You’re probably reading this post with a high degree of skepticism, and I don’t blame you; getting advice on choosing an online marketing agency from the head of an online marketing agency is like asking the IRS to file your taxes for you.

But wait! Before you discount everything I’m about to say, know that prior to starting my own SEM agency, I spent eight years on the “client side,” and I negotiated with dozens of agencies (and selected several of them). So be skeptical if you must, but I suspect by the end of this article I will have convinced you that these tips are actually useful!

So without further ado, here they are — 10 tips on choosing an online marketing agency:

Judge Cultural Fit

1. Ask to talk to your account manager. Every agency has a few really smart, smooth biz dev guys who will get you excited about the agency’s knowledge and commitment to clients. Of course, once you sign your contract, you’ll seldom hear from these folks again. For this reason, ask to personally meet/talk to your day-to-day contact(s) prior to signing a contract. Is there a personal fit? Are they experienced (and not in the Jimi Hendrix sense)? Do you trust your marketing budget to be effectively managed by this person or team?

2. Figure out the agency’s average client size. Most agencies build their internal team around an expectation of a certain amount of revenue per client. As a result, if you are way too small or big for an agency, the team you end up with will likely be mismatched. For example, if you are spending $1M/month on marketing, and the agency is used to servicing $5K/month clients, the agency is likely to be overwhelmed and under-staffed to support your needs (much as they would love to work with you). Conversely, if you are the $5K/month client talking to the $1M/month agency, it’s likely that you’ll be an afterthought to your account reps and will get poor service.

3. Avoid scare tactics. Generally speaking, the bigger the agency, the more likely they will try to sell you on “CYA” – Cover Your Ass. When they can’t compete on price, service, or expertise, big companies try to scare clients into not using a smaller or lesser-known agency. Ultimately, if you’ve done a good job vetting the competency and cultural fit of your preferred agency, you should recognize this line of reasoning as an argument of last resort and ignore it.

Assess Expertise

4. Break down the agency’s business by marketing channel. Let’s say you are looking for an agency to help you with display advertising, and the agency’s Web site lists display as one of 35 marketing disciplines they manage for clients. In this case, it’s important to understand whether display advertising is really a core focus of their business, or whether they just do display as a “tack on” service. If you’re not sure that you are getting a straight answer, ask to speak to several reference clients who use the agency for the specific marketing channel you are considering.

5. Do your own due diligence. Doing reference checking on agencies is important, but ultimately references are a pretty weak method of evaluating an agency (or a potential employee, for that matter) because the agency only puts you in touch with their absolute happiest clients. If possible, go to LinkedIn or send emails to friends and try to find people who have worked with the agency and aren’t on the reference list.

6. Ask for an audit. Many agencies will do a free evaluation of your current marketing campaigns and come back with a laundry list of recommendations they would implement if selected as your agency. At a minimum, this gives you a lot of free tips, but it also helps you evaluate whether the agency’s folks really know their stuff.

Negotiate the Contract

7. Understand contract length and terms. Most advertising agencies ask for between six-month and one-year contracts (PPC Associates, by the way, only requires a two-day contract!). I’ve seen some contracts that ask for up to three years. The longer the contract, the greater the risk you take, since, if the agency turns out to be a lemon, you are stuck with them for the length of the contract (barring an expensive legal battle).

It’s also important to understand the out-clause and renewal clause. An out-clause is the amount of notice you have to give prior to canceling the contract, as well as the conditions under which you can cancel. Some one-year contracts offer a 30-day out-clause without cause at any time, meaning that you can effectively cancel the contract on Day One and be done with the agency in 30 days. Other contracts don’t allow for an out unless there is a “material breach” of the contractual terms (one party violated the contract), or until the entire term of the contract has run.

Renewal clauses can also be tricky. Some contracts auto-renew unless terminated, meaning that you have to proactively cancel the contract at the end of the term or else you are locked into an additional term of the same or greater length. Other contracts have no renewal term, meaning that you have to renegotiate the contract at the end of the term and sign a new contract. Auto-renew can be advantageous to you if you have really favorable rates, but generally I recommend removing auto-renewal clauses and giving yourself the option of renegotiating or trying a different agency at the end of the term.

8. Look for hidden fees. Some agencies low-ball clients on standard pricing terms and then nickel-and-dime them on additional fees. For example, most agencies charge on a percentage-of-spend basis, but some charge extra for services like:

A. Landing-page design
B. Custom reports
C. Banner ads
D. Translation
E. Technology
F. In-person meetings
G. Travel

All of this should be clearly spelled out in the contract. If it isn’t, you should add it in yourself.

9. Talk about the conflict-of-interest policy. Once you start working with an agency, they have access to all of your marketing data and potentially all of your internal revenue data. If the agency doesn’t have a conflict-of-interest policy, there’s a chance that they’ll bring on one of your competitors. Hopefully, if such a situation occurs, the agency has a “Chinese Wall” policy of not sharing information between two competitive accounts. Every agency has different rules and, frankly, different ethics. Ask up front, and if possible, add language into your contract that protects you. Common contractual terms to request include:

A. An exclusivity clause: the agency won’t work with anyone else in your industry.
B. An exclusion list: the agency won’t work with specific competitors.
C. A post-contract minimum time period before the agency takes on a competitor.
D. A definition of the agency’s conflict policy and Chinese Wall policy.

10. Understand who owns the data and your accounts. In the event that you and your agency “break up,” it’s important to understand who owns what data. For example, if you have a Google AdWords account and your agency declares that the account is their property, when you leave the agency, you lose all of your data and account history and have to start from scratch. This is bad on many, many levels. If possible, insist that all data – accounts, creative, etc. – are owned by you, the client, and put this in the contract!

Make a New Friend

Many clients see agencies as their adversaries, and sadly, many agencies feel the same way about their clients. It doesn’t have to be this way! Client-agency relationships usually break down due to a lack of communication, cultural fit, or financial alignment.  Use these 10 tips when selecting your next agency, and there’s a better-than-average chance you’ll end up with an agency that you think of as a friend, rather than a foe.

David Rodnitzky, CEO

15 Comments

  1. bgtheory May 14th, 2012

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  2. toddmintz May 14th, 2012

    Ten Impartial Tips on Choosing an Online Marketing Agency (from a Partial Observer) | PPC Associates Blog http://t.co/7Ams1roy

  3. tdwhalenho May 14th, 2012

    Ten Impartial Tips on Choosing an Online Marketing Agency (from a Partial Observer) | PPC Associates Blog http://t.co/i7Q81pD0

  4. Terry Whalen May 14th, 2012

    Good, thorough list!

  5. JaimeTSikora May 14th, 2012

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  6. rodnitzky May 15th, 2012

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  7. NewsSEM May 15th, 2012

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  10. DanButiu May 15th, 2012

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  11. ThinkFirstWeb May 15th, 2012

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  12. contentmktglabs May 15th, 2012

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  13. LongviewSources May 18th, 2012

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  14. EricksonRay May 18th, 2012

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  15. Mash Bonigala February 11th, 2013

    I believe, trust is the biggest factor when you are targeting any market segment. Making sure that your marketing agency builds up this trust is paramount to success. Here are 8 more signs that a marketing agency can be trusted: http://goo.gl/1jAtZ

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David Rodnitzky
David Rodnitzky is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including Rentals.com (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up. David is a regular speaker at major digital marketing conferences and has contributed to numerous influential publications, including Venture Capital Journal, CNN Radio, Newsweek, Advertising Age, and NPR's Marketplace. David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.