Making the Case for Ad Agencies in eCommerce

Finch CRO Michael Hollenbeck joins Mike and Nevin for Happy Hour. In the age of automation and AI - when any Joe or Jane can spin up a solid PMax campaign - are ad agencies even necessary anymore in eCommerce? The team discusses over a cold one as they wind the week to a close. Plus, we learn a little more about Michael's personal dating life than we bargained for. Marketing and advertising agencies continue to play a crucial role in the eCommerce space, contributing to profitability. Agencies are essential in focusing on business outcomes and advocating for their interests. While ad platforms may have representatives who appear to support business owners, it is important to remember that these representatives are ultimately paid by the platform and may not prioritize the business's best interests. Furthermore, agencies consistently analyze data and possess the expertise and capacity to examine overall strategy. They offer insights beyond just optimizing return on ad spend (ROAS) and may suggest focusing on other areas, such as margins, to enhance profitability. Agencies bring value to e-commerce businesses by providing specialized expertise, strategic thinking, and advocacy, making them a vital component in driving profitability. Agencies also play a crucial role in educating and providing clarity on the metrics used in advertising. Many prospects they encounter at Finch have a fundamental misunderstanding or lack of clarity regarding which metrics they should be using. This lack of understanding can result in ineffective ad campaigns and wasted resources. Agencies invest significant time in sharing best practices and educating their clients on the most relevant and valuable metrics for their specific business goals. By doing so, agencies help their clients make informed decisions and optimize their advertising strategies. Without the guidance of an agency, brands may miss out on this education and clarity, leading to negative consequences for their advertising efforts. The speaker believes that agencies are important because they bridge this knowledge gap and ensure that brands use the right metrics to measure the effectiveness of their ad campaigns. Agencies should have pricing models that align with the individual needs and goals of each client. This means that not all clients will require the same services, and agencies should tailor their pricing accordingly. For example, some clients may already have a feed management system in place, while others may require extensive search engine optimization. By offering pricing models specific to each client's needs, agencies can ensure they provide value and avoid charging for unnecessary services. In addition to reflecting the individual needs of the client, the episode emphasizes the importance of building a relationship based on accountability and mutual trust. Trust is identified as a crucial metric that can make or break client relationships, especially in the context of performance agencies. Since every client has different goals, it is important for agencies to establish trust by delivering on their promises and consistently meeting client expectations. The episode also acknowledges that agencies do not have control over certain aspects, such as product development or the competitive landscape. However, agencies can still strive to make their pricing models fair by considering factors such as a base fee and a reduced percentage of ad spend. The goal is to find a pricing model that suits both parties, ensuring the agency is compensated fairly while providing value to the client. Overall, the episode highlights the importance of having flexible and responsive pricing models that cater to the individual needs and goals of clients. By building relationships based on accountability and mutual trust, agencies can establish long-term partnerships and deliver value to their clients.