Brian Burt is the founder and CEO of CANOPY managementthe leading full-service Amazon agency.
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Digital marketing agencies feel pressure from their customers, according to eMarketer† Evaluations and audits are getting faster and faster. Recently, major brands including Coca-Cola, Facebook, The Home Depot and Unilever have all announced ratings from global agencies.
About half of digital marketing agency professionals worldwide said their average client lifespan was less than 36 months in this recent survey, meaning a large number of clients don’t see value for money.
Agencies have had their own pain points in managing and growing their business. According to a September 2020 CallRail survey, as noted by eMarketer, finding new customers (the most common concern) was mentioned by 48% of respondents worldwide.
It may be time to take a closer look at why agencies have such a hard time finding new clients and retaining those they build relationships with.
Let’s look at the contractual relationship itself.
There has long been a power imbalance in digital advertising: based on little more than trust and a sales pitch, clients who enter into agreements with agencies end up assuming 100% of the risk for media placements. That’s a bit like talking about marriage after a nice first date.
What about the campaigns that inevitably take some time to get off the ground before seeing a return? Or the worst-case scenario where an agency’s performance promises turn out to be nothing but smoke and mirrors? There’s little recourse for advertisers if that happens; they are expected to absorb the financial blow and submit based on lessons learned. The whole industry could do better.
It starts with the basics: Once a campaign is over, many agencies don’t take the time or effort to look at the details that drove performance in the first place. Why are agencies rushing past this important step? Unfortunately, there is a simple answer to that question. It costs (office) money and resources to analyze the data and improve future processes. Most agencies are understandably more concerned with their own balance sheets.
I say no more. It is time for agencies to guarantee results, formally and contractually. The prospect can be daunting for many of us, and it will fundamentally change the way our industry works. Agencies have always done it this way and I’m sure the majority could be terrified of any change in the status quo. But with the accelerating challenges we face, we can’t afford to let indolence keep us from meeting the needs of the moment.
The long-term implications of performance guarantees will change the nature of the economy and agency relationships. It will change how all parties in the ecosystem structure their arrangements.
In the future, this will inevitably cost us in the broadcasting world. If we take on this challenge, at some point we will all fail to keep a promise and end up writing a check we’d rather not have.
I say, embrace the risk and the reward. Lessons learned are often the most valuable. There are too many agencies in our industry resting on their laurels. Let’s welcome the inconvenience and let it make us stronger.
Setting up new contractual frameworks for KPIs and the basic work will be a challenge. It’s also the part I’m most excited about. It’s a great opportunity for agencies that want to do the job of standing out from the competition’s shortcomings. Reporting, analysis and execution all take on a different character when performance guarantees are involved.
bottom line; I think it will be worth it! That is why I am arguing today for a formalized system of guarantees from digital agencies. I want my company and customers to be on the honest, transparent side, and I think this is one way to get there.
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