Problem 4: They lack real world business knowledge
Why most marketing agencies are con artists - part 4:
This is part 4 of our guide explaining why almost all marketing agencies are con artists.
In the last section we discussed how marketing agencies just do "activity" without strategy. In this section we look at how agencies have a lack of real world business knowledge and what the effects are.
Most marketing agencies don't have enough real world business knowledge.
There are dozens of moving parts that make up a successful business. Supply chain, operational capacity, overheads, gross, operational & pre/post tax net profits, price-breaks for larger stock purchases, storage & physical space, staff development, hiring & training, recruitment agency fees, salary, national insurance, pension contribution, a great website, making people aware that you exist, reputation/credibility... The list goes on and on.
You need an agency that can be your partner to help you grow your business - but almost all marketing agencies don't even understand the network of complicated intricacies that makes up your business and its potential to grow.
They are not business people.
They are marketers who do the "activity".
When you work with a marketing agency you will speak to 2 different people; the salespeople and marketing executives.
The major problem here is that neither are experienced business people who understand what it takes to develop your business. They don't know the kinds of problems that you face, what the implications of pushing certain products/services might be or what your opportunities may be.
We covered the problem with salespeople in the first step of this series, but they are not business people or marketers. In short, they are professionals whose job is to get you to buy.
Marketing executives are low paid, usually just a few years out of university & don't often have much real life experience, let alone business experience.
Your putting your trust into people who are good at writing adverts, sending emails & making technical changes to your website. You're not working with people who truly understand and appreciate what your goals are or how to get you there.
Most agencies forget why you're working together.
Almost every digital marketing agency and employee you deal with forgets that you're not working with them for the sake of having marketing. You're doing it for more sales.
It seems crazy to say it, but it happens so often. Agencies think you want SEO, Adverts or a new website - but you don't want them for the fun of it. They're a tool to move your business forward.
They produce reports that show you dozens of metrics, graphs and charts with green arrows going up. They use technical language to show you how clever they are and how well they are doing for you & your business - but you don't understand or care what it means.
The only result that matters to you is sales, leads & revenue. You want your cost to be as low as possible whilst maintaining the highest quality and greatest result. The issue is that their goal is to show you how clever they are by producing these detailed reports with every number and figure going up. They want to justify you spending your money on every service they have and keep you paying your bill.
Once again, it's not about a powerful strategy to generate you the most sales/leads or to help you achieve your objective, but it's about justifying your spend on each individual service so they can maintain your budget for as long as possible. All to often they truly do forget why you are working together.
They don't understand your goals or how to scale a business.
You are working with an agency to increase your sales with an end goal of growing your business. Most agencies don't have a clue how difficult, time-consuming or expensive scaling a business can be.
You can run into all sorts of problems such as a lack of staff/time, a shortage of product supply, run out of physical space or need to implement new processes/structures to facilitate your growth.
Now having said that, the opposite is sometimes true; you might have a product/service with near-unlimited capacity to grow/scale. This is why dealing with someone who understands how to scale a business is so important, because it's about working with someone who is your partner and can see the upcoming problems and opportunities before they happen.
Again, this comes down to research, planning & strategy.
Most marketing agencies lie/manipulate basic business financials to make themselves look better.
I have worked in & seen so many marketing agencies that con businesses through miss-reporting basic financials.
They report on your sales as the total value of sales, and they calculate your spend excluding their fees, and show you your "return on investment" as your total sales vs your ad spend.
This is a con and a joke.
Let's pretend you have 3 services with an agency:
- SEO / £1,000
- Facebook Ads / £1,000
- Email marketing / £400
- Total spend: £2,400
The agency lie:
The activity generated £4,800 in sales. The agency will report to you that your spend was "£1,000" and your total sales from all activity was £4,800 - an amazing "480% ROI".
In reality, your gross profit is 30%. That £4,800 in sales becomes £1,440 gross profit. Your total spend (when you take the agency fees into account) is actually £2,400. Your business has actually made a loss of £960.
The major reason that this con is so common is because it is actually really damn hard to increase a business's sales by an amount to make the extremely high agency fees worth paying - so instead of doing their research, coming up with a great strategy, charging a lower fee & legitimately getting a great result for the client for a reasonable price, they just don't include their fees in the ROI calculations or reports. It's easier for them to hide your spend when it's compared to your income so you don't ask questions or cancel.
That is why this is such a great con. They sell you promises, do work & then lie to you about the value of the work so you keep spending your money with them.
Most agencies don't view your professional relationship as a partnership. They don't want to make things as simple as possible for you because they don't actually want you to fully understand what's going on. They hide the full spend in reports, mislead you with false figures and throw dozens of graphs, tables and charts at you to make it look like everything is going great.
After about 3-4 months though, most business people speak to the agency after realizing, "hey, these reports are great, but we're not seeing results reflected in our accounts". This is part of the downward spiral with a client. It is usually another 3-6 (depending on how many more promises from the agency they will tolerate), before they put in their notice.