Problem 2: Their business model lets them down
Why most marketing agencies are con artists - part 2:
This is part 2 of our guide explaining why almost all marketing agencies are con artists and fail to get results.
In the last section we discussed how salespeople in marketing contribute to the problem. In this section we explore a slightly larger problem:
The marketing agency business model is failing clients.
Every business needs a structure that can be scaled up as they grow but that doesn't compromise on the quality of work for the customer. Most marketing agencies structure themselves in such a way that it makes the latter part incredibly difficult. It puts their own operational efficiency & profitability above the drive to get the client the best result. This is appalling.
The billable hour problem with marketing agencies.
It is in the interest of most marketing agencies to keep billable hours as high as possible whilst ensuring that their staff don't "over-service" clients. Now, this sounds reasonable except the amount of work & service required each month varies massively.
For example, SEO requires a lot more work in months 1-3 to get early and effective results than it does thereafter. Instead of front-loading your budget to make sure all this work gets done & you get your result, they would rather bill you for all of the services all of the time to maxamise their own income at the expense of your results.
This is a huge problem as clients want the lowest number of billable hours but the agency wants to maxamise them. The client wants the greatest result in the shortest period of time, but the agency wants a long term source of revenue - aka; they want you to pay your bill every month for every service, regardless if that is the best way for you to reach your goals.
This is in part due to the problem that we cover in part 1 of our guide (which covers salespeople and the role that they play in not understanding business or marketing and as a result they miss-sell services with the wrong budget), but it is also down to the attitude of marketing agencies, as well as their physical structure/business model.
Step 1: You deal with a salesperson.
We have covered all of the major problems with this in the 1st section of our guide, but in short, you (the client) have had conversations with a salesperson of the agency. They have come up with some solutions that sound like a good idea for you. They put forward a proposal and you sign up.
From here, the salesperson passes the order form to a manager at the marketing agency and has nothing further to do with you.
Step 2: The work is passed to the marketing manager.
The order form comes through to the marketing manager. It is their job to look at the services/amount of time that has been sold and to look at which of the staff have time to do it. Once someone has been selected, the work is passed onto them.
A good marketing manager should also look after & train up the staff to always develop their skills and to become better marketing professionals.
Normally, all staff have checklists to work through for each service - so regardless of the clients' unique business or opportunities, they will get the same work that everyone else gets. The only variable is budget and that directly affects the amount of time spent & how many points on the checklist can be worked on each month.
The ultimate job of the marketing manager (and the main point that he is held accountable for) are the billable hours available within the team and ensuring that staff don't work more hours than have been paid for. Once again, the services that they signed up for and the budget they committed is based on the salesperson, not a strategy built by someone who knows what they are talking about.
In short, you have the manager making sure that what the salesperson has sold is done. They then pass the work to an executive who is paid £12/hour but their time is billed to the client at £75/hour. The executive then works through internal checklists to do what has been sold, regardless or not if this is the best way to get you the result you want for the goal that you need.
Step 3: Your marketing work is completed by a low level executive.
The people who actually do the work are the marketing executives. It is their job to speak with the client and do all the marketing activity. They are paid the least and are responsible for doing the services that have been sold.
The average salary for an exec is around £22,000, or £12-13 per hour. Their time is billed out to the client on average at £75 per hour.
If a marketing executive has all 35 hours a week filled with billable hours at £75/hour, they will generate £126,000 a year in revenue for the agency.
Generally speaking, marketing executives have only spent a few years in the industry and have limited marketing knowledge and next to no real world business experience. They are being trained in how to do the activity, but not when the activity needs to be used.
They are taught that their reporting metrics are a better measure of their success than the clients increase in sales/leads/revenue. They are not taught that the client's turnover is not their gross profit. They do not appreciate that the reports that they generate don't include the cost of the fee which the agency charges the client, and that any ROI figures based on paid advertising budget are not done on the profit of the product but the full retail value.
Ultimately, they work through a checklist to do the work that you have paid for and don't really have a say in changing your services to get you a better result. They just have to do what they are ordered to do. It's sad.
The problem with this structure:
The client is getting cheated out of having the most impactful work done.
You pay a huge fee to have a checklist worked through by people who are paid very little to work through that checklist. It's a joke.
At no point is your goal and the best route to completing it taken into account. For most marketing agencies, you are just another client who is paying for X amount of time and will have the same work done as anyone else.
It is my belief that this comes from a lack of experience, understanding, imagination, strategy, but also a very restrictive structure.
There is no reason why the most important work can't be done 1st depending on a client's unique situation. For example; if you have a great product and we research the problems, questions & requirements that your customers have and discover that your website is missing a lot of the information that they are looking for - then let's do that first! The keyword targeting will help with SEO, the relevant & useful information to help with a buying decision will directly help with sales and conversions, and the addition of the information that your customers need will make future investment into paid advertising more effective. It's a great place to start.
Instead, you will have a technical SEO audit done first followed by a checklist of tasks to work through. This can include updating page titles and meta descriptions, alt text, broken links fixed, headings updated - and the list goes on. Now, these are all valid points to impact the SEO of your site - but it's not going to impact your sales right away, which is what you want, and it's not necessarily the best way to increase your rankings. But that's how most marketing agencies structure your work.
You get exactly what you signed up for - regardless if that is right for you or not - and it won't change.
The salesperson sold what you would buy.
The managers are responsible to the managing director/heads of department. They want to see billable hours high and clients not being over serviced.
The executives are responsible to the manager, who wants to see the internal process/checklist for work completed in the allocated time.
Because everyone in the organisation wants to keep their job and are responsible to someone above them who has a vested interest in this structure, it means you, the client, get pushed to the back of the priority list. It's almost funny.
The worst thing about this is that nobody will speak up and say; "actually, based on what you want to do, what you need isn't what you have signed up for. This is what we suggest to get you the result that you want, if that sounds reasonable?" I think the reason that nobody speaks up is because they are all too worried about undermining each other. They put their own position in the agency ahead of the needs of the client. I think this is shameful.
Your budget will never change to be spent more effectively.
Following on from the previous point, not only will your services likely never change, but your budget will never be reallocated to be spent more wisely to achieve your goals faster.
For example; in the 1st three months it would be best to put all of your budget in SEO, improving the website & re-engaging previous customers. After month 3, the work from improving the site and a lot of the heavy lifting SEO work should be done. Now there is no reason that a good portion of this budget can't be moved into paid advertising.
The problem here is the agency is making £62 gross profit (approx. £45 net) per hour for the website & SEO services, but they make next to nothing on paid advertising (because the vast majority of your budget actually goes on the advert spend).
Even though moving your budget to the most effective area/service to generate the greatest results in the fastest time, it harms the profitability of the agency. So not only are you taking longer to get any results because an effective strategy hasn't been developed or put in place and you are just having a checklist completed month by month, but you will spend pointless sums of money after the work has eventually been completed.
In short, we believe that it is a con. You are having your money taken for the benefit of the agency, not for the legitimate benefit of your business.
Ultimately, most marketing agencies are built around making themselves as much money as possible - not getting the best result for their clients. I think it's sad that after a few months and the heavy lifting work in most CRO & SEO services has been completed that some of the budget is not then reallocated into more effective services for this stage of the campaign.
We believe that clients deserve better, even if that effects our overall profitability. We're in this business to make a legitimate business and grow a great reputation, not for the short term financial gains like most agencies.