Agency Red Flags – On Both Sides of the Table

Today, let’s discuss what to look for in an agency, balancing the perspective as there are two parties in this dyad: the agency and the client.

Neither the agency nor the seller is created equal.

Every time you hear that an agency is a scammer, remember there’s also a blacklist circulating of rogue sellers that agencies avoid because they default on payments, are rude and aggressive, or have unachievable expectations for various reasons.

There is a lot of content covering this topic around agencies, what to look for and what to ask, but I wanted to delve into some of the nuances that are rarely spoken about.

All the stuff you should be asking agencies and performance companies

Who’s going to manage your account?

There are actually three parts to this question for your typical PPC Agency:

  1. Who is going to manage this account?
  2. What happens when they are sick or go on vacation?
  3. What happens if the backup person is sick?

It is obvious there is going to be one set of eyes, but employees still need to legally take vacation time, and they will be off sick at some point. What happens when they are off – who is the second account manager stepping in? What happens if they are sick too?

How many accounts are they managing?

Is it 5, 10, 15, 20?

Accounts have their own complexities and different demands. You may be in a highly competitive niche that requires a lot of intelligence work, which is more demanding than managing 1500 products that sell in the long tail and turn over 2 units every three days.

Each account manager will have only a certain amount of capacity. The more they manage, the heavier the load. Additionally, ask them how many clients they have at the agency and how many account managers they employ.

From that information, you can perform a rough calculation of how much each manager is handling and make a preliminary assessment of the feasibility of delivering on their promises.

Communication

How do you prefer to communicate? Are you highly technical about PPC, considering it one of your hobbies, or does the topic confuse you during calls, leaving you overwhelmed and perhaps a bit embarrassed?

This is about your money and business, so ask for exactly what you need. I’ve lost count of how many conversations I’ve had with brands looking to leave their agency. I’ve identified the communication breakdown and advised them to go back and request information in a specific way. The reason involves switching costs (for you, the seller).

Later, when we focus on the seller side, I’ll talk about those who think the grass is greener elsewhere, the agency switchers, and those guided by their beliefs without having enough information on hand on whether it is possible to have their expectations met.

Bigger is not always better

Talent has diminishing returns.

Let me explain: in an ideal world, you would have A-players in every position on your team, and all of your products would be hero products. However, as you scale, the talent will max out at a certain level.

The talent pool in the community is no different.

If you are working with larger agencies, you need to devise the right line of questioning to ensure your business is allocated to the top end of the talent pool. Anyone can get Amazon certified, but that doesn’t necessarily mean they belong at the top of the talent pool.

Transitioning to the Agency

Small business owner packing product parcel boxes for delivery

When you switch to an agency from self-management, another agency, or software, what is the process?

This has always puzzled me, especially when clients exit to aggregators. We would teach the buyer how to transition smoothly instead of starting from scratch.

The same issue arises with software. You’re going to lose all your valuable campaign history and disrupt your sales, and this benefits no one-not you, the buyer, nor any third-party software company. It will just cause you more problems. You need to carefully manage the transition by gradually phasing out old campaigns and ramping up new ones until the impression share has shifted completely.

This monitoring process can take anywhere from a few days to several weeks, depending on factors like velocity.

Flat Rate vs. Percentages

You either know what you’re paying or you’re hedging your bets. But let’s discuss some (but not all) of the reasons why percentages are used.

Starting with software, most operate on a percentage or tiered basis. Many agencies use third-party software solutions. These percentages are passed onto the agency and then onto the client unless the agency absorbs the cost, which can be challenging.

Why is this?

  1. Engineering talent is extremely expensive, especially for the top professionals.
  2. Processing power is costly; more users generally mean higher variable costs.
  3. Lower subscription prices are used to attract users, with the difference made up on the back end.

There is no such thing as a free lunch; you just need to know what you can afford.

Switching back to the agency, it’s possible the agency isn’t using software that incurs these costs, choosing instead to absorb these expenses to win your business due to price sensitivity and competition. They might then recoup their expenses on the back end through metrics like percentage of ad spend to make the numbers work.

The best solution here is to ask them to outline this in an email or a spreadsheet. This gives you a clearer picture where you can see the numbers clearly laid out. You can then budget accordingly and see if the math is mathin’.

Notice Period

As a general rule: The longer the notice period, the higher the churn rate of the agency (or software provider if they are looking for longer term lock-ins).

Here’s why:

In reality, a notice period should only be as long as necessary for the client to transition smoothly.

Anything over 30 days can be a red flag. If a client is considering leaving, they typically have their plans in order on most occasions. They may need a waiting period for the transition, and it is the agency\u2019s responsibility to assist with that.

If you encounter contracts with 60, 90, or 120-day notice periods, ask for a clear and valid reason. Most transitions can be completed within 24 to 72 hours, depending on the complexities and the terms agreed upon for the handover.

AGENCY RED FLAGS

Agency red Flags Seller Sessions
Crystal Balls Seller Sessions
Overselling, software, sales teams Seller Sessions
Full servide agency seller sessions
performance agency Seller Sessions
agency to avoid seller sessions
product problem
quick wins seller sessions
Premium priced products
Everything in house Seller Sessions
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Table of Contents

Agency Red Flags

Agency red Flags Seller Sessions
Agency Red Flags - On Both Sides of the Table
Crystal Balls Seller Sessions
Part 2 - Crystal Balls, Case Studies and Magical Strategies
Overselling, software, sales teams Seller Sessions
Part 3 - Overselling, Software, Sales Teams & Churn Rate
Full servide agency seller sessions
Part 4 - Full-Service Agency
performance agency Seller Sessions
Part 5 - Performance Only Agencies
agency to avoid seller sessions
Part 6 - Types of sellers agencies look to avoid
product problem
Part 7 - You have a product problem, not a visibility problem
quick wins seller sessions
Part 8 - Scattered Attention and Quick Wins
Premium priced products
Part 9 - Premium Priced Products
Everything in house Seller Sessions
Part 10 - Everything In-house
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