How has your agency been in the last three months?
We’re seeing digital marketing agencies and their eCommerce clients struggling and trying to adapt to the latest changes in the digital environment, from the iOS 14 update to Google’s announcement about killing 3rd-party cookies.
That’s just how it goes in the digital space – you have to become a master of resilience.
And you will, as long as you reach out for advice from people that have been in this game for years and know what you need to adapt to the constant challenges.
That’s why we interviewed Tim Kilroy, Performance Agency Growth & Innovation Coach.
He has been offering digital marketing consultancy to agencies of all sizes since 1997. Tim has worked with over 100 agencies that have learned from him the “secrets of creating a scalable and salable agency” during the coaching and consulting programs he created.
Discover his advice on approaching the constantly changing environment in a healthy, growth-oriented manner, keeping you away from short-term fixes that might be more harmful to your agency than you imagine.
Challenges of today’s digital marketing agencies
Alexandra Panaitescu: What are the most common challenges digital marketing agencies face today?
The biggest problem agencies face today is that it’s tough to show how you are different.
The things that make you different are, generally speaking, not the channels you manage nor the reports you’re generating. What makes you different is how well you understand your clients’ problems, how you address those problems, how creative and technically proficient you are.
All of those are aspects that clients understand only after agreeing to work with you, not before. So one of the biggest challenges that agencies face is that, from the outside, it seems like their services are interchangeable.
Another challenge agencies struggle with is that clients don’t understand how complex the channels are and that things take time.
For instance, when you launch a Facebook campaign, and it’s in learning mode for a week or two, you can’t spend all the budget at once. The limitations put on agencies by the platforms are challenging because clients don’t understand those well.
A.P.: You make me think about SEO agencies because they have the same struggles in terms of time needed until the first results arise.
T.K.: Yes, it’s true with SEO also. SEO, it’s tough. My advice to SEO agencies is to emphasize that the benefit that they give immediately is not in search engine ranking but visitor experience. Better content means that people get more out of it, and the engagement with the brand will improve.
The goal for your SEO agency client isn’t better rankings, although that’s how people often express it. That’s not what companies are trying to accomplish.
Their goals are “we need new visitors who are experiencing our brand for the first time,” “we need return visitors who can experience our brand in a deeper way,” or “we need to create content that answers the questions of our existing customers.”
Those are the things they’re trying to accomplish, and it has nothing to do with rankings.
Differentiation as a solution for overcoming agency’s challenges
A.P.: You mention differentiation as the biggest challenge of today’s digital marketing agencies. What role do you think differentiation plays in helping struggling agencies?
T.K.: There’re three types of differentiation.
One way you can differentiate as an agency is by addressing a particular niche or vertical. Most agency owners focus on a specific niche or industry to make their world smaller, so they have to understand fewer things and get better at them faster.
The second kind of differentiation is problem-focused. For example, if your agency is better at increasing click-through rates than anyone, that’s the problem you will solve for clients that may or may not be in the same vertical.
The third type of differentiation is client-focused, which implies understanding the problem set of your potential client and what it is like to be on the client-side, with all the stresses and strains they face.
People in agencies might be thinking, “well, we do Facebook ads, and that’s the most important thing.” But Facebook ads are just one part of a much bigger universe because the agency’s clients deal with customers, supply chain, shipping, customer service, etc.
To solve the problems of your clients, you have to be thinking about them. It’s your job as an agency to take your way of thinking, your particular set of tactical expertise, your way of developing a strategy, and lay it on top of the client’s problems and needs.
How customer data is reshaping the future of digital marketing agencies
A.P.: What do you think about the recent changes around third-party cookies? What is about to change from an agency perspective?
T.K.: Many agencies have just been called out on their own mistakes.
Think about the Facebook return on ad spend. Some agencies thought, “this metric makes us look really good,” and that’s all they were promising to their clients.
So, if their only focus was on the same channel ROAS, now they’re struggling because the same channel’s ROAS is terrible. Why? What has happened isn’t that Facebook advertising has gotten less effective; it’s just the measurement of it has changed.
In conclusion, the agency was focusing on the wrong thing in the first place – on an easy metric that made them look good instead of thinking about their real value.
“Focusing on the metrics that make you look good as a digital marketing agency means that you are self-serving, and you’re not doing the right thing for your customers.”– Tim Kilroy
A.P.: Why did changes like the iOS 14 update have to happen to see more interest in first-party and zero-party data?
T.K.: What you’re supposed to do with first-party and zero-party data has been misunderstood and hard to use because it wasn’t obvious.
Google Analytics never did a great job of saying, “Hey, this first-party data is important.”
Shopify hasn’t done a really good job of saying, “Did you notice that these people are your best customers? And they’ve all purchased item X? So, maybe, if you can try to sell item X, you’ll attract more customers who are in the top 10%.”
But now you have tools to track customer behavior on your online store, and you can use all that data to shape their online customer experience.
Instead of thinking about eCommerce as a technology experience, you should think about it as a human experience. Even though it’s mouse clicks and screens, it’s a real person, looking for a human experience and making a choice to buy from you or not. So, you have to think about customers as people, not as a collection of channels and clicks.
What agencies could say is, “Hey, guess what? We certainly don’t have as much data about clients using Apple Mail or some other email clients. So we’ve got to think differently about this.”
They should recommend ways to collect more information about their clients, drive and track more engagement. They don’t have to rely on metrics like open rates but give customers new opportunities to tell store owners more about what they like.
Choosing the right digital marketing agency
A.P.: What should every agency be focused on?
T.K.: It doesn’t matter what kind of agency you are or how much revenue your efforts bring. You’re just part of a big ecosystem.
I think what frustrates most clients is that agencies get so focused on their services, metrics, and what’s easy for them to track that they don’t often ask their clients questions like:
- What else is going on in your business?
- What else can I learn about your business?
- What else can I teach you about your business?
- How else can I improve your business?
- What results are we driving? How does that work with other channels?
- How can we leverage any of that data to make the rest of your business better?
So, agencies that don’t ask those questions and just say “Facebook is super important” or “Email is crucial” are not doing their job in the first place. The clients get frustrated because they don’t feel like their agency is a partner; they represent outsourced labor costing them more money every day.
A.P.: What should an eCommerce company look for when choosing a digital marketing agency?
T.K.: We’re moving towards agency models built around the stages in the life cycle of a business.
Some agencies are really good at servicing early-stage clients and tend to focus on a specific area. If you’re working with an early-stage company, they don’t have enough historical, transactional, or value data to extend their value proposition across multiple channels. They work with a lot of solo providers or single-channel agencies.
Then we have businesses somewhere between $2 and $50 million a year in revenue that will work with people who can handle multiple channels because they can start thinking strategically. Working with bigger businesses is about hitting the quarterly growth goals across multiple channels.
As the eCommerce business gets bigger, they will work with agencies that can think bigger, not just about channel performance, but about branding, offline engagement, partnerships, exclusive content, large-scale advertising, or internationalization. This type of business might work with three or four agencies, using the best parts of their services but having them working together.
We’ll see more and more agencies that are less channel-focused and more growth-oriented.
A.P.: How can digital marketing agencies help their eCommerce clients thrive?
T.K.: One of the most important aspects of helping clients thrive is acting as a partner and keeping in mind that you’re part of a bigger ecosystem.
Push them to think about more. I’m not talking about more spending, but if there’s something that you have forgotten or should do, something that will make a big difference in what the agency is doing.
As an agency, you can start to inform your clients about an opportunity, whether you can provide it or not. The clients will trust you more and be more invested in you if they know that you are looking out for them.
“Think of your agency not just as an execution partner but as a strategic partner focused on creating a healthier client.”– Tim Kilroy
If you have a client that cannot execute across all aspects of their business, it doesn’t matter how good you are at paid search or Facebook; they’re eventually going to fall apart. And that means that your revenue is going to dry up. So you need to be thinking about them holistically, even if you were only touching one part of their business.
Another way agencies can help clients is just by asking better questions.
Often, when you ask clients what they want, they’ll say, “more revenue.” But that isn’t all that they want. They’re looking for a particular kind of revenue. Are they looking for more revenue generated by first-time buyers or selling to a new type of customer? Do they want to increase the frequency or the average order value?
“More revenue” doesn’t help you create a great plan for your clients. You need to get specific about what they actually want. If they don’t know, you have to understand their business and ask them questions like, “Is it better for you if someone places a $50 order every two months, or would you rather have them place a $100 order every four months?”
It’s crucial to get them as specific as possible about what they want, so you can adapt the way you approach customers, create messaging, create a sense of urgency, and so on.
Another thing that agencies must know about their clients is that there’s a difference between the customers they have and the customers they want.
Let me give you an example from a fashion brand I worked with. They were sure that their ideal customer was a woman between 35 and 50, who had kids, lived in the suburbs. So we did a demographic analysis, and we found out that their actual customer was above 65, had a household income that was through the stratosphere, and lived in the top 50 zip codes in the US in terms of income.
That demographic wasn’t who they thought they were making clothes for, but that’s who was buying their clothes. As a result, the fashion brand changed the models wearing the clothes, choosing women in their 40-60s.
It all comes down to this fundamental way of thinking that is “return of understanding”: the more you understand about your clients and what they’re trying to accomplish, the better you’ll serve them, and you will be rewarded with increased customer lifetime value.
As we’ve seen the power of customer data in reshaping the future of our partner digital marketing agencies, we couldn’t agree more with Tim on the fact that agencies need new ways to collect information about customer behavior and to rely on better metrics.
Tim Kilroy emphasized that every digital marketing agency’s biggest challenge is that clients only understand your actual value after working with you.
So, if you want to stay fresh and relevant, you should look beyond your services and metrics and think of your agency as part of an extensive ecosystem. Tim believes that the best way to differentiate in this competitive environment is to position your agency not just as an execution partner but as a strategic partner.
Stay tuned for more expert insights and advice on everything eCommerce and digital marketing. Subscribe to our weekly newsletter.
Like what you're reading?
Join the informed eCommerce crowd!
Stay connected to what’s hot in eCommerce.
We will never bug you with irrelevant info.