Conflict of interest is typically regarded as a bad thing. For example, I just served on jury duty and witnessed the intense commitment of both attorneys to ensure that none of the jurors had any relationship whatsoever with anyone involved in the trial. An impartial jury serves the best interest of both parties. It avoids any “edge” and lets the results come down to facts, evidence, and the truth.
For businesses, the truth is that most don’t realize the amount of conflict of interest that exists in their current agency relationships. Can you handle the truth?
This conflict, while not malicious in nature, is the result of a legacy agency model that continues to affect your marketing spend. Ultimately, it’s sucking the life out of your opportunity to build brand value that surpasses your paid media spend.
The good news is that you can still do something about it, but only after you understand it. I’m writing this article as a summary of a three-part podcast series I recently released to call attention to the conflict and offer a way forward.
The Current Legacy Model
Let’s begin with what I’m including as an “agency”. I’m talking about ANY vendor who is running any portion of your ad spend. This includes spends like SEO, PPC, programmatic, social, pre-roll, and anything else that costs you money to reach a consumer’s eyes or ears. In many of these popular ‘agency’ models; a client’s fees are based on a percentage of their ad spend. Frankly, the model was created for a different generation of media placements and is way out of balance. This is the foundation of the conflict.
For those who are unaware, these types of agency fees are typically between 15-30%. So, if your budget is $100,000, they are taking $15-30,000 of that money to place the actual ads and only the remainder is spent driving your campaigns. While this makes a really clean model for vendors to price services, common sense tells us that it would be unwise for an agency to ever tell you to reduce your ad spend. In fact, it is more beneficial for them if you raise your ad spend. Conflict.
Why do you think a standard first question during the sales process is “What is your paid media spend?” This is the number used to qualify the business relationship for the agency. Take note that the question is not, “What is your marketing budget.” We’ll get back to this in a moment. But first, you should understand why you’re paying more than you should.
You Are Paying the Brand Tax
I consider all paid media a brand tax. Strong brands do not need to buy ad placements to sell enough products/services to meet their objectives. They are paying zero brand tax. Conversely, if your brand is so weak that you need to spend most of your budget on ads to push buyers to your products, then you are paying very high brand taxes. Most businesses are somewhere in between. But how do you know what level of the brand tax your business is paying?
Try this litmus test: What would happen to your business for the next 3 months if you completely turned off your paid media? The answer to that question will give you an idea of how strong your brand is and how much of your marketing spend is actually ‘brand tax’.
When you invest your marketing budget on brand-building content and not sales content, you are building equity that outlasts and ad spend. (By the way, it IS possible to drive actual sales with brand content, but we’ll get to that in a moment.) Now that we are clear on that, let’s get back to the broken agency model.
The Metrics to Nowhere
Now, let’s talk about the metrics that the old, percentage fee-based model is directing your attention to. The emergence of digital marketing has allowed us to measure on an entirely different level, but that doesn’t mean we are automatically better off. If I learned anything from the statistics class I took in college, it was that you can make numbers say just about anything you want them to.
Giving weight to the wrong metrics can result in an incredible amount of wasted ad spend. The number of impressions based on a street’s traffic used to be a great way to sell a billboard, but I bet most people these days can’t tell you what billboards they drove by this morning. Many digital agencies will report on campaigns by communicating how many “impressions” (or times shown) the ad had and, like billboards and television, this doesn’t measure the actual business impact of the ad itself.
Regardless of what you measure, the percentage of fees you pay for that wasted ad spend remains consistent. This is why focusing every metric on a measurable, attributable business result is the only way to go. Let me give you an example with one popular metric, cost-per-click or CPC.
I’ve seen many agencies openly sell and celebrate the fact that they focus on achieving the highest Quality Scores for their clients. Sounds awesome, right? High-Quality Scores usually mean more traffic more relevant to the keywords being searched and lower CPCs. Who doesn’t want lower costs?!
The problem lies in the quality and relevancy of all those cheap clicks. Did your ad display first because the algorithm deemed the keywords relevant, but actually it was out of context? How’s the landing page experience? Did they connect or did they bounce? Is the agency telling you if they bounced or is that your developer’s problem? The twenty-five cent clicks might be producing zero buyers while the three-dollar clicks are translating into $1000 sales. Now, which is the better value? In this example, your focus should be on avoiding those cheaper non-producing clicks and focusing more on connection with the $3 ones.
Let me talk about one of my favorite metrics in all of the digital advertising at the moment.
It is Facebook’s “Relevance Score”. The reason I love this so much is that it rewards those who produce content that people actually like and it is solely judged by the USER’S interaction with the ad. If your ad has a low relevance score, it means nobody wants to look at it. As an incentive to get you to make content that doesn’t annoy their users with your garbage sales content, Facebook charges you way more to display this ad.
On the contrary, if you invest your budget creating empathetic, fun, and engaging content, users enjoy it, like it, comment on it, share it, or otherwise interact with it. As a reward for your highly relevant content, Facebook charges you way less to display it because it is bringing value to its users. Think about it… the ONLY asset Facebook has is the attention of its users. Entertain them, and you get rewarded. Annoy them, and it’s going to cost you big.
In both of these examples, the conflict in the current agency model doesn’t incentivize excelling in the metrics that show relevance or direct correlate to business objectives leading to wasted time, money, and most importantly, the attention and psychological impression of those your business desperately needs to connect with.
So what are we to do in this era of conflicted agencies, savvy consumers, and information overload? We relearn what it is to form and measure “connection”.
How to Kill the Parasite
I’ve found the best way to curb the conflict and start building a brand connection that drives business is to get back to the basics of human connection. We’ve been conditioned to approach commerce as one business to another (B2B) or a business to a person (B2C). Instead, we should refine our thinking to consider that all commerce is now business to humans (B2H). Once we adopt this B2H approach, the common sense that has been lost in the conflict-laden agency models and metrics can be restored. It begins and ends with cultivating connections.
Getting beyond the transactional marketing inherent in sniping potential buyers at the bottom of the sales funnel requires a shift more and more businesses are realizing. I can’t tell you how many businesses and individuals I’ve had conversations with about this over the past year. In every conversation I can see the light building in the eyes of executives, marketers, and personal brands as I present the following approach which originated in my agency’s values.
When my first business was acquired and I turned 100% of my attention to my agency, one of the first things I did was define our values: Honesty, Empathy, Attention, Connection, and Care. The unique trait of our values is that they must be practiced in order if they are going to work. As we helped more companies build their brands and execute campaigns, the results helped me realize that our values are actually more about human connection than company culture. Because of that, they have been adopted as our marketing process and it’s working.
As you adopt the following process when strategizing, creating, executing, and measuring your marketing spend, you will stop burning through your budget with brand taxes and irrelevant metrics and begin cultivating a real and measurable brand connection with other humans (translated as a growing and healthy business).
Here is an overview of the five values:
- Honesty: Be authentic, always. In order to do this, you have to get really honest about what you are actually about. What are your unique selling points and why do you sell what you sell. “We sell great products” isn’t enough. Not even close. There isn’t any room for illusions here…it’s really easy to tell who is faking it.
- Empathy: Sure it is becoming a buzz word, but empathy has never been more important in marketing. This is where you do the hard work of understanding what the people you want to do business with you really care about. This isn’t a demographic, this is a mindset. This is psychographic. What do they want most in life? What are they afraid of? How do you help them get what they want and avoid what they don’t?
- Attention: This is the pivot point. This is where the level of your creative is the true variable as you leverage your understanding of who you are and what your potential buyer wants to create content that earns their attention. Notice my use of the word “earns”. This goes back to the concept of the Facebook relevance score I mentioned earlier. If you don’t earn the attention, then you are taking it. Maybe even stealing it by loud, kitschy, disconnected content. Great content will compel the view to pay attention, not demand it. If your agency produces your content for “free” or as a part of their % fee, you should be paying attention. That model incentivizes them spending the least amount of time and money possible on your creative. They get paid off running more ads, remember?
- Connection: This is where it all comes together. This is the goal. Real, genuine, earned connection. Who you honestly are and what they deeply desire come together in a compelling case for why your relationship reinforces one another. We all know that a $700 YETI cooler isn’t needed to keep drinks cold for your backyard picnic. The $100 Coleman will do just fine. YETI, however, through honesty of belief, understanding of what their customers aspirations, and great design, they have earned the type of connection that builds loyalty, identity, and gets those credit card swipes. Can’t you just smell the brand taxes vanishing?
- Care: Care is the ongoing relationship of a true B2H connection; continually listening, adapting, and providing. Just like any real relationship, if you get comfortable and start feeling entitled, you are heading for trouble. This is where community management, experiential, surprise and delight, and proactive brand marketing strategies come into play. Again, ask how these types of activities fit into the current agency pricing model. They don’t.
How to Move Forward
Breaking free from legacy is always challenging, but can also be incredibly inspiring for your team and your customers. Momentum should never be underestimated. I understand that this approach could be considered overly generalistic at times, however, I assure you that it is infinitely complex.
You can’t pick and choose the values you like and forget the ones that are difficult. This builds. If you’re empathetic without being honest, your customers will feel misled and see that you don’t actually care. Not only did you miss the opportunity to connect, but you now made a negative psychological impression. You might close that one sale, but they won’t be back and they definitely won’t recommend you to their friends.
If demographics allow you to get ‘granular’ with your marketing, following this process allows you to bring the psychographics of your consumer down to an atomic level. You can do it, and the promised land of connection is worth it.
A great place to start is to take a look at your current marketing strategy, agency relationships, internal team, and consumer sentiment. If you’re honest, you will know where you stand pretty quickly. Chances are that if you’ve read this article, you already do.
The Parasite Feeding on Your Marketing Strategy and How to Kill It was written by yours truly, Patrick Bergemann. I discuss this and other marketing and human connection topics on my weekly, Clarity Compressed Podcast as well LinkedIn, Instagram, Facebook, and Twitter. I’m also working on a digital workshop offering that will walk you through the process we use at Congruent so that you can transform your marketing and your business. If you’d like to be notified of updates for that, you can sign up for the email notifications at BrandBeatsTheHacks.com.