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When to Choose a Digital Marketing Agency or an Outsourced CMO

Your business needs more customers, so what do you do? The easiest thing is to spend money on advertising, which works great if you're looking for a 20-30% increase in customers. But what if your company has more aggressive growth

goals? How do you achieve them? Even though Nettra has spent over $19m on the Google & Facebook advertising platforms, we're the first to admit that advertising on its own will not produce a substantial lift. This is why we wear two hats: we're a marketing agency to the businesses that hire us to carry out specific tactics like web design, SEO, or Google ads. But we also wear the hat of a CMO (chief marketing officer) which allows us to roll up our sleeves with our clients to tackle their biggest obstacles to growth. We often focus on non-advertising strategies like business development, referral processes, and sales enablement. Our CMO service is very unique so we decided to create this video that outlines the differences between it and our marketing agency business model.

Video Transcription

Dave Martin (00:05):

I'll never forget the day that I realized that the marketing agency business model is broken. Well, maybe not broken, but definitely can use some tweaking. So there I was with my team, we are on the eighth floor of an all glass building, pitching a very prominent financial company marketing services. So we laid everything out. We spent about a week preparing for this thing with digital assets and showing them all the things that we've done for prior clients like them and how we could just blow it out of the water for them. So they looked at everything and said, "Well, this is pretty impressive what you guys have done, and we have no doubt you probably could do this for us, but advertising has never amounted to more than 10% of our clients. So what other kinds of strategies do you have to create more clients than just Google ads and Facebook ads and things like that?"


And secretly when they said that, I just kind of looked like this, "Mm-hmm, mm-hmm," but honestly inside, it was like jaw drop, top of my head blow off because I realized my company was totally focused on selling media and billable hours for design. That was it. And it does fit for some companies. So my point here is not to bash marketing agencies, because they do great work, but if that's the kind of work that you need. I found that a lot of companies like this one, the kinds of work they need are things that really chief marketing officers or CMOs focus on. When a CMO is hired by a large company, they don't say, "Let's spend a ton of money on Google and Facebook." They first look at, "Well, how are we getting clients right now?" And usually, it's a handful of relationships that amount for the majority of the clients anyway. So many CEOs go, "Who are those relationships and what are similar relationships that aren't producing those kinds of clients, and how can we activate those relationships?"


And I started to think about that kind of business development approach. Or even many companies are spending thousands of dollars on media, but they've never really invested in a referral strategy. In other words, it's so much easier to create a repeat customer versus trying to tell somebody new that you're great and they should use your product or service. And yet, so many companies spend all this money on marketing before they even focus on having a real robust referral strategy. And so I started to think about these things and think like, "What are we doing as a marketing agency if we're just focusing on this 10 or 20% potential lift for companies, yet we're leaving on the table the 80% of how companies get their business?" And that was my light bulb moment. And that's when I realized I need to take a look at how we do things and restructure how we help companies get more clients and get more brand awareness.


Many of our clients refer to us as more of a outsourced CMO. So what are the differences between an outsourced CMO approach and a digital marketing approach? So the CMO, what they do when they are hired initially is they, of course, like I said before, look at how a company is bringing in clients. And ultimately, what a CMO does is they look at ways to increase the lifetime value of a client and also decrease their cost of acquisition. All of these strategies should center around those two things. In other words, if I could increase how much my average client is worth, well that makes me more money. And if I could decrease the cost of how much money I'm spending on marketing and advertising to get that client, well then that also makes me a lot of money. And there are so many different ways to go about doing that.


Now, on the other side, marketing agencies, they're hired usually for a very narrow focus. They're often not involved in the top level strategies that companies have for growth. They're usually called as more of a vendor to help them either get more brand awareness or get more clients, and that's usually through paid media, whether it's digital, traditional or both, and also billable hours with design. And agencies are great at doing that. So let's talk about some of the pros and cons of working with a marketing agency. What's great about marketing agencies is it means that you don't have to hire more employees. Of course, you could hire one person to try and do SEO, Google AdWords, design, do coding for websites, but I've never met one person that does all those things even well. Usually people have specialties on what they are good in.


So companies can either hire four or five or six people to do what a marketing agency does, or they could hire one person and then work with an agency and then work with that person. In other words, marketing agencies can provide excess capacity. So instead of hiring three or four people to sit behind a desk and pay them benefits and things like that, you get experts to help you with content writing, media management, media buying and design. And so that's one of the best parts about marketing agencies and why the business model, it does still work for a lot of companies and why there's plenty of very successful agencies in America right now.


A couple cons to think about when considering working with a marketing agency is that they usually just focus on media channels when it comes to client acquisition, which can get very, very expensive and oftentimes compromise your return on investment. And the other is the fact that they often rely heavily on media, and so in some cases, the average marketing agency's staff is anywhere from 10 to 15 people, so the larger the staff, unfortunately, that sometimes dictates the kinds of things they do. In other words, media is very, very scalable, and so it's very easy for a marketing agency to sell media even if it's not completely in your best interest. So what are some pros and cons of working with an outsourced CMO or a CMO advisory? Well, the first is that they focus on growth over everything else. It doesn't matter what channel it comes from. Sure, Google and Facebook sound sexy, but what if you got 70% of your clients in the next three months from a very targeted referral strategy that's not even digital?


Well, who really cares if it's digital or not? All you care about is you want more clients or you want more brand awareness, or you just want to hit your goals. And that's what an outsourced CMO does, is they'll look at all 22 acquisition channels, everyone. So of course, there's digital ones that we've talked about, Google, Facebook, SEO, even traditional advertising channels, but outside of that, there's things like business development strategies, referral strategies, PR, public relations strategies. There's so many things to consider. And so what many CMOs do, including us, is we'll sit down with our clients and come up with a viable idea for every outreach channel and then rate them and then categorize them on how we can create clients for the least amount of money with the most impact. Probably the biggest con of hiring an outsourced CMO or a CMO advisory group is if your company already has a director of marketing or a senior vice president of marketing, that person may provide some resistance in working with a group like an outsourced CMO. But there really shouldn't be any resistance at all because both groups are working towards the same common goal.


One of the biggest differences between a marketing agency and an outsourced CMO advisory group is who does the work. And for the marketing agency, this was part of the broken business model to me that I had to really figure out, but typically, of a marketing agency, let's say a staff of 20, there's usually a few people, say two or three, that provide all of the direction and provide all of the decisions, and then they have their employees that carry out their decisions. Well, those two people of that marketing agency, if you ask them, they would love to employ experts in every single part of the marketing strategy. So SEO, they'd love to have somebody on their staff that's been doing SEO for 12 years, Google Ads, they'd love to have somebody that's been doing Google ads for the last 10 plus years, Facebook ads, all these things, email marketing. They'd love to have seasoned veterans doing all these things. But the problem with the marketing agency business model is, if they had these level of experts at every single position, they would not make a profit.


And so what marketing agencies do is they'll hire people out of college, and those people will be with them for probably two or three years, and then they go to some other agency. So what many clients find is they'll be wined and dined by the agency's directors, founders, co-founders, and given a great pitch, and they sign off on it, and then they're given to an account coordinator who's been at a school for a year and a half, who, on their own merit, couldn't have landed that kind of job, and oftentimes communication errors and things like that happen. And that's a very common thing that happens with marketing agencies. So how is an outsourced CMO different from that?


Well, the outsourced CMO has still employees doing core parts of marketing, such as media management, content writing, web design, but what that outsourced CMO can do is also use freelancers. Now, many people will hear this and go, "Well, of course. I mean, every agency uses some freelancers here and there." Yes, but most agencies prefer to do things in-house just because it sounds good. But yet, what outsourced CMOs do, including us, is we have freelancers that have 10 plus years experience in many of these things we're working with, and we've been working with them for years. So what our clients get is us as a quarterback with the strategy, implementing, and when we don't have somebody internal, it's somebody external that we've been working with for years. And that way, you get the 10 plus year level experience on every facet of your campaign. And oftentimes, it's either coming at the same price as working with a marketing agency, if not less.


Another big difference between marketing agencies and outsourced CMOs is that marketing agencies tend to pay their employees on the low side and that's because like we talked about before, they're getting their employees from college of the last couple years, and usually there's high turnover until they're on to their next gig. Outsourced CMO advisory groups across the United States can afford to pay their employees much more because of course, they've purposely chosen to have a smaller group doing core competency. And because of that, we have much happier employees and they do much better work.


So the big question is, who should you hire? Well, first of all, you've probably never heard of an outsourced CMO or even know that exists. And that being said, marketing agencies are great. If you already have a marketing strategy in place and you have various components firing away, and part of the things you need are advertising, you need design, you need some SEO, very specific things, then a marketing agency would be a great choice to carry those things out.


But if your company doesn't really have a specific marketing strategy and you're not really focused on your past clients and current clients and trying to get them to buy more from you, and you're not really looking at the kinds of relationships that are bringing current business in and ways of getting more of those relationships, it might make sense to first start with an outsourced CMO, who not only can look at those things and come up with strategies that involve Google AdWords and Facebook ads and SEO and all those things. But if you lack that strategy, if you lack that kind of process, the CMO might be a better bet for you. But either way you go, you're in the right place because you're on our website. And so since you're on our website, go ahead and look up, if you look at the toolbar, you'll see a tab that says Insights, and there's a ton of blog posts, if you click on that, where we have a lot of different articles that are designed to really help your business grow.

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