6 ms·

The main issue with hiring an agency to do marketing is that your incentives are not aligned. They almost always charge based on your marketing spend. Which me

The main issue with hiring an agency to do marketing is that your incentives are not aligned. They almost always charge based on your marketing spend. Which means it's in their interest to make you spend as much as possible. They are only rarely willing to base a part of their compensation on your conversions. And often that's only structured as a bonus. They are never willing to base on it CAC. So, you often end up in a situation with thousands in ad spend that is basically useless. That's what I've been struggling with as well. I know I need to learn to do it myself but it's quite time consuming.

Rexxar 5y ago
> The main issue with hiring an agency to do marketing is that your incentives are not aligned. The same could be said for IT and software development but for a strange reason lots of people are doing it.
- rognjen 5y ago
  In general, when in-house capability doesn't exist, things are outsourced. But I don't think that comparison is entirely equivalent. I think for software it's easier to specify requirements that more closely relate to goals. Then you pay for the complexity they entail. For instance, you can say I want to replace this form with the objective of eliminating paper and improving efficiency. The dev shop might charge you more than the market rate but they'll still have to deliver you something that's relatively close to what you imagined. Furthermore, it would be in the interest of an honest dev shop to advise and build something really useful for the client so that they come back.
  - libertine 5y ago
    So you're assuming that marketing agencies aren't honest? I'm struggling to understand what are the differences - why isn't the best interest of a marketing agency to generate good results to a business? What's not aligned in that? Like... it's cheaper to find clients, fool them into getting a chunk of their marketing budget, and dump them? I don't see how this is good business. Why can't a dev shop just do a bad job, hide behind poor requirements, and keep a infinite scope of work after you're too invested in them?
    - tluyben2 5y ago
      Well compare it with a big software consultancy outfit. You will pay and hardly get anything and yet they remain big and keep their name. Same goes for many big name marketing agencies: pay a lot, get nothing and they go on to business as usual. I am not sure it is not honest: it is, at least, lazy. I have seen it with so many software, marketing, investor relation, lawyers, accountant etc companies: they do the absolute minimum they can get away with, possibly just copying all from a previous client and charge the world for it.
      - libertine 5y ago
        That was kind of my point, it's a behavior across any industry, it's not specific to marketing, or dev shops, finances, law... The thing with consultancy it's kind of what you've said: they've built models/systems that kind of work with minor tweaks and sell it to other companies. It's done because the perception of building those systems from the ground up seem more expensive then to get it "installed"... which might be true for many scenarios, but for others, it might not.
    - rognjen 5y ago
      You're right about honesty. It's in the interest of both to be honest and do a good job. That wasn't a necessary segue. It's that specifying the meaning of a "good job" is much more difficult when it comes to ads. Good job in software means do what I want and do a great job means accomplish what I want but do it more efficiently. (And on budget ofc) For ads do a good job means give me most customers for my budget. And the measure of that is CAC. But I've yet to come across an ad agency that bases it's compensation on CAC.
      - libertine 5y ago
        >It's that specifying the meaning of a "good job" is much more difficult when it comes to ads. Well that's the crux of it: it's about people and people aren't input/output machines. One message (input) doesn't predict a behavior (output). That's why I think that anyone that promises specific results in marketing, you should step away from it. I think the best stance is that they will work with you to achieve something, and "work with you" means literally that - try to figure things out with you because your brand/product is it's own thing. >For ads do a good job means give me most customers for my budget. And the measure of that is CAC. But I've yet to come across an ad agency that bases it's compensation on CAC. Ok, now I think I understand you... From the moment you're dependent on a 3rd party, basing your compensation on their work it's just soaking up risk. This goes for both ways: it's the same of some marketing agency saying to a dev shop hey guys, our marketing is solid, don't worry, we will pay you in rev share until the bill is settled... why would you take this deal? Same goes for marketing: how can they know that you have a good sales dpt. to close leads? How can they know you have a good on boarding? Is the price competitive? They could be throwing you the best ads, getting top notch potential customers, and your product just sucks. Now what? Why should the agency pay for your bad job?
  - etempleton 5y ago
    I will jump in and add to this as someone who is in marketing and has worked in an agency. Marketing work is never ending and very fluid. There is always more you could be doing and you could always be doing something better with more time. It inherently doesn’t work well as spec work. And yet that is how marketing agencies operate. Agencies are best hired when you do need something very specific done that you don’t have the expertise to do in-house. A video, a new website, a very specific, time-limited marketing campaign. If the work is continuous, it should be moved in-house ASAP and it is better to wait then pay an agency to do it in the short-term.
    - rognjen 5y ago
      This is *exactly* my experience.
ykevinator3 5y ago
What is cac?
- rognjen 5y ago
  Customer acquisition cost. Basically: total spend / total new customers.
- deleted 5y ago
  [deleted]

Rexxar 5y ago

> The main issue with hiring an agency to do marketing is that your incentives are not aligned. The same could be said for IT and software development but for a strange reason lots of people are doing it.

rognjen 5y ago
In general, when in-house capability doesn't exist, things are outsourced. But I don't think that comparison is entirely equivalent. I think for software it's easier to specify requirements that more closely relate to goals. Then you pay for the complexity they entail. For instance, you can say I want to replace this form with the objective of eliminating paper and improving efficiency. The dev shop might charge you more than the market rate but they'll still have to deliver you something that's relatively close to what you imagined. Furthermore, it would be in the interest of an honest dev shop to advise and build something really useful for the client so that they come back.
- libertine 5y ago
  So you're assuming that marketing agencies aren't honest? I'm struggling to understand what are the differences - why isn't the best interest of a marketing agency to generate good results to a business? What's not aligned in that? Like... it's cheaper to find clients, fool them into getting a chunk of their marketing budget, and dump them? I don't see how this is good business. Why can't a dev shop just do a bad job, hide behind poor requirements, and keep a infinite scope of work after you're too invested in them?
  - tluyben2 5y ago
    Well compare it with a big software consultancy outfit. You will pay and hardly get anything and yet they remain big and keep their name. Same goes for many big name marketing agencies: pay a lot, get nothing and they go on to business as usual. I am not sure it is not honest: it is, at least, lazy. I have seen it with so many software, marketing, investor relation, lawyers, accountant etc companies: they do the absolute minimum they can get away with, possibly just copying all from a previous client and charge the world for it.
    - libertine 5y ago
      That was kind of my point, it's a behavior across any industry, it's not specific to marketing, or dev shops, finances, law... The thing with consultancy it's kind of what you've said: they've built models/systems that kind of work with minor tweaks and sell it to other companies. It's done because the perception of building those systems from the ground up seem more expensive then to get it "installed"... which might be true for many scenarios, but for others, it might not.
  - rognjen 5y ago
    You're right about honesty. It's in the interest of both to be honest and do a good job. That wasn't a necessary segue. It's that specifying the meaning of a "good job" is much more difficult when it comes to ads. Good job in software means do what I want and do a great job means accomplish what I want but do it more efficiently. (And on budget ofc) For ads do a good job means give me most customers for my budget. And the measure of that is CAC. But I've yet to come across an ad agency that bases it's compensation on CAC.
    - libertine 5y ago
      >It's that specifying the meaning of a "good job" is much more difficult when it comes to ads. Well that's the crux of it: it's about people and people aren't input/output machines. One message (input) doesn't predict a behavior (output). That's why I think that anyone that promises specific results in marketing, you should step away from it. I think the best stance is that they will work with you to achieve something, and "work with you" means literally that - try to figure things out with you because your brand/product is it's own thing. >For ads do a good job means give me most customers for my budget. And the measure of that is CAC. But I've yet to come across an ad agency that bases it's compensation on CAC. Ok, now I think I understand you... From the moment you're dependent on a 3rd party, basing your compensation on their work it's just soaking up risk. This goes for both ways: it's the same of some marketing agency saying to a dev shop hey guys, our marketing is solid, don't worry, we will pay you in rev share until the bill is settled... why would you take this deal? Same goes for marketing: how can they know that you have a good sales dpt. to close leads? How can they know you have a good on boarding? Is the price competitive? They could be throwing you the best ads, getting top notch potential customers, and your product just sucks. Now what? Why should the agency pay for your bad job?
- etempleton 5y ago
  I will jump in and add to this as someone who is in marketing and has worked in an agency. Marketing work is never ending and very fluid. There is always more you could be doing and you could always be doing something better with more time. It inherently doesn’t work well as spec work. And yet that is how marketing agencies operate. Agencies are best hired when you do need something very specific done that you don’t have the expertise to do in-house. A video, a new website, a very specific, time-limited marketing campaign. If the work is continuous, it should be moved in-house ASAP and it is better to wait then pay an agency to do it in the short-term.
  - rognjen 5y ago
    This is *exactly* my experience.

ykevinator3 5y ago

What is cac?

rognjen 5y ago
Customer acquisition cost. Basically: total spend / total new customers.
deleted 5y ago
[deleted]