6 Red Flags When Hiring an Ad Agency
If you see any of these, watch out
In this article, I am going to cover six red flags to watch out for if you want to work with an ad agency, marketing agency, or a freelancer. Each of these are things that I have witnessed myself, usually multiple times, and the victims are often savvy entrepreneurs or business owners who simply have not heard of these red flags before. These are so common, you may be working with a marketer right now where you will notice one or more of these red flags, and if so, I would exercise caution.
#1 - Setting Sky High Expectations
The first one, and probably the most common, is setting sky high expectations. I have worked with hundreds of clients on paid advertising, using virtually every paid ads platform under the sun, and while you may see outlier results with very small budgets or over short durations, if you are spending a reasonable amount on ads (let’s say $3,000 / month or more) and measuring performance over a period months, exceptional performance will usually be around a 6x return on ad spend (ROAS). This is very rare though, and I would say a 4x ROAS is a more realistic gold standard for what you can hit, while a 1.5x - 3x ROAS is still generally fairly good. Now, to clarify, this is for campaigns targeting cold traffic. If you are running Google Brand Ads, Remarketing Ads, or targeting a custom list of warm prospects, your results may be much stronger, but you are going to also be capped in the degree to which you can scale these campaigns.
So, if 6x ROAS is exceptional and close to the upper ceiling of what you can hit long-term, if you talk to someone who says, “We will get you 10x ROAS, no problem”, they are likely either manipulating data or straight up lying to you. Some marketers will point to an outlier marketing campaign that went viral and say, “We can replicate this - we will generate hundreds of thousands of dollars off just a few thousand dollars in spend”. Do not buy it. While there are certainly some marketing campaigns that do go viral, there is no guaranteed way to do it, or else everyone would just copy it. Sky high promises are almost always the surest sign you are being taken for a spin, and it is often because you are talking to a salesman who has no idea how marketing actually works.
#2 - Cherrypicking Data
The second red flag, which is intimately connected to the first, is cherrypicking data or extrapolating out from small sample sizes. Almost always, when called out on their pie in the sky promises, shady agencies will say, “We have proof: check out these clients we drove results for”. Almost always, they will show cherrypicked data that does not hold up over a reasonable sample. Maybe they will show 1 week of performance, or they will just show you ads targeted at warm traffic (many of whom would have converted regardless of whether you marketed to them), or they will show you a client spending some absurdly small budget that got lucky for a short period. Either way, if you want to find a marketing partner who you can stick with and trust for the long-term, do not buy these promises made off of cherrypicked data.
#3 - Refusing to Set Clear Goals and Avoiding Accountability
The third red flag is refusing to set clear goals and avoiding accountability. This one comes in a few forms. One very common example is marketers who refuse to commit to a clear, written goal. Some marketers say, “It is not about the numbers - it is about getting your ads in front of people and building up your brand” or others say, “It is complicated, there are a lot of variables here, and too much focus on the numbers is going to hurt more than help.” Either way, no matter what excuse they give you, you absolutely should have clear written goals. The second example of this red flag is moving the goalposts. Maybe you have a goal of a $50 cost-per-lead and on your weekly call, the cost-per-lead is not addressed and they say, “We had a great click-through-rate (CTR) this week, .25%, which shows we are progressing nicely”. In these scenarios, you should always come back to the core goal, ask how the performance is measuring up to it, and hold the marketer accountable; it is unacceptable to try to evade accountability by shifting the focus.
#4 - Using Slippery Language or Marketing Jargon
The fourth red flag is using slippery language or marketing jargon. A good, honest marketer, should be able to articulate to you clearly and concisely how you are performing versus your core goal and how the results directly impact the bottom line of your business. If a marketer is patting themselves on the back because they have driven a high click-through-rate or a high average time per session, you should always come back to, “How does this translate into revenue for my business?” If you do not get a clear and direct answer from them, that is not a good sign. A slightly lower version of this red flag, but still a red flag nonetheless, is a marketer who brags about the cost / lead they have driven, and when you mention that none of the leads are qualified, they say, “It is my job to drive the leads, it is your job to close them.” Most of the time, this is a questionable answer. Which audience you market to and the messaging they see has a real impact on whether or not the leads are likely to be qualified, and if you are not seeing sales, a good marketer will dig deeper to try to find out what they can do to help fix this. For example, if I ran a dishonest ad that said, “Free super bowl tickets!” and got tons of people to fill out a form on a landing page, it would be a bit disingenuous for me to then say to a client, “It is your sales team’s fault that you are not closing these leads for your B2B SAAS Product!”
#5 - Making it Hard for You to Leave
The fifth red flag is making it hard for you to leave. Some marketers do this by having you sign very long contracts (such as 12 months or more), and in my opinion, this is almost a red flag. Personally, while I think it is reasonable for a marketer to insist on a couple month starter contract, since it takes some time to get off the ground and get traction, but if it is a 12+ month contract with someone you have never worked with, it usually ends in disaster. I have talked to so many clients who say, “this agency we worked with was terrible, but we are stuck with them for 6 more months, so there is not much we can do”. At Stackmatix, we did a 3-month minimum contract and then it switched month-to-month, and we made it very easy for anyone to leave if they were not happy. Another version of this red flag is holding your data or assets hostage if you leave. If your marketer helps you to set up any accounts, such as Google Analytics, Facebook Ads, a custom landing page, or anything else, your email should be the primary email on the account and you should be the account admin. Any marketer who says, “Anything we work on during our time together belongs to me” is a huge red flag. A common one I have seen on Google Ads or Facebook Ads is marketers who say, “The ad account set up is our IP, so you cannot take it with you”. You should absolutely own all of your data and anyone who does not accept that should be avoided at all costs.
#6 - The Bait and Switch on Account Ownership
The sixth and final red flag is the bait and switch on account ownership. This is much more common with agencies, but whenever you sign a contract with them, you should get clarity on who will be managing your accounts and whether this is subject to change in the future. Assuming you are satisfied with your account manager and are promised that they will not be changed, you can usually rest assured, but if you do not ask these questions, you will likely get a seasoned, experienced account manager from the get go, then within a few months, a junior, inexperienced marketer will be subbed in and the quality of your results will drop off precipitously. As mentioned, as long as you ask directly and get clarity on this one, most agencies will play it straight, but if you are unaware of this, you can get yourself in real trouble.
Conclusion
To summarize, the six red flags are setting sky high expectations, cherrypicking data, avoiding accountability, using lots of marketing jargon, making it hard for you to leave, and doing a bait and switch on account ownership. These are not one off, random cases - they are absolutely rampant in the industry, so much so, people have come to accept and tolerate them concluding, “This is just the way it is.” This is not true though - each of these is absolutely unacceptable, and before you sign-off on a new marketer or agency, you should make it crystal clear that none of these red flags are present.
Great article on "red flags." It is surprising how few people understand how to assess the return on ad spend.