It’s Time For Agencies To Guarantee Results

Brian Burt is the Founder and CEO of CANOPY Management, the leading full-service Amazon agency.

Digital marketing agencies are feeling pressure from their clients, according to eMarketer. Evaluations and audits are accelerating. Recently, major brands, including Coca-Cola, Facebook, The Home Depot and Unilever, have all announced global agency reviews.

About half of digital marketing agency professionals worldwide said their average customer lifespan was less than 36 months in this recent research, meaning a huge number of clients aren’t seeing value for their money.

Agencies have had their own pain points with managing and growing their businesses. According to a September 2020 survey by CallRail, as noted by eMarketer, finding new clients (the most common concern) was cited by 48% of respondents worldwide.

It might be time to take a close look at why agencies are having such difficulty finding new clients and retaining those they do establish relationships with.

Let’s consider the contractual relationship itself.

There’s long been a power imbalance in digital advertising: Based on little more than trust and a sales pitch, clients that enter into agreements with agencies end up taking on 100% of the risk for media placements. That’s a little like discussing marriage after a fun first date.

How about the campaigns that inevitably take some time to get off the ground before seeing a return? Or, the worst-case scenario in which an agency’s promises of performance turn out to be nothing but smoke and mirrors? There’s little recourse for advertisers when that happens; they’re expected to take the financial hit and file it under lessons learned. The entire industry could do better.

It starts with basics: Once a campaign has concluded, many agencies don’t take the time or effort to review the details that drove performance in the first place. Why are agencies rushing past this important step? Unfortunately, there’s a simple answer to that question. It takes (agency) money and resources to analyze the data and improve future processes. Most agencies are understandably more concerned with their own balance sheets.

I say no longer. It’s time for agencies to start guaranteeing outcomes, formally and contractually. The prospect might be daunting for many of us, and it will fundamentally change the way our industry works. Agencies have always done it this way, and I’m sure that the majority might be terrified of any change to the status quo. Still, with the accelerating challenges we face, we can’t afford to let inertia prevent us from meeting the needs of this moment.

The long-term implications of performance guarantees will change the nature of agency economics and relationships. It’s going to alter how all parties in the ecosystem structure their arrangements.

Going forward, this will inevitably cost those of us in the agency world. If we meet this challenge, at some point, all of us will fail to live up to a promise and end up writing a check we’d rather not.

I say, embrace the risk and reward. Hard-learned lessons are often the most valuable. There are too many agencies in our industry that are just resting on their laurels. Let’s welcome the discomfort, and let it make us stronger.

Establishing new contractual frameworks for KPIs and foundational work will be challenging. It’s also the part that I’m most excited about. It’s a great opportunity for agencies willing to put in the work to differentiate themselves against the shortcomings of the competition. Reporting, analytics and execution all take on a different character when performance guarantees are in play.

Bottom line; I think it will be worth it! That is why I’m calling today for a formalized system for digital agency guarantees. I want my company and clients to be on the upstanding, transparent side of things, and I think this is a way to get there.


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https://www.forbes.com/sites/forbesbusinesscouncil/2022/05/18/its-time-for-agencies-to-guarantee-results/

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