The conversations were part of our research into how European-based B2C businesses can expand abroad. The comments weren’t always positive however. Some executives spoke very highly of their agency partners, whilst others wished they’d never met them.
So what are the opportunities and the pitfalls? In this post, we will look at the three steps you should follow to get the most out of your agency relationship.
1. Choose the right partner
Take your time. The wrong partner will inevitably lead to problems down the line. Of the companies we spoke to, those who had forged the most successful and harmonious agency relationships were those who knew exactly what they wanted from their agency. Reasons for engagement included:
- A means to scale up internal resources when internal hiring is constraining growth
- Managing an international rollout
- Experimenting with and finding new channels — potentially geography-specific
- Optimising existing channels
- One-off benchmarking of internal team performance
Speak to a number of different agencies to determine each one’s relative strengths and choose the right one accordingly. Some will have relationships with geographic focus that may open up channels you previously had no access to. Others may have channel-specific expertise, such as optimising your cost per click through search.
2. Set expectations and objectives
A point of contention can often be fees. These are typically a percentage of total spend. This can lead to the perception that agencies want to maximise spend. To overcome this objection founders should work to set explicit goals with hard parameters that must be worked around. These will prevent excessive spending in the case of non-performance.
Ensuring that incentives are aligned will in large part come down to crafting an engagement contract that fits with your goals. You should avoid signing up for a recurring long term contract that ties you into a minimum monthly spend with loose or no conditions attached. Where possible, a contract should be on a rolling month by month basis, giving you control of any spending commitments if — as is often the case with early stage ventures — circumstances rapidly change.
The contract should be based around your objectives. For example, if you are trying to limit CPA for a particular channel you should be able to negotiate targets which, if not met, allow you to terminate the contract. Be sure to negotiate the rights to your data: you may find yourself having to start from scratch when you no longer work with the agency. You may even have to purchase your own data back from them.
3. Manage the relationship
Hiring an agency is not a silver bullet. It can be very dangerous to simply let an agency loose on your AdWords accounts for example. Vague objectives could easily indicate a lack of investment in your internal team.
Agencies can provide an effective way to manage internal resource constraints, optimise existing channels and experiment with new channels. However, getting the most out of the relationship can be a full-time job in itself. The companies who were able to leverage the expertise and specialisation of their agencies were those who treated managing the agency relationships as a full-time role. A point person was assigned to liaise daily or weekly with their agency counterpart, actively managing campaigns and feeding into decision-making. By keeping an agency engaged, founders can also avoid another commonly encountered problem: that a company’s account becomes unloved and under-resourced by the agency. The dazzling pitch team may not appear in the day-to-day running of your account.
Agencies are not right for every early stage venture, but there can be a time and a place for fruitful agency relationships. By following these three simple rules there’s no reason why you shouldn’t be able to find the perfect match.