Are marketing agencies worth it?

Most Founders and Operators get fired up when they think about hiring an agency… and not for good reasons.

I get it. There are a LOT of mediocre service-based businesses out there. Most of you reading this have either worked with or in one. I know I have.

(I also don’t have a dog in this fight one way or another. There are pro’s and con’s to working with agencies, and below I’ll share what they are).

My unique set of experiences allows me to be extremely qualified in providing an answer to this question., “are agencies worth it.”

I’ve worked inside small media agencies and large media agencies. Managing ad accounts, client communication, building reports, and internal politics. There were a lot of success stories, and a lot of epic fails along the way.

I’ve also worked as a full-time Director within a DTC brand where I managed multiple agency relationships directly. I was held accountable for performance.

As of right now, I don’t run an agency myself, but I personally serve clients with growth marketing on a contract basis.

I’ve done this for over 7 years.

All three of these scenarios combined have resulted in me having quite an opinion about the burning question, “are agencies actually worth it?”

Let’s dive into it.

The most important question you can ask yourself before making any hiring decisions is…

“what exactly do I want out of this working relationship?”

It’s not good enough to just think at a high level. “Better performance” is too broad and too vague. Be more tactical. Examples below:

“I need someone to come in and improve Meta efficiency by X within Y time frame.”

“I need someone to produce video creative that has a 1/10 hit rate within Y time frame.”

“I need someone to help me better understand attribution between all my marketing channels.”

The more granular, the better. Because these goals are what you should be holding any growth marketing partner to, agency or not.

Write down 5 or 6 of these tactical goals you have. Problems you desperately need solved within your business. These will be the questions you’ll want to ask when interviewing. It’s extremely important to vet whoever you decide to give tens of thousands of dollars to.

Now the annoying truth is that it’s not a simple black and white answer.

In some situations, agencies can make all the difference for your business. In others, they can sabotage your growth plans and fast track you to bankruptcy. And then there’s a whole lot of grey area in between those extremes.

I’m going to take you through a few scenarios that I’ve personally witnessed, and then provide some commentary.

Grab a nice cold beverage… let’s go.

Scenario #1

I had a lengthy conversation with a DTC Founder that was super excited about scaling their business. They knew they needed some help on the marketing side. But they only had about $8,000 available to use on OPEX without taking a massive financial risk. They wanted the full suite – paid ads, performance creative, copywriting, landing pages and CRO. 

I told them to hire an agency, because finding a competent individual with all of these skills would be impossible at their available budget. The last thing a growing business needs is to waste 3-6 months hiring the wrong person who interviews well, but is ultimately inexperienced in the areas you need them to perform in.

They refused, saying they wanted a full-time employee instead.

Unfortunately, you’re simply not going to hire a Head of Growth, Director of Paid Media, whatever you want the title to be for a measly $96k per year. The candidates who are actually good at all of those skills will require $150k+ minimum. Then you need to supplement your new hire with resources to execute. Think designers, video editors, website builders and devs, etc.

Hiring a full-time employee would have been a terrible decision for the business. But they were headstrong, and really emphasized the importance of building a company culture for their brand.

This is a situation where hiring an agency makes total sense because:

• The founder was inexperienced in all the areas he knew needed help with (so he couldn’t just do it himself)

• The business had a limited budget to solve these problems (agencies are usually cheaper than hiring full-time equivalents)

• It was time for the business to scale.

Scenario #2

I spoke with a brand that was generating $2M+/month in revenue at about 15% net margin. 

He was doing almost everything himself. Working 80+ hour weeks and stressed out of his mind. 

His agency had not improved volume of sales or efficiency of media spend for almost 5 months! Their reports were short and superficial, Slack messages were ignored for multiple days, and the ad account hadn’t been touched in 56 hours when I audited it.

The worst part?

He was paying a % of ad spend to the agency. ~$40k in monthly retainers. wtf…

I told him straight up… fire that agency and bring everything in-house. The room on OPEX was there, and the inefficiency from his existing agency made the decision even easier.

You can build a KILLER internal marketing team for $40k/month. All full-time, working for your business rather than 7+ other accounts. The amount of work that gets done when you have all that concentrated mental power is staggering. Plus, the Founder would be able to buy some of his time back. No more picking up the Slack from the terrible agency.

But even if that agency was doing a good job, it would STILL make sense to start transitioning to in-house.

They had the capital to afford high quality talent, and the business was generating enough revenue to sustain the new OPEX expenses.

BONUS: If you want me to audit your agency, reply back to this email.

Alright, nuff said.

Till next week.