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What is the value of an advertising agency? Agencies can bring a lot of (varied) value, but there has to be one overriding reason for agencies to exist. Having spent five years on the PPC agency side, I’ve often wondered why anyone would be incentivized to outsource critical parts of their marketing to an outside firm. The answer is pretty simple: they can’t do the job themselves.
Now the “why” of all this is what’s most interesting. Is it because people are short on time? Short on skills? Is the function so boring that they want nothing to do with it? Part of the challenge of working on the agency side is deciphering a client’s motivations for working with you. What’s frustrating is that these motivations will change and evolve over time. To make sure there are no hard feelings and you don’t get too high or too low, there has to be some understanding that, in all likelihood, this will not be a permanent arrangement.
This is particularly true for a PPC agency. Unlike say, TV commercial production, it’s a lot easier to bring in-house PPC talent on board, therefore using agencies as crutches or stopgaps to fill the void until you can staff up. Knowing this, you wonder why any of us decide to join an agency – much less start one (this is when I tell you all that David Rodnitzky is really insane).
The answer is that there’s a need for it, and while engaging in these fleeting relationships might seem like we’re craving punishment and rejection, there’s still value to it all. Everyone gets something from it, and so long as everyone keeps the RIGHT priorities in mind (quantifiable results), everyone can win.
What’s sad about this arrangement is that people aren’t always clear about the dynamics that make this ecosystem survive. Don’t get me wrong, clients have a right to be demanding and expect excellence. Part of what makes PPC Associates so successful as an agency is that we’ve never lost sight of the fact that a client’s profitability and success must remain our top priority. If our clients aren’t making money, what good are we? Realistically, though, agencies have to make money, and clients might not always like how that happens (no matter how amazing the results are!)
Where things get a little fuzzy is when you dig beneath the surface and face the truth: the ultimate value proposition of the agency (PPC or otherwise) is that we can do as well or better than an in-house team, in a third of the time. This is the disconnect that leads people to question why in the world they’re paying an outside shop the same salary they could invest in a dedicated full-time resource.
Some are very aware of this and forge ahead. Some aren’t, and their jaws drop, ears steam, and language coarsens upon receiving the news. Bottom line: if this wasn’t the case, agencies wouldn’t exist. What gets lost in number of hours invested is offset in specialization. Whether we’re talking about process or experience, the hope is that the agency in question can make up for the fact they have NO CHOICE but to invest 30% (or less) in ways that still enable them to drive results.
Again, if results and success are the primary drivers of a relationship, there shouldn’t be anything wrong with this arrangement. If you’re going to work with an agency, it’s best not to think about man-hours invested vs. what you’d get from an in-house resource. Focus on what’s actually getting done. If you can find an internal resource who can get the job done just as well, then by all means, hire that person!
We’ve worked with clients savvy enough to realize this and do it, and we continue to work with clients that very well could hire internal resources but choose not to do so. At the end the day, it’s a question of value and reliability. New people pose new risks, and sometimes it’s best to pay a premium for something you know, unequivocally, is going to work.
The sooner you come to this realization, the sooner your relationship with your agency will improve. The beauty of applying this logic to a PPC agency (vs., say, a creative agency) is that the results are quantifiable. Dollar in, dollar out – paying your agency is not different than paying Google or Bing. You need results to back it up.
– Sean Marshall, Director of Client Services