Preliminary meeting

2. Strategic meeting

3. Writing the action plan

4. Approval of actions

5. Going live

6. Review of monthly/quarterly performance

7. Contract revision

Do they have an Onboarding method? If the answer is no… switch agencies

The onboarding is a process in which the client integrates into the necessary actions to advance the project. There are tools like Basecamp, Monday (the best), etc. to facilitate this method.

From experience, 90% of the time projects are stalled due to slow decision making from clients. This method that advocates process transparency “step by step” and the who-what-how-when allows for more tight deadlines.

How will your results be measured?

• New clients?

• New leads?

• Traffic on the site?

• New followers?

• Walk-ins in your store?

• New Users on your platform?

• Increase in your organic traffic (SEO)?

By how much do they estimate the increase?

They will not be able to give you a guarantee and that’s normal, if your brand or product is unattractive, it will have a general impact on the results. But a good agency could suggest some possible adjustments that could be made to improve certain aspects of your business. For example: your website, your logo, your colors, your packaging, the decor of your store, etc.

Is time billed when you call with questions?

• When I go to the chiropractor, he charges me.

• When I call my accountant, he charges me.

• When I go to the hairdresser, she charges me.

If you ask your agency for things that are not in your contract. Advice, strategies, etc. I suggest you pay them, even if they don't want to. This way, you ensure that you have their full attention and a service that meets your expectations.

Anyway, if you spend 5 hours with them per month for that, you can expect a bill of $400-800. And if that advice helps you grow, it’s legitimate that they get paid to help you.

If you want free tips, subscribe to our blog! 😉 and if you need more specific advice, send us an email or a text and we will get back to you within 8 hours with our availability.

Performance reviews.

Your agency must be S-M-A-R-T.

What does it mean?

It means they must know how to set goals, when to do it and/or to do it.

• Specific

• Measurable

• Achievable

• Realistic

• Time-bound (within a time frame).

So when you meet with your account manager or your rep at your first meeting, make sure they talk to you about goals with those 5 characteristics.

If they don’t have objectives to share with you, challenge them! Ask them what their objectives are for the next period and what they think about the completed period. It’s their job to provide you with solutions or ask you questions to come up with a game plan to adapt the campaigns.

Gro and I understand that it’s not always easy to challenge a provider in a field that we don’t understand much. Hence the very essence of our company. If you have campaigns over $1000 per month that you are managing and you feel you are not being well served, or you just want validation that the work is being done well. Send us an email or a text, we would be happy to give you our opinion.

I also invite companies with larger budgets of $5-10K monthly and “Big Spenders” of $10-100K to send us an email, an outside opinion can often make all the difference between an expense or an investment!

Fees.

Percentage-based

I am the biggest fan of percentage-based monthly fees. It’s in my opinion the best way to achieve poor results and/or pay too much.

Why?

Because the agency’s objective will be to make you spend more on advertising to earn a bigger commission. Knowing that digital marketing involves bids, like at the stock market,

Imagine the following scenario:

There are 10 roofing companies in Laval, of which 3 are clients of ABC Marketing. ABC Marketing starts their work and sets up Adwords campaigns, for example. 4 months later, during the performance review, the account manager informs his 3 clients that CPCs (cost per click) have increased. That if they want to achieve the same results, they must increase their monthly bid.

The risk that the other 7 companies who advertise on Google decide to follow suit is also high, which leads to “speculation” and an increase in the CPC price for roofers in a given area. This in turn raises the roofers’ budgets and at the same time the agency’s commission…

A James Bond scenario you think? Such scenarios have recently emerged in the automotive sector...

This is why I prefer the following scenario:

Fixed fees.

Let’s return to the roofing scenario.

• The agency agrees to help the client get 5 roofs per week with a budget of $2500/week.

• Setup of an advertising campaign to attract 500 visitors per week in the company's region. Radius of 50 KM around.

• Adwords campaign with the following keywords: "see list". With a goal of $5 CPC.

• Facebook remarketing campaign at $150 per month.

1. Setup of the Adwords campaign: $2000

2. Setup of the Facebook remarketing campaign: $1000

3. Monthly adjustment and performance review: $750/month

For an increase in leads and traffic, a proposal for an increase in monthly fees will be provided if applicable.

Minimum fees to make changes to the campaign, aside from simply increasing budgets: $500 in fees.

This billing method allows for 2 things.

First, if you decide to double your budget in April and May because for you it’s a good time to get more traffic, you won’t have to pay the agency double for any additional work on their part.

Second, you ensure that the agency will be responsive to making strategic changes or modifications in order to lower your CPC. It’s a bit complex, but let me explain.

Percentage scenario: 20% commission

• You need a max of 100 leads.

• You invest $10,000 per month on Facebook.

• You pay the agency $2000.

• It costs you $120 per lead.

Fee-based scenario: $2000 per month (including amortization of the initial setup)

• You need a max of 100 leads.

• You pay the agency $2000/month to acquire your 100 leads. Since they are not paid on commission, the agency puts in extra effort to reduce your cost per lead, because it won’t lower their commission.

• You invest $9000 per month on Facebook to get your 100 leads.

• It costs you $110 per lead.

• Saving of $1000 per month.

It’s certain that this scenario is based on speculation. But if I tell you that the harder you work, the smaller your pay will be… There’s a good chance you will do the minimum to hit the objectives discussed with your client.

So, let's take the following situation:

• You negotiate fees + a performance bonus.

• For example: $2000 per month + $10 per lead under the threshold of $85/lead.

You are likely to see some amazing performances.

Negotiate, negotiate, negotiate.

Ultimately, everything is possible when negotiating an agreement with a marketing agency. Be “clever” as our American neighbors would say, cover your bases, ask plenty of questions, and if you’re not sure, contact us, we are here to help businesses make the right decisions in the web world.