THE BLOG

3 Dirty Secrets Your Marketing Agency Hides From You

04/24/2015 03:37 pm ET | Updated Jun 23, 2015

You may love your marketing agency, but I'll let you in on a secret. If you're a business owner or director of marketing that's paid 5, 6 or even 7 figures for a 'marketing rebrand' lately call your accountant! Your marketing agency is cheating on you.

Here's what your significant marketing other doesn't want you know:

1 - They Aren't Marketers - Many marketing agencies haven't grown businesses like yours. Or, to put it better, they don't know if they've grown businesses like yours. They may have designed pretty brochures, amazing infographics or filmed mini vignettes, but they couldn't directly attribute any ROI to the marketing material they've designed for you. Do they have the education, certifications or a laundry list of grown businesses to reference? Are they marketing technologists? Probably not. So let's call these 'marketing agencies' what they really are - a team of talented graphic designers. You know you've got a team of designers, and not a marketing agency, if you're discussions center around font updates and colors as opposed to metrics and results.

2 - You're paying them too much - When most businesses hire a marketing agency they are buying time and activities. You may need them to design a poster, build a website or manage search campaigns. What your agency isn't telling you is that those activities are becoming cheaper. Telecommuters throughout the globe with less overhead and administrative costs can handle those activities with less costs per hour than an agency can. True, it will be a greater burden on you to chase around multiple people for design, search and website work as opposed to a single account manager at an agency. But the gap between $100-$200/hr (what most agencies charge on retainer work) and what a telecommuting consultant may charge ($25-$85/hr depending on experience, location etc) is far too wide.

The push-back on this comes if your agency has proven its value through top-of-the-funnel metrics or business opportunities generated. Then, they've earned the right (and your trust) to charge you a premium for the results they continue to produce for you. You'll gladly pay a marketing agency $1 million, regardless of their actual costs or activity, if they contribute $3 million worth of net revenue. That's the difference between value-based pricing and time-based pricing. Most marketing agencies cannot attribute statistics to their work though.

3 - They Subcontract A Lot - Most boutique marketing agencies rely on very little full-time staff. Since the nature of most of their work is project-based they only hire people when they get new jobs to do. I use the term 'hire' loosely. They really just find a contractor to do your work since they may not have the budget for in-house resources. Couldn't you have done that yourself and save some money by cutting out the agency middle-man? Look, there's nothing wrong with this. Just know, that if your work is being subcontracted, there could be delays and a request to increase the budget when your requests for revisions result in more expenses for the agency. Also expect continuity issues with subcontractors. They are basically bounty hunters looking for their next big score. They'll drop your project and your agency if the work is no longer interesting to them, leaving you higher and drier than Radiohead. That delays your project, puts more budgetary pressure on the boutique agency and drives up costs all around when a new subcontractor comes in. A lot of times even large agencies setup private-label working agreements with smaller agencies. It may be cheaper to have a smaller agency do the work as opposed to their own employees. Don't be fooled by all those pretty staff pictures on their website. Very few of them will actually be full-timers.

Marketing agencies can be the cure for what ails your business woes, but just make sure you hire the right one and on your terms. Here's a sample contract you can use to hire you're next marketing agency.