When a business is considering partnering with a marketing agency, it is important to understand how their business model works. What to Choose When Working with an Agency.
Victor Desaga, contextualist at Completo , explained what interaction with an agency on a commission model can lead to, and why a fixed fee is the optimal choice for a business looking for a reliable partner and contractor. What to Choose When Working with an Agency .
Commission model: an approach that is disadvantageous to the customer
Many agencies operate on a commission local marketing email list model, which can lead to unnecessary expenses and inefficient use of the client’s resources.
It sounds harsh, but it is a given: the commission model of work implies that the customer pays a percentage of the advertising budget to the specialists who launch and run the activities.
This operating scheme has 3 significant disadvantages:
it is based on increasing the budget , not on its effective distribution. The larger the advertising budget, the higher the advertising costs, the higher the agency’s earnings. Even if this increase does not bring you any benefit;
the contractor is not interested in increasing the effectiveness of advertising campaigns and optimizing their using webinars for inbound success settings, because the client does not pay for the services provided or the leads generated, but simply a percentage of the budget spent;
with small budgets and a desire to save money, the customer runs the risk of running into a newbie contractor who will take payment, that is, set a %, much lower than the market, but will study and gain experience with your money. This can directly affect the results of activities and lead to misuse of funds.
It is important to remember that good specialists and agencies do not dump the market, but justify the value of their services with experience and relevant cases.
If a contractor offers you such a work scheme, we advise you to evaluate all the risks especially carefully. Otherwise, it may turn out that the contractor, not you, will receive the profit.
The agency should not just be an executor, but a business partner
In the current reality, a business needs a partner who can help it scale and grow.
In the process of our work, we even came up with the concept of a “true business partner”, which we recommend all our Clients and colleagues in digital to focus on.
So, a “true business partner” should be:
is ready to test new approaches and hypotheses, experiment with creatives, take into account trends and tendencies. Even if these actions do not lead to immediate results. And all these experiments, by the way, do not imply an unjustified increase in advertising budgets;
interested in obtaining the final result , which may be:
increasing brand awareness;
obtaining qualified leads, which, if the spam data sales department works correctly, turn into deals;
sales growth;
receipt of money into the account.
“True Business Partner” does not offer unreasonable budget increases for promotion and it does not work on a commission basis, but on a hybrid model, or takes a fixed fee.
A hybrid approach is the ultimate in flexibility, but fixed pay is the best choice in the current environment
The hybrid model – a combination of flexibility and responsibility – is not yet very popular in the market, but nevertheless, it is already encountered.
It involves two stages:
the first is unlimited work during the first three months with a focus on analytics and testing various hypotheses . Payment for this period is fixed – the risks for the Customer are minimal.
Three months seems like a long time, but it is necessary to set up all the necessary analytics.
Moreover, after setting goals and setting up the first advertising campaigns, time must pass to determine the starting positions.
It is also possible to conduct initial testing of hypotheses and determine the potential of Yandex Direct or another advertising system for a specific project within three months.
The second stage is setting specific goals and working to achieve them .
Here, if a transparent analytics system is set up, it is already possible to work with payment for KPIs according to various schemes.
For example, like this:
minimum fixed payment for work + additional payment for fulfilling the plan. It turns out that if the performer has not fulfilled the KPI, he will not receive additional payment;
pay per lead. In this case, a specific cost per lead is indicated, and payment is made upon receipt of the required number of leads.