Marketing Agencies

To effectively purchase a marketing service, one needs to be well-versed in the suppliers of such a "product" and their assortment policy.

Three main types of customers of marketing agency services within a company can be distinguished. Firstly, owners or directors – this case is often found in micro and small businesses, as well as when solving strategic issues. Secondly, functional managers / responsible persons in the field of marketing and sales. Finally, the third option is when the ordering of services is carried out by procurement specialists, which, as a rule, is associated with the regular acquisition of relatively standard services for a given company (more often large) based on outsourcing. Each type of customer is guided by their own considerations and logic when choosing a service provider, which does not exclude the importance of a comprehensive understanding of the marketing agency market.

Why is it difficult to compare marketing agencies with an in-house marketing department?

The question of selecting a marketing agency to perform a certain task (as a project limited in time) or to assign a specific marketing function (as regular activity) arises as a consequence of an internal need in the company, which can be expressed by both the head of the enterprise and the top person in marketing. However, in any case, the possibility of satisfying such a need through the company's internal resources is primarily considered, which can be either available or acquired on the labor market for a new line of activity or project.

Hence, the task objectively arises to compare two solutions – to outsource the marketing function to outsourcing or to expand the staff of the marketing department (increase the workload of existing employees).

What seems like a simple economic task of calculating and comparing two "efficiencies" in practice turns out to be very non-trivial.

If we make a simple intersection, four situational options emerge:

1) the task is project-based – the workload on the staff increases,

2) the task is project-based – an employee is hired to the staff,

3) the task is regular – the workload on the staff increases,

4) the task is regular – an employee is hired to the staff.

There are also combined options, but let's not complicate an already difficult choice. At the same time, we remember that for efficiency, we need to calculate both costs and results. Let's start with costs.

It is easiest to compare the cost alternatives of solving a task in-house and by involving an outsourcing company in the second and fourth options – by calculating the cost of marketing agency services and the remuneration of newly hired employee(s), taking into account all tax payments and deductions (for example, if both the service provider and the customer work under the general taxation system).

When increasing the workload of existing staff employees, especially within a project task, comparing costs is much more difficult, as workload accounting for employees in Russian companies is often not done very well, and in the case of a project (temporary) workload of an employee – it's also unclear how to properly organize the constant change of tasks and their correct intersection with other activities. Given that the volume of the current workload of marketers is often only indirectly related to their level of pay, ensuring comparability of cost calculations is problematic.

But it is even more difficult when comparing the effectiveness of two solutions to calculate the expected result, which often is poorly quantifiable. More or less accurately, one can predict the return from an existing staff employee or from a marketing agency with which work is already established "on stream." When we talk about attracting new employees or outsourcers, the opinion about their effectiveness is formed more expertly or intuitively.

As a result, the comparison of options for involving a marketing agency or working in-house is rather conditional. Therefore, the choice of one or another option lies more in the area of intuition and managerial experience of the decision-makers.

Why is it difficult to compare marketing agencies with each other?

After passing the first "fork," a second one arises – how to compare marketing agencies with each other. In our opinion, we should start by deciding that, given all the diversity of such organizations, there are the most common types suitable for different tasks. And, knowing what task we want to set for the marketing agency, it is worth looking for a performer not in the entire market of marketing services, but in a specific segment where the probability (but not guarantee) of finding a suitable counterparty is higher.

What follows is not some typology of marketing agencies claiming to be comprehensive. Let's talk about whom customers of marketing services most often encounter in the market.

1. Advertising agencies.

Many marketing agencies in practice are advertising agencies, which, of course, does not exclude the importance of advertising activity and promotion in general. One just needs to be clearly aware that a good specialist in the field of advertising, as well as an agency, most often cannot be used to effectively solve other marketing tasks. As practice has developed, few organizations working in the field of advertising call themselves advertising companies. Most mimic marketing ones. Probably, this stems from the fact that in the understanding of many potential customers, marketing and advertising are approximately the same thing, but the word "marketing" seems to give more weight, sounds more solid. It is important not to pay attention to these formal signs, but to understand the essence of the organization that is being considered as a service provider. Many types of advertising are indeed good to do on outsourcing, but this does not mean that such a contractor should be trusted with strategic marketing issues.

2. Digital agencies.

This should include marketing agencies that specialize in working online. If the main portfolio of the company's services includes the development and promotion of websites, organization of contextual advertising, SEO promotion, and similar works, then we are dealing with this kind of marketing agency. As a rule, this type of marketing service provider does not try to present itself as a performer for different tasks, clearly defining its areas of responsibility.

3. Agencies engaged in quantitative research.

Quantitative research is aimed at various measurements of market processes, for example, brand awareness or consumer preferences. Most often, fairly large companies work in this segment, which have their own technologies for working with certain markets (specialization can be expressed to a greater or lesser extent), as well as a significant staff of employees and an extensive partner network. Many of them are federal players and are well known to marketing specialists. Given the large capacity of the quantitative research market, they rarely go beyond their segment, developing it and increasing their competitiveness by improving the offered product.

4. Agencies engaged in qualitative research.

Qualitative research is designed to assess market development and collect information about its conditions, which is fully or partially not subject to formalization. Unlike the previous type, such agencies are rarely large structures, which is due both to the lack of need to maintain a permanent staff (non-standard tasks, irregular workload) and the predominance of the importance not of technology (which needs constant maintenance), but of the professional level of the management (expert) staff. They may specialize in certain geographic or industry markets, but more often they have high universality.

5. Agencies for performing marketing functions on outsourcing.

They mainly work with small businesses (micro-enterprises) and take on the organization of the marketing process as a whole, including the selection and training of personnel for work in the customer's staff. They often also deal with sales development in a comprehensive manner, which is logical given the main goal of marketing activities. In this environment, work without forming a legal entity is common – on the basis of individual entrepreneurship or under a civil law contract with an individual – a consultant.

6. Narrow-profile agencies.

This can include a fairly large number of organizations that specialize in some narrow marketing function or technology. More often, such organizations do not try to explicitly associate themselves in the eyes of consumers with marketing activities. As examples, we can mention firms providing Wi-Fi marketing services or engaged in preparing customer participation in exhibition events.

7. Full-cycle agencies.

The peculiarity of this type of marketing agency is that they declare the possibility of providing a wide range of services within a single concept of work and interaction with the customer. Unlike the fifth type, here the marketing function is not taken outside but remains inside the company (often with the presence of a marketing department or marketer on the customer's staff), and some universal marketing technology is not sold. At the same time, such an agency takes on the solution of a set of tasks for the development of the customer's commercial activities. A high degree of universality requires the performer to have competencies in various areas, especially the ability to conduct market research and implement tools in the field of sales development and promotion. At the same time, a partner network is required, which allows quickly selecting co-executors for the customer's numerous tasks.

How to build the logic of choosing marketing agencies

When a customer tries to compare different performers, they must clearly decide – which type of marketing agency is preferable for them under the current conditions and the tasks at hand. Only then compare potential service providers, based on each type, as the selection logic will differ somewhat.

Companies choose advertising and digital agencies quite often, so the cost of error here is quite low (especially for advertising agencies). The main problem is the wide choice, which implies a significant amount of time to study counterparties of this type. It is better not to try to find and evaluate all possible options, which can number in the hundreds, but to set optimal requirements, compliance with which makes a company a contender to become your supplier.

Larger customers, when choosing a supplier of advertising products, actively use tender procedures, which simplify the process of searching and selecting.

When comparing, it is good to use an analysis of the applicants' references, which is especially convenient for comparing the quality of work of digital agencies. In the most significant situations, for example, when developing corporate websites or launching a large-scale SEO promotion campaign, it is advisable to involve third-party experts to evaluate the proposed options. Essentially, we are talking about a project competition.

The selection of research companies is built on different principles. For quantitative research, the company's experience in working in this market and its portfolio of current customers are important. Moreover, there are a number of ratings of agencies specializing in quantitative research, which allows forming a fairly clear idea of their work level and understanding the expected results. In some areas, the brands of such companies are so well-known that the choice becomes essentially non-alternative for the customer.

Assessing the potential of companies engaged in qualitative research is a more complex task. Tender procedures are also actively used here, but it is extremely difficult to choose the optimal performer based on fairly formal criteria, especially if the contract price plays a big role. We can recommend developing several key evaluation criteria for yourself, for example, references for the specifics of the research, the composition of the project team, the cost of work, etc., select 3-5 most interesting companies for cooperation, draw up a detailed technical assignment, and discuss it with each applicant (in person or remotely, but orally). This approach does not guarantee but significantly increases the chances of meeting a reliable performer interested in quality work.

Transferring marketing to outsourcing is a highly risky decision. Here, the degree of integrity of the performer, their reputation in the market, not to mention the actual quality of the services provided, is extremely important. As a mandatory condition, one can specify the regular availability of the performer, often – their location in territorial proximity to the customer. The choice is usually made based on recommendations and confirmed results of work on comparable projects.

Choosing a narrow-profile agency requires immersion in the specifics of its activities, which necessitates the customer having these competencies. If they are lacking, it makes sense to request an expert opinion from an external marketer or agency. Due to the diversity of such suppliers and the varying levels of structuring and maturity of the markets in which they operate, decisions often have to be made intuitively or rely on the opinion of a few experts.

It is most difficult to select a marketing agency for a set of works ranging from marketing and sales strategy to the implementation of tactical measures (full-cycle agency). Such a choice, due to its significance, can take months and requires a deep study of all applicants who meet the primary formal criteria.

In addition to the professional level of the team, important attention should be paid to the business reputation of the performer, as well as their willingness to work with non-standard tasks and motivation for such activities. A good signal can be interest in remuneration that includes not only regular payments and the utilization of the budget for the implementation of individual measures but also a percentage of achieving sales performance indicators. It is also desirable that full-cycle agencies (their managers or those responsible for the project) are available on a regular basis and visit your company, monitoring the execution of work and recording all changes in real time.

Attracting marketing agencies, implemented with a certain logic and based on a rational choice, can become the basis for improving the quality of commercial activity management and even form new growth points for the business. This decision is not a panacea, but a crucial tool for increasing one's market advantage.