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Why Traditional Agencies Fail Their Clients Online

Daniel Yonts


Nothing brings more comfort than knowing a competitor has selected a traditional agency for its online marketing needs. For successful Digital Marketers, it means that life has gotten easier within the markets they engage. It means more time to experiment, question assumptions, uncover new certainty and develop ever stronger processes. Now, extra time at the beach or river becomes possible without the annoying pangs of anxiety. We can afford to relax and reflect.

For me, a little anxiety and pressure from competitors is a good thing. The push and prod of market forces facilitates professional growth – and helps the time at the office go by much faster. More importantly, having competitors that waste the time, money and energies of their clients is bad for my profession. If the Marketing profession cannot be counted on to deliver digital results -- it affects businesses (mine especially), consumers and our overall economy. Marketers cannot be ineffective online when Digital is the dominant media.

Of course, traditional agencies aren’t alone in their struggles with the web. Their fundamental problems are shared with those they represent, and businesses built via traditional channels. What makes this industry unique is that it influences and shapes the broader marketing community – along with media and overall business perceptions. Thus, when traditional agencies don’t understand digital marketing, their approach becomes codified into the results and thinking of decision-makers. Rather than offering truths learned from the marketplace, they devalue the marketplace through a mythology that serves their limitations. This mythology is why traditional agencies fail their clients online.

When traditional agencies fail their clients, Digital Agencies often follow them down the same path. Since the advertising markets are conditioned towards a mythology, it’s difficult to offer a competing approach that attracts clients. It’s easier and more profitable to leverage myths – as well as an existing pricing structure and management processes. This won’t likely help clients or advance the Internet Marketing profession, but it facilitates deals and establishes low expectations for results. Short-term, this is a comfortable and rewarding environment. Long-term, however, their clients fail to compete online and require fewer services. 

 
1. Belief that Digital Marketing is About Getting Clicks
 
An emphasis on clicks is the primary fallacy that has doomed Marketers to mediocrity online. This applies to paid search, organic search, display advertising and every other online channel. It assumes that ad messaging cannot influence consumers and that landing pages will provide the “hard sell” needed for better conversions. Thus, marketers design ads around being clicked on and create landing pages to let folks know who they are, what they do and why they should buy. A high click-through rate (CTR) is how the PPC manager measures success, while a Landing Page Optimization specialist works on tuning the digital sales pitch.
 
Unfortunately, research shows that clicks don’t equate to sales or brand awareness. According to a report by nielsen1, “virtually no relationship exists between clicks and brand metrics or offline sales. “ What’s more, clicks are becoming harder to acquire. The average click-through rate (CTR) for paid search is around 4% at Google and 2% for other search engines (ComScore). For display advertising, the CTR is a fraction of 1%. While research on the ineffectiveness of click-focused campaigns can be ignored, the increasing scarcity of clicks cannot. It directly challenges the value proposition and scalability on which agency services are sold. It also has a negative impact on the perceived value of online advertising.
 
2. Belief that Being Seen Doesn’t Matter
 
A focus on clicks assumes that being seen doesn’t matter. This is implied by the desire to achieve a high click-through rate. The higher the CTR, the fewer times an ad is shown for the same advertising dollars. Why would an advertiser want their ad messaging to be seen as few times as possible? Simply, Marketers don’t believe that ad messaging itself can educate and persuade consumers online. For them, that’s what a landing page is for, and consumers must click to get to a landing page.
 
To acquire clicks, marketers create messaging around clicks. They design ads meant to inspire clicks as quickly as possible – rather than letting the most likely buyers know who they are, what they do and how to find them. What’s more, click-focused ad messaging is less likely to disqualify non-buyers – thus, driving non-converting visitors to landing pages. This approach is also likely to skew ad targeting away from conversions as well.
 
3. Belief that Branding Doesn’t Exist Online
 
By focusing on clicks rather than being seen, marketers have abandoned the core ideas of advertising. For many traditional agencies, branding doesn’t exist online. They’d reference a long list of campaigns that couldn't get clicks – no matter how skewed the messaging was toward this goal. They'd highlight an absence of brand awareness generated from ads designed to acquire clicks. Thus, many concluded that being seen online has little or no value. In other words, branding cannot or does not occur online –at least, not through advertising.
 
Exposures don’t matter. If branding occurs at all, it’s from landing pages – and, perhaps, “Likes” or “Shares” on social media. Traditional agencies will point out an inability to track and measure the effectiveness of exposures. They don’t believe that online exposures have value for brands -- outside the context of a click (which requires exposure to occur). Unfortunately, this has become the prevailing view among traditional and digital marketing professionals. It's unfortunate because the premise is false. The idea that online exposures have no value is so untrue, in fact, that it threatens the foundations on which these professions were built. When the dominant media can’t enable consumers to know that brands exist – branding and advertising professionals are in trouble.  
 
4. Belief that You Can’t Measure Brand Activity Online
 
The belief that you can’t measure brand activity from online advertising has been untrue for over a decade. This is a huge myth that’s grown from poor testing, analysis, tracking – and organizational silos with a genuine lack of curiosity for how consumers buy online. Once you know how consumers behave when they’re ready to convert – you can use this knowledge to design better messaging, more effective targeting and a meaningful testing strategy. Without this insight, marketers do the exact opposite of what’s required to profitably grow sales. They focus on clicks rather than letting the largest number of targeted people know they exist. They pay more, get seen less, and drive low converting visitors to landing pages.
 
When consumers search for your brand or go directly to your site – these activities can be measured. Both cannot occur unless consumers had been exposed to your brand. Most people wouldn’t search for a brand or randomly go to a URL without prior exposure to the brand. Since the advent of search, these metrics have been readily available to traditional marketers. Brand searches can be measured with a simple paid search campaign and most any analytics package can track direct entries. For most retailers, brand searches and direct entries account for 60-80% of all sales. These visitors convert at the highest rate and have the highest average order size. With more exposures (online or offline), this brand activity increases.
 
For the last few years, Google has provided powerful tools to identify the source of Brand Activity in the form of View-Through and Impression Assisted Conversions. These conversions occur when a consumer views an ad and later converts – without clicking on the ad. For display ads, an overwhelming majority of conversions happen this way (view-through). For paid search, impression assisted conversions are equal to or greater than 1-click conversions. Thus, marketers can know which campaigns, ad groups, keywords, placements, demographic group (gender, age) and individual ads generate the most Brand Activity.
 
5. Belief that Display Advertising Doesn’t Work
 
Because display advertising produces a low click-through rate and it’s assumed you can’t measure brand activity, display ads are viewed as a waste of advertising resources. Traditional marketing agencies have devalued the one form of online advertising that suited their existing skill-set. For their traditional media partners, devaluing display advertising has served to protect their main source of revenue as online media emerged. Poorly designed tests and an army of sales reps persuaded marketers that display ads could never deliver the results of traditional media.
 
Ironically, the only hope for many traditional media outlets is for display ads to be viewed as an effective advertising tool – where they can generate revenue from their huge inventory of exposures. Absent a technological apocalypse, the average consumer engagement times with old school media isn’t going to increase with the passing of time. Newspapers aren’t going to come back to life – nor will the legions of advertisers who overpaid to support their last gasps. Media that survives will be woven into a digital environment. Without the support of display ads, it will be supplanted by new media and its business model will evaporate. Without their traditional media partners, many agencies will see their business models dissolve as well.
 
Adding to the irony is that display ads do work. The more exposures you get online -- the more people remember your brand, search for your brand or go directly to your site. This is verified by research from ComScore, Neilsen and others – as well as the quiet few who’ve grown brands using this strategy. Those who know better like the fact that display advertising is cheap, publishers don’t know the value of their exposures and competitors are focused on clicks. Nobody is better served by industry myths than those who know better.
 
6. An Approach that’s Predicable
 
For most paid search campaigns I run, I have a fairly good feel for when competitors drop out of the marketplace for the day. By focusing on clicks and feeling exposures have no value, they accomplish their goal of a high CTR and leave me to enjoy several hours of exposures and cheap clicks. Turns out, when competitors exit a marketplace (search or any other) prices go down. In the morning, some competitors may bid up terms to $7 or more per click. In the afternoon, I get to be all alone (or nearly alone) at $0.50 per click. Paid search is but one example of how predictability is built into the approach dominating traditional agencies.
 
Being predictable is fine if everyone decides to play by the same rules – often defined as “Best Practices”. In this environment, the biggest budget and most adherence to rules/methodologies wins. Who decides on such rules and methodology – determining what’s effective or not effective? Is it marketers who’ve used an approach to build their own success and are eager to inform their competitors? No. Those who define “Best Practices” are search engines, advertising networks, and traditional marketers for the most part. Each has its good reason to construct rules and methodologies that promote or imply predictability.
 
For me, I have never received payment from Google to help them reach their goals and deliver predictability. I don’t work for Google. I work for my clients. What they call “Best Practices”, I call a blueprint for how competitors are likely to behave. I develop my own rules and methodologies to take advantage of this blueprint -- rather than just blindly adopt it. I find ways to pay less in order to reach targeted markets and push the costs of competitors up. For many traditional agencies, “Best Practices” are simply a cover for mediocre performance and the unwillingness to test. “Best Practices” only require Technocrats not Marketers. I’m a marketer. I gladly follow ethical and legal guidelines – everything else is optional and viewed with suspicion.
 
7. Processes that are slow, disconnected and inefficient
 
The digital environment enables marketers to quickly develop, test and optimize campaigns around branding and conversion goals – at a fraction of the cost of traditional marketing. Messaging concepts can be tested in hours or days versus weeks and months. Campaigns can be developed that target the same demographic characteristics prized by offline marketers (age, income, gender, etc). A campaign can also target specific countries, regions or interests at specific times. With a few thousand dollars in ad spend, marketers can find out what works and doesn’t for very defined groups of people. Then, when they spend the big money online and offline, they’ll have something to go by other than the confidence of an agency or the unproven biases of the client. They’ll have actual results from the marketplace concerning assumptions.
 
Traditional agencies and their digital offspring, however, are more likely to deploy the modified processes built around old media partners (TV, Radio, Direct Mail, etc). Because of the cost and creative workflow, there is far less testing of messaging concepts. There is also less testing of messaging to specific groups of people. Perhaps, this is why many agencies spend months and months crafting their best guess concerning messaging and targeting. They assume the same limited number of chances to hit the target online as there are offline. Combine this with a bias toward clicks, an inability to measure brand activity, and a belief that branding doesn't occur online -- and you have processes built for Technocrats rather than Marketers.
 
Processes built for Marketers should accelerate engagement with markets, expand reach, provide feedback and allow for optimization around marketing objectives. They are focused on strategic goals rather than just specific tools and tasks. Processes built for Technocrats are meant to increase reliance for a particular tool, task or tactic. Using “Best Practices” and a technical orientation, they are meant to justify results rather than affect results. What’s worse, these processes push brands and the technocrats themselves further from marketing objectives. They support overly specialized Digital professions that have emerged through a focus on clicks, the belief that branding doesn’t occur online and an over-emphasis upon technology.
 
Without these broken processes, Marketers would have known how to measure and grow online brand activity years ago. For example, SEM experts have had to notice that most sales and leads come through brand searches. This simple knowledge and its implications would lead to better digital marketing strategies, tactics, and campaigns. Unfortunately, SEM Experts are reluctant to let employers/clients know that the majority of sales they report for their channel aren’t necessarily a result of their activities. How do you optimize for search to get more consumers to search for your brand? You can’t. Technocratic processes insulate specialized professionals from the larger marketing process – creating silos of self-preservation and inefficiency.
 
8. Agency Pricing Structure Encourages Low Conversions Rates and Discourages Optimization
 
Many traditional agencies and their digital offspring are paid by the amount of advertising dollars they spend – rather than the effectiveness and efficiency of campaigns. There is no reward for reaching more people at a lower cost or sending more qualified visitors to landing pages. Online, they mostly view their job as providing clicks or “likes” or “shares” according to an ad budget. Optimizing for primary conversions is the job of other specialized professionals – such as conversion optimization or landing page experts. Optimizing for exposures is rarely done. This means fewer people within a brands’ best markets see an ad, gain exposure to a brand or receive messaging that most likely leads to a sale or lead. Given the scarcity of clicks and inability to measure brand activity, disqualifying non-buyers makes it harder to spend ad dollars. This leads to lower conversion rates and a bias against optimization at the messaging and campaign level. Within Digital markets, this pricing structure leads to brands that struggle to compete against much smaller competitors online – and agencies dependent upon these weakened clients.
 
Savvy Digital Marketers use the agency pricing structure to their advantage. They can count on agencies to spend money without building, measuring or protecting brands online. They can depend on them to drive up certain market prices in predictable ways – and force others (such as CPM rates) lower. In a desperation to obtain clicks, agencies can be relied upon to skew messaging toward this goal – so that ads get seen without folks knowing who brands are, what they do and how to find them. This is tremendously helpful for those marketing competing brands online. They use this knowledge to create Marketing Best Practices that are shared with no one and that change as markets change.
 
Traditional Agencies and their Digital Offspring Can – and Should Do Better.
 
Those who understand markets and how to engage them cannot be replaced by Technocrats in the Digital world. Creative concepts and strategic positioning can’t be produced solely through algorithms, tools and standard operating procedures. This is what traditional agencies have forgotten. When they rediscover their “inner marketer”, it will open up avenues of success for them and their clients. How could it not? Agencies have talented people with the ability to shape markets and the Digital Marketing profession. Absent a reliance on myths and useless metrics, this talent would certainly produce the strategies and positioning that would help clients succeed online (and offline). 
 
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1. Beyond Clicks and Impressions: Examining the Relationship Between Online Advertising and Brand Building
https://www.facebook-studio.com/fbassets/resource/32/Nielsen-BrandEffectandCTRWhitePaper.pdf
2. How Online Advertising Works: Whither the Click
https://www.comscore.com/Insights/Presentations_and_Whitepapers/2008/How_Online_Advertising_Works_Whither_The_Click
 
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defaultLogic offers marketers another perspective and a different approach. Through training and consulting, we help clients challenge assumptions and develop strategies to leverage existing assets. These services are offered via online training sessions, directly to clients in the Richmond, Virginia area and through workshops in Orlando, Atlanta, New Orleans and Baltimore. Feel free to contact us for more information.

 



 

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