Traditional digital marketing agencies are over.
If growth hacking is not the answer, agile marketing just might be.
It’s easy to see that many companies today continue to market their brands, products and services based on untested theories about their customers and communication channels. They have swallowed the ‘data pill’ and choose to collect and measure as much as they can, with no real understanding of what they plan to do with it. The world is moving way too fast, and the digital landscape far quicker for this to be a viable approach to marketing.
A real shift in mindset is required; an adoption of a new set of theories about how to market and test assumptions. The adoption of this brave new paradigm is as big for marketing as Copernicus’ new ideas that the world actually revolved around the sun (and not the reverse) was for the world. Copernicus changed the basis of physics and astrology permanently, and we believe that marketing is about to go through its very own ‘Copernicus moment’.
The old rules of engagement in marketing are being eroded and a wave of new thinking is forcing change. Those holding onto power and autonomy because of experience are being challenged by new ideas that suggest the ‘old rules’ no longer apply. This offers companies both challenges and major opportunities for those willing to embrace the new ideas.
As during any period of change in the industry, difficulties, questions and doubts about outsourcing marketing functions are inevitable. External agencies that undertake marketing and advertising roles for businesses have a reason to resist these bold new ideas, preferring to languish in the established dogmas of ‘best practice’ marketing. We believe that unless these agencies can change their perspective on what marketing is, and their role in it, their shelf life has come to an end.
What is a marketing or advertising agency?
A marketing or advertising agency by definition is independent and normally external to the business it works on behalf of. It has specialized in a ‘set’ of technology or advertising channels and rarely explores outside these boundaries.
Digital marketing agencies might offer SEO or Adwords, maybe both if you’re lucky. They’re adept at reducing cost of acquisition and sale through the channels they know and are comfortable with using these techniques to vindicate their existence to their clients. But their narrow focus results in over optimized acquisition and unnoticed bottlenecks and opportunities, resulting in a lower performing business and sales funnel.
They are neither concerned with the overall blended cost of sale, nor the more obvious opportunities that exist for growth So long as they can maintain, and perhaps increase their retainer, they are ‘quids in’ and happy.
The top digital marketing agencies grew up in London
The first ever advertising agency dates as far back as 1786, and hailed from good old London. However the first modern advertising agency was founded in 1856 by Mathew Brady and was famous for being the first entity to change the typography and font size in adverts, reportedly causing a ‘sensation’.
Sometime after 1866 James Walter Thompson joined the ranks, quickly becoming known as the the best salesperson in the company. He ended up buying the agency, soon realizing that he could sell more ad space if he created the adverts on behalf of businesses. Soon after he set up the first Creative Department, hiring writers and artists.
Since these early days the advertising agency has undergone many changes. The more recent being the internet, providing a proliferation of digital advertising channels, social media and now more real time data analytics.
But we believe that many agencies still trade on past theories and conjectures without any testing and experimentation at all.
“Well this worked for company X, so it will probably work for company B too”.
Unlike mathematical proof that is concrete and unquestionable; conjectures are no more than ideas based on some (or a lot) of evidence. They are however and will always be, just ideas that can be disproved and should be tested.
Why do we even need growth hacking agencies?
Agencies around the world in many industries have successfully bridged the gap to connect consumer and businesses for years. They have specialized and found their own processes for getting things done, to become an invaluable part of the sales cycle for many companies.
But things are evolving. We’re entering an era of marketing where the rules of engagement are changing under our feet. Across multiple industries the agency model is under pressure, with marketing being no different. Whether it’s how the travel agency was effectively replaced through technology by a combination of websites such as Airbnb, TripAdvisor and Kayak; to London’s commercial property agents being disrupted. Marketing agencies are finding themselves under pressure from upstarts that are challenging the very foundations on which marketing is built.
Businesses want more bang for their buck and many heavily specialised marketing agencies have rigid skillsets and processes that don’t allow for the rapid evolution and learning required in today’s marketing space.
The traditional agency model seems to be a hindrance these days rather than a help.
They are more adept at telling a young fledgling business what they need based on what the agency can offer, and based on their previous learnings, instead of a deep and current evaluation of what is really required, working and (perhaps more significantly) not working.
They truly understand the need to maintain a state of constant innovation and learning. They are some of the most talented and passionate people in the business landscape, but the rules within which we now play are not the same and so their strategies need to change.
Sarah Wood, CEO of Unruly, sums it up perfectly:
“There’s a common misconception that agile marketing simply means moving faster and responding in real time to the social flow. That’s just the tip of the iceberg. Marketing at the speed of social can only happen effectively if agencies take the time to collaborate across teams and agencies, plan their “moment marketing campaigns” ahead of time and get robust sign-off and testing processes in place from the outset. Otherwise you can aim for agility but end up with incoherent marketing messages and confused consumers.”
What is the role for growth hacking or lean marketing for startups?
Marketing is a type of social science, and like any science there can be no sustained and definitive, unquestioning proof about what does and doesn’t work for so many reasons. Causal relationships are infinite and hard, if not impossible to define and understand when it comes to peoples actions and decision making in the marketplace.
Feedback, or the gaining of insight from data, is paramount to ensuring that you are delivering wanted value and communicating down the right channels. We believe that the MBA and marketing text books are now so horribly outdated. Our rules of engagement need updating.
Marketing should be moving in that same direction.
In a world this fast, how can ‘waterfall’ planned campaigns or 3 year marketing strategies ever be relevant? The marketing activities and decision making must be taking place as close to real time as possible. Marketing teams need to be empowered to rigorously experiment so as to both validate or falsify their current playbook, so that they can produce repeatable ‘non-obvious’ marketing tactics.
Experimentation takes you closer to the vision. When Copernicus changed our thinking about the universe, the vision of reaching the moon remained the same, it was just the way that we would think about getting there that changed.
As suggested above, a strategy needs to be informed by feedback much like a scientific theory is informed or falsified by experimentation. Strategy should be malleable, but experimentation done without bias.
Performing experiments in marketing
Rigorous testing and experimentation is a new function in marketing. It requires a totally different mindset, and should not be held accountable for growth results per se. Its sole function should be to run experiments, provide insight and let business leaders make the decisions. This is where I believe the opportunity for ambitious technology startups exists.
Taking the agile development methodology and letting it do its magic in marketing.
We talk about trial and error and not trial and success. As modern day marketers we are tasked with finding predictable marketing tactics and strategies, and therefore the establishment of a ‘playbook’ for that business.
We should find ourselves far more excited when we encounter an ‘error’ than a ‘success’ seeing as the later simply adds a little more proof to the theory, whereas an error has the power to falsify a theory. This results in a reduction of wasted marketing spend and perhaps a glimmer of a new set of rules by which to play.
The role of marketing is to understand customer needs, and how to communicate a service or product that fulfils these needs in a timely manner and in the right place.
What role does the growth hacker play?
In much of the current marketing literature this move toward experimentation has resulted in the emergence of the growth hacker. Simply the term ‘growth hacker’ implies 2 things. Firstly, that it’s success is appended to ‘growth’, and secondly that it is about mindless hacking of growth, rather than a more systematic approach to testing.
Using an array of statistical tests and data analysis techniques, it’s pretty easy to move any line ‘up and the to the right’. Wherein lies the issue, growth justifies the existence of the growth hacker. This role is still emergent and undefined. The skill sets held by this person are important, useful and perfect for the job of experimenting, it just needs a little more guidance that’s all.
Even the heroes in this space, the likes of Morgan Brown and Sean Ellis, don’t preach mindless growth. They talk about optimizing parts of the funnel that offer the greatest rewards for minimal work and align marketing activities with business objectives. They talk about a more mechanized approach to growth hacking, one that builds and informs a playbook rather than a marketing team implementing a strategy dictated from above.
The inside out marketing agency
Marketing is a shifting landscape of ever growing channels, rapidly changing customer needs and ever new competitive threats. A fully holistic approach to marketing is perhaps even more important now than ever. We’re lucky to now have far more access to analytics and customer data, but this should be paired with a rigorous and systematic approach to testing and experimentation.
There’s an issue with inflexible digital agencies, assuming they know what you want and need. Without the freedom and encouragement to learn by trial and error they can never hope to let the consumer guide their marketing activities.
Flexibility to fail is critically important these days, and much like software development, failing small and fast is how you can ensure incremental learning and development in the right direction.
The similarities between science and markets are striking.
Both should be ruthlessly focused on experimentation; weeding out the weak and promoting the stronger. It’s the role of marketing to add evidence and weight to theories about communication and customers that will better help the business and in turn it’s customers. Therefore, marketing as a function needs to have at its disposal full information and zero bias towards one method or another.
The very nature of the external digital marketing agencies in their current form means they are unable to deliver the required rigor of experimentation and are certainly biased toward their own bottom lines. They are prisoners of their own success.
This is nothing new as even science is vulnerable to ego. The future of marketing is about brutally dispassionate analytics, helping to shape the more creative decision making process based on it.
There’s no way that high growth startups, or at least those that have just found product market fit can ever hope to hire the skill-sets required to capitalise on potential growth fast enough.
Why should they? It’s not their core competence.
There will always be a requirement for businesses to rely on other ‘growth specialist’ companies to be the tip of their spear in my opinion.
Of course the end goal is to internalize as much as possible, but that’s where the playbook comes in. An example being how companies required scientists to demonstrate the basic theories and properties of plastics before investing in a plastic molding factory. Those that inform the marketing playbook will likely come from dedicated growth and experimental teams that have an arsenal of tactics to inform their experimentation.
External growth agencies shouldn’t be there to justify their own existence. So long as their customers know and understand this, unbiased experimentation can occur to help the business find those extraordinary profits previously gained by those companies with superior strategic positioning. If their success is attached to ‘up and to the right’ then they will unknowingly massage the data to show that, rather than offer insights for real growth.
Businesses must begin to identify with ‘inside out’.
External teams will be working inside your business, amongst your team, and externally too. The clear lines about who is and is not part of your team will blur. Your focus is your business. Fine. But a growth and experimental teams’ focus is the continuous testing of your assumptions to help you find growth that others miss.
The knowledge of running high tempo testing from other companies will inform your growth and marketing playbook.
To end this, the traditional digital marketing agency is over. External teams sitting in a few channels are not going to find that exploitative discontinuous growth whilst building a more robust foundation of tested assumptions that inform the marketing playbook. The idea of external agencies is changing – fast.
You should and will have external growth experts, looking at your business in its entirety, or full stack. They will be meeting with your internal team, and should be treated as part of the family. They will care as much as you do about the growth of your business, and are certainly your best weapon in getting above the noise and building a great business.