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Digital marketing agencies are a dying breed. If you are one, or you are using one, keep in mind the three things you need to do to ensure you don’t end up dead.

As I see it, digital marketing agencies are not set up for success. Every time I have used a marketing agency myself, it has been a stop-gap arrangement until I could set up my own team.

Marketing agencies are destined to die, and if you rely on one, you’ll die with it.

– Mike Templeton, Foxtail Marketing

There are multiple issues with the way marketing agencies operate today. Not that all marketing agencies are out to screw their clients, you can find more information on how to tell which is going to be a worthy investment. But most others have simply gone and done what ad agencies (and Mad Men) have taught them.

As a company looking to engage an agency (or at least someone similar to an agency), you should do the following:

Focus on success metrics, not on budgets.

Whether your budget is $1,000 or $100,000, your expectation for payback remains similar. If $1,000 spent in marketing gives you $15,000 in sales, then ideally $100,000 spent in marketing should give you $1,500,000 in sales. While any self-respecting marketer will tell you it isn’t that simply a case of unitary analysis, the basic premise is still correct. More marketing budgets should give you more sales. If you’re a digital marketing agency then there are resources out there to help to gain a greater CIR, being one to help with Google Advertisements allowing you to streamline the process from start to finish. So what should you do?

Use Cost/Income Ratio (CIR) to measure if your payback is meeting your expectations.

While typically a banking term, CIR simply is the ratio of how much you spent to gain $1 in income (or sales, or profits, as you see fit). Is there a “good” number? Not really, we have seen CIR’s range from 3% to 20% of gross sales in the e-commerce industry depending on a variety of factors, including the category you operate in, what stage you are in, etc. For instance, fashion may see a higher CIR in certain markets, while startups launching a product are also likely to see higher CIR in the initial days.

Aim to move digital marketing in-house in a predetermined time period.

No one understands your business like you do. If you expect any external agency or partner to understand the intricacies of your business, then you are setting them up for failure. So, simply be upfront with your need to move marketing in-house within (ideally) a six month period, and use the external party to set up the processes. You can find help with setting up that internal team in the meantime, be it with getting them reading through pages that will help (like or by internal restructuring. Here is a key list of things to prepare before you are ready to move digital marketing in-house:

  1. Hire a digital lead, typically someone who knows the basics of all digital channels and is exceptional in at least one channel.
  2. Hire a designer. Typically digital leads will be great at data analytics, and won’t be able to design a banner to save their lives. Even though there are a lot of free tools, including our favorite: Canva, you will be better off with a designer who knows the basics of design.
  3. Set up data collection sources. Ensure that you are able to track your traffic’s behavior through tools such as Google Analytics and Facebook pixels. If time and budgets permit, use consumer analysis tools such as Omniture, Metrilo, and Clevertap.
  4. Understand your consumer segment. Contrary to what many might think, understanding your consumer in micro detail is not just the marketing department’s job. The founders, CEO, COO, VPs, Directors, everyone must have the same understanding of who the customer is. Using the data collection sources you’ve set up, make sure to build the consumer personas for your product(s) and communicate that extensively within your teams.

Work with Technology.

Marketing does not work in isolation from the rest of the business. The technology/product that marketing delivers through is a core component of the customer acquisition and engagement process.

Simply increasing traffic to a page is not success, if visitors bounce off the page in quick succession.

If your marketing team/agency is bringing traffic to a signup page, then ensure that you are measuring the effectiveness of the signup page components too. Experiment with different call-to-action (CTA) components, run A/B tests, and split tests. Make sure that conversions (e.g., signups, sales etc.) are improving over time.

Long story short, marketing agencies are on their way out the moment you sign them up. So it is beneficial to everyone involved if the expectations are set tight right from the beginning and both teams work toward a smooth handover to ensure client success.

Have you tried using an agency before and fired them quickly? Or did you sign on an agency and never stopped using them? Let us know in the comments below.


Product and Marketing guy. Ex-founder of $10m re-commerce company, with extensive experience in B2B and B2C product design, revenue management, and sleepless nights.

1 Comment

  1. Great post! Wanted to offer my $0.02

    This trend is happening for good reason. For years, agencies have been getting too fat on their brand fees due to a lack of transparency on the work they’re actually doing. We’ve written about this extensively in our badvertising posts.

    Brands can look at account history, but most in house teams don’t, and some agencies have programs that automatically change bids back and forth to make it look like they’re working when they actually aren’t.

    What a time to be alive.

    Billing for hours is also archaic, as nobody’s sitting there on a screen share watching their agency do work. That would be a dystopian 1984 version of what marketing agencies could be, and nobody does that.

    This lack of transparency is one of the main reasons why companies are making the shift to in house. Even if executives are not watching their employees’ screens, at least they have a general idea of what they are paying for.

    We wrote an extensive post on how companies can navigate this transition, if you are interested:

    Hope that helps! See ya

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