5 Steps to Finding the Best Advertising Agency
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 decisions. And, if you decide to outsource to an agency, the selection process can be overwhelming, with the thousands of agencies to choose from. This article will help you make those decisions easier.
Internal teams vs. third-party agencies
The decision to manage campaigns internally versus 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. Previously, I wanted to handle everything in-house, to save costs compared to an agency (which can often be 15-20% higher, including their fees). And, I used to want to find disparate agencies with specific expertise (eg, 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, and preferably a cross-channel agency capable of managing all the desired channels through a single partner. The reasons for this are as follows: (1) agencies have moved from being 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. Especially since the techniques that work best each year can change quickly, and you want to benefit from the most recent learnings (not hire someone with yesterday’s playbook). 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 probably could generate with an in-house team.
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. So, the first step is to have 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 the most suitable agencies. to support these budgets and these 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) have 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 from other similar companies, to see who they work with. Or, 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 may result in a list of approximately 8-10 agencies to consider.
Step 2: Create a questionnaire and interview 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 need to ask them probing questions, such as: (1) what is your minimum media budget, are we big enough to be a big account for you; (2) what are your fees, can we afford your services (keeping fees within the 10-20% range, depending on media budget); (3) what is your expertise in the sector, do you have good references from similar companies like ours; and (4) do you work for one of our competitors, do you have any conflicts that we need to be concerned about. This part of the process will narrow your list down to about 3-5 real top targets.
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 2-4 weeks, they should have completed their research and planning and be ready to present their proposal. In these introductions, 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 company and your team (are they fun to work with and share your common values, as you will spend a lot of time with them); (3) the quality of their ideas at the strategic level (did the presentation match your advice and desires); (4) their proposed media mix; and (5) the quality of their optimization tools and cross-channel reporting capabilities (because in today’s world, the best agencies are more tech companies than anything else).
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: (1) talking to their references (to make sure what they presented and what they delivered was on par, especially in terms of team quality and effort satisfaction) ; and (2) negotiate the agreement and statement of work (to ensure that both parties are broadly aligned on the legalese and the plan). This may take several weeks.
Step 5: Officially award the winner
Congratulations, you have officially hired your ad agency. I hope the above process has helped you find a truly great partner for your specific business who can help propel it 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 getting all the management processes in place (e.g. , schedule of weekly meetings, desired KPIs on daily/weekly/monthly reporting). This part of the process is as important as agency selection and 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 their fees into a pay-for-performance structure. So maybe half of their fees are fixed, and the other half of their fees are incentive-based. And, keep that incentive uncapped, the more successful they are for you, the more fees they can earn. And, do your best to cap your total fees (eg, 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. In particular the costs around programmatic purchases or the DSP platform. If they can find high-quality media in other ways, it can save you money here, so push them to buy directly from publishers or leverage their bulk buying power, where you can.
Hopefully, we’ve taken the daunting process of selecting an advertising agency and simplified it into an easy step-by-step guide, which will result in an agency well-experienced to meet 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. Hopefully, you are now “on the run” to marketing success and profitable scaling of your business.
George Deeb is a partner at Red Rocket Ventures and author of 101 Startup Lessons – Entrepreneur’s Handbook.