How High Performing Agencies Market Themselves

Agencies Nov 6, 2023 25 minutes read

Table of contents

    Marketing agencies often neglect their own marketing, much like the shoemaker’s children who go without new shoes.

    Survey respondents reinforced this point, including Samantha Strazanac, CEO of Strazanac Solutions:

    “Our marketing, unfortunately, lives off the quote “The cobbler’s children wear no shoes” which means we are so focused on providing the best marketing services to our clients that our own marketing is usually neglected.

    Blogs get written for our clients, but rarely for us. We optimize the SEO for our client sites, but don’t even touch it for our own website. We represent our clients at events and conferences but never do so for our agency.

    In short, our clients get premium marketing services but my agency’s marketing is always put to the back burner.”

    Samantha Strazanac

    Samantha Strazanac

    CEO at Strazanac Solutions

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    If you want to grow your agency, you’ll need to prioritize your own marketing and sales efforts.

    And this is where this new research comes in.

    In partnership with agency advisor Karl Sakas at Sakas & Company, we surveyed 200+ agency leaders to understand how agencies market themselves today—and identify current best practices that help agencies get more clients and revenue, despite all the obstacles they face.

    This research will help you understand the current state of agencies’ self-marketing efforts, including:

    • How much do agencies invest in self marketing?
    • What marketing activities bring agencies the highest ROI?
    • What are the primary goals of agency self-marketing?
    • Who’s in charge of agencies’ self marketing efforts?
    • Are agencies more likely to specialize by industry or by service?
    • How do agencies price their services?

    And much more. Enjoy.

    Executive Summary

    Agencies have a problem: they deliver good marketing results for clients, while neglecting their own self-marketing. Compared to clients, agency self-promotion efforts are less strategic, less structured, and de-prioritized. Even at larger agencies, marketing activities often fall to the agency founder. This approach isn’t working, as most agencies recognize there is a gap in their self-marketing efforts, often due to a lack of dedicated personnel to manage their marketing.

    Agencies often don’t track the ROI of their marketing efforts, making it hard to prioritize where to focus. As Karl Sakas noted:

    “Many agencies are spending marketing dollars without a plan or even measurement. If agencies were their own client, they’d fire the agency.” 

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    Across all agencies, many perceive that their peers are better self-marketers, yet only a few actually see themselves as outperformers.

    Smart agencies have an opportunity. By executing a strategic, intentional approach that focuses on high ROI activities, agencies can reach their growth goals—and do self-marketing that they’d be proud to sell to their clients.

    Findings: How Agencies Marketing Themselves

    Here are the findings of our research:

    Strategy Consulting is the Top Service for Agencies

    When it comes to the services offered by marketing agencies, strategy consulting takes the cake.

    In descending order, here are the most popular agency services:

    • Strategy consulting
    • Content marketing
    • Graphic design
    • Email marketing
    • Web design
    • Social media marketing
    • SEO
    • Web development
    most frequent services offered by agencies

    Do agencies prioritize strategy consulting? Yes, it’s the #1 service. Content marketing is still in the top three, but now led by SEO.

    Agency services

    “In practice, agencies tend to under-value their strategy consulting offering. If you want to change that, consider repositioning yourself as a ‘strategy-first’ agency.”

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    The takeaway: If you’re an agency, strategy consulting is a must-have in your service portfolio. But be sure to position it as a high-value service—instead of a free or low-cost value-add—to get paid what you’re worth.

    PRO TIP: Take advantage of Databox’s features and programs designed to help agencies deliver more predictable performance for every client. From streamlining and automating your client reporting process to tracking performance in real-time, and sharing results as they happen, we are dedicated to helping you spend less time on reporting and more time on strategy and execution. Learn more about our agency programs and plans here.

    Two-Thirds of Agencies Have Fewer Than 25 Clients

    Most agencies (52%) juggle between 10 to 34 clients at a time. Almost a quarter of our respondents (24%) focus on ten or fewer.

    Karl Sakas notes: “Fewer than 10 active clients can lead to a Client Concentration problem.”

    Agency active clients

    Only an ambitious (or foolhardy) 11.9% dare to handle 50 or more. Is that you? Karl Sakas notes:

    “Without proper structure and staffing, having more than 25 active clients can lead to a Client Dilution problem. Agencies will have a lot of clients and often a lot of revenue, but they’ll struggle to deliver the work profitably.” 

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    PRO TIP: If you don’t want growth to get out of control, you’ll need to turn down some new clients. You have just one opportunity to make a first impression. Assess your capabilities realistically, and if you can’t meet the demand, don’t take on the work.

    Agencies Favor Specializing By Client Industry

    Nearly all agencies (90%) report specializing in some form. Half of all agencies specialize by industry, while one-third specialize in the services they offer. The remaining 10% identify as generalist agencies, without an industry or service specialization.

    Agency description

    One-fifth of our respondents said they specialize in one client industry, and another fifth focus on multiple client industries that are similar or related (i.e., doctors and dentists, or lawyers and accountants). Around 10% do not attempt to specialize, and 15% specialize in several unrelated industries.

    PRO TIP: Specialization can help your agency stand out in a crowded market, but definitely consider your team’s strengths and your client base when deciding how to specialize. Learn more about the advantages and disadvantages of specialization here.

    Agencies Typically Grew Revenue Less than 30% in 2022

    For most of our respondents, their revenue grew in 2022—but that growth wasn’t distributed evenly.

    Agencies service revenue growth

    Over half (58%) reported service revenue growth of less than 30%, with a significant percentage (over 20%) growing by only 0-9%. That’s a stark contrast with 6% who reported they doubled their revenue and 2% who report they tripled it. Approximately 12% of agencies reported their revenue shrank in 2022.

    “It’s hard to sustain rapid growth. Agencies tend to see a slower growth rate over time. They’re still growing, but at a slower rate than before. Patience pays off. If you grow 40% a year, your revenue will be ~5X in five years. But 25% annual growth would still be ~3X in five years.”

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    Want to share your input? The survey is still open, and you can see how you stack up against other agencies if you join our Best Practice and Performance Benchmark Group for Marketing Agencies.

    Most Agency Revenue is Recurring

    A majority of agencies report that at least 50% of their revenue is recurring.

    Agency ARR

    Recurring revenue provides much more stability than one-off projects and is a reflection of an agency’s financial health. And client retention is usually higher ROI than retention.

    “You don’t need 100% recurring revenue to feel stable. If you get to 80% recurring, you’ll have a predictable revenue stream, and can make hire decisions more confidently. There’s also room for Paid Discovery projects and strategic one-off work.”

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    PRO TIP: When your agency is profitable, you can afford to build a strong team that keeps things profitable. For that to work, you’ll need to develop self-sustaining processes for your team.

    Most Agencies Had Less than 25% Net Profit Margin in 2022

    Profitability is a mixed bag. While some agencies scrape by, others enjoyed healthy profit margins in 2022.

    Agency net profit Margin

    At one end, 15% are facing challenges with a margin of less than 5%, while 10% are thriving with a margin of 35% or more. The remainder is spread roughly evenly in 5% increments.

     “As a benchmark, your agency net profit margins are ideally 20-30%. This assumes 50-60% for labor—including owner compensation—and 20% for overhead. If you’re over-spending on labor, your net margins will be lower. But for most agencies, net margins above 30% aren’t good, either, if it means you’re understaffed and overworked.”

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    PRO TIP: Ensure the agency is profitable and that it can remain so without you. Your business needs to be able to function on its own to earn profit and become “acquirable.” Developing self-sustaining processes for your team is key to achieving that.

    Agencies Focus on Custom Services

    Agencies prioritize revenue from services that are customized to each client. But nearly half of agencies also report delivering productized services.

    agency revenue sources

    On average, agencies reported that 61% of their revenue comes from custom services, 47% from productized services, and 14% from other sources.

    PRO TIP: Offering both custom and productized services can give you the breadth you need to cover all your bases. You’ll be able to cater to different client needs and budgets, ensuring flexibility and the ability to adapt to market demands.  Learn more about the pros and cons of custom vs. productized services.

    Most Agencies Follow the Fixed Fee Pricing Model

    Fixed fee is the pricing model of choice for a large majority (75%) of agencies. It provides predictability for both the agency and the client.

    Agency pricing model

    The hourly-based model follows at 17%, while points- and performance-based pricing are both in single digits.

    PRO TIP: Fixed-fee pricing rewards efficiency and effectiveness, since you can raise prices without needing to do as much work to get results for clients. But sometimes hourly makes sense, especially if you’re doing work for the first time or if your team struggles to push back about scope creep. Find out which business model is right for your agency.

    Owners/Founders Are Frequently Doing Too Much

    In most agencies (71%), the owner or founder also wears the CMO’s hat. They’re “steering” the marketing ship, but are they really the best people for the job?

    who acts as agency's CMO?

    Agency leaders often wear many hats. Less than 20% of agencies we surveyed said the Head of Marketing—the person you’d expect to be the most qualified for the job—served as CMO.Larger agencies are more likely to have a CMO who isn’t the CEO—but not as many as you might think. For free access to those “segmented” insights and more, sign up for the Benchmark Group.

    To be fair, agencies and clients sometimes have different marketing priorities.

    Andre Oentoro from Breadnbeyond highlights the difference in success metrics between agency’s own marketing and client marketing. He states, “For our own marketing efforts, metrics include website traffic, brand awareness, industry recognition, or lead generation for agency services.” However, when it comes to client marketing, Oentoro explains that the focus shifts to “the client’s specific goals, such as conversions, sales, return on investment (ROI), or customer acquisition.”

    Similarly, Natasha Rai from Explainerd points out that the objectives and messaging also differ. When agencies market themselves, they focus on showcasing their expertise, unique selling points, and building brand recognition within the industry. On the other hand, client marketing is about “communicating the client’s value proposition, solving their pain points, and driving specific actions such as lead generation or product sales.”

    While broad skillsets are useful, delegation and role-specialization are vital as you grow. No one’s an expert at everything.

    That’s not all, though.

    Not only are agency owners serving as the agency’s own CMO, they’re often responsible for day-to-day execution of self-marketing efforts.

    Agency task distribution

    Is there a limit to the capabilities of the average marketing agency CEO? Almost two-thirds of surveyed agencies (62.24%) report that owners or founders are responsible for the day-to-day execution of self-marketing efforts. While a third have their own marketing teams, another third delegate it to marketers who also do client billables. That kind of multitasking requires highly competent people and systems, or else it’s not going well.

    PRO TIP: As soon as you can, delegate the CMO role to someone other than the agency founder. This will free up agency owners’ time, so they can actually manage the business. This helps in other areas, too: be sure to avoid the bottlenecks that keep your agency from growing.

    Of course, that’s easier said than done if you don’t have enough resources.

    “Having someone other than me dedicated to strategy and experiments with our own marketing would be incredible – I am not able to lead the marketing team effectively enough”

    Shannon Emmerson

    Shannon Emmerson

    Founder & CEO at Forge and Spark

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    Most Agencies Focus Their Marketing Efforts on Lead-Gen

    Most agencies we surveyed (55%) prioritize client acquisition over other marketing activities. In practice, this typically means a focus on B2B lead generation.

    Agency marketing goals

    Not everyone is focused on a single area. About a third of agencies report that they prioritize all four options: client acquisition, brand awareness, client upsells, and talent acquisition.

    “We do more than the average agency in marketing. Doing is always better than not doing.”

    Perry Nalevka

    Perry Nalevka

    CEO at Penguin Strategies

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    You’ll also want to try new things. Andi Graham, CEO at Big Sea, mentions changing the agency’s structure and internal accountability: “[We’ve] split ourselves into three micro-agencies, and are restructuring how we handle our own internal marketing to make each pod responsible for their own rev gen.”

    PRO TIP: Choose a solid business strategy, develop a roadmap, and align your goals to the plan. Follow the plan and don’t try to do everything at once.

    Client Referrals Produce the Highest ROI… and Cold Outreach Produces a Negative ROI

    A whopping 71% of surveyed agencies report very high ROI from client referrals. This is followed by word of mouth (35%) and SEO (27%).Client referrals are a powerful opportunity.

    Holly Kinney, Director at Capacity Interactive, noted: “Relationships are at the core of everything we do. Face to face interaction has the highest ROI for us.”

    marketing activities that bring the highest ROI to agencies

    Katie Long, President at Idea Grove, notes: “The SEO value we’ve build up from 18 years of blogging is outstanding. We have a very healthy pipeline of inbound leads.”Cold outreach has been reported as having negative ROI by 18% of surveyed agencies. Other negative ROI activities include digital advertising (12% of agencies) and posting on brand’s social media accounts (10% of agencies).

    Approximately half of agencies report doing public speaking. And some are doing it especially well.

    “Speaking and meeting prospects where they are has been very fruitful.”

    Eric Keiles

    Eric Keiles

    Co-Founder at Square 2 Marketing

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    But that’s far from the end of the story. There’s a significant number of activities that agencies perform but have no idea about the ROI because they don’t monitor it. Brand identity, case studies, and social proof, are all significant, and agencies rank them as important… but they simply don’t track the impact they’re having.

    But that’s not the end of the story. Agencies often report they don’t track the ROI of key marketing activities. Those non-tracking activities include: brand identity, case studies, and social proof.

    Fortunately, Databox can help you with this. We have over 200 free dashboard templates for monitoring and analyzing different marketing activities.

    PRO TIP: To develop a stronger client referral network, focus on helping others first. The more you share, the more you secure your reputation as an expert in your field.

    Traditional Advertising is the Least-Practiced Self-Marketing Activity

    Although it’s not surprising that 85% of digital agencies skip traditional advertising, agencies are also ignoring several popular methods to reach audiences and expand their brand authority.

    Surveys and benchmarking can be incredibly influential (just ask Databox), but almost two-thirds of agency respondents skip them. They also don’t focus on podcasts—or traditional techniques like press releases, conference sponsorships, industry awards, and more.

    Is this the right call? Sometimes it’s a matter of of resource allocation and priorities. If you don’t have resources, you really can’t allocate them anywhere, so that part, at least, is understandable.

    Most Agencies Reinvest at Least 3% of Their Annual Revenue into Self-Marketing Efforts

    Nearly two-thirds of surveyed agencies (66%) reinvest more than 3% of their annual revenue into their own marketing efforts.

    Investment in marketing efforts

    Is this enough? You have to spend money to make money; a significant number of agencies invest more than 10%. While the number of those investing more than 25% is expectedly small, it’s not negligible.

    Meanwhile, a similarly-sized group of agencies aren’t sure how much they’re reinvesting in self-marketing. What’s the “right” marketing investment for your agency?

    Our research partners at Sakas & Company have some ideas on determining how much you should invest in self-marketing. The right answer depends on your agency size and your growth goals.

    Most Agencies Budget Less than $100K for Self-Marketing

    Slightly over half of surveyed agencies (52%) reported having annual marketing budgets up to $100K, while a surprising 31% don’t have a formal marketing budget at all.

    Annual budget for self -marketing

    That’s right: nearly a third of agencies do not have a set marketing budget.

    “If your agency doesn’t have a self-marketing budget, consider how you’d react to a high-growth client that didn’t have a marketing budget. You’re spending money on self-marketing; it’s time to make a budget.”

    Karl Sakas

    Karl Sakas

    Agency Consultant & Executive Coach at Sakas & Company

    Want to get highlighted in our next report? Become a contributor now

    PRO TIP: At agencies, team time is money. Ideally, you’ll track time on self-marketing, too.

    Here is a simple dashboard template from Harvest that can help you determine your team’s capacity and how much time they have (if any) for agency self-marketing activities.

    harvest dashboard template

    MarTech Stack: Agencies Focus on Website Analytics, Followed by Social and Email Platforms

    Almost all agencies we surveyed rely on Website Analytics tools (99%), Social Tools (91%), Email Marketing (87%), CRM/Sales Tools (86%), and SEO Tools (84%).

    martech stack

    Even the least-used category—Video Tools at 71%—still covers more than two-thirds of agencies.

    PRO TIP: Looking to upgrade your tech stack? Here are free sales and marketing tools that marketers and salespeople in the Databox community are using to fill gaps in their processes.

    A Quarter of Agencies Would Invest in Additional Personnel for Self-Marketing

    What if you had extra budget each month? If given a $10,000 monthly bonus, a quarter of agencies would invest in hiring additional personnel for self-marketing.

    Additional Personnel for Self-Marketing

    Digital advertising is second on the list, with 21.81% of respondents saying they’d invest a $10K windfall in it.Andy Crestodina of Orbit Media notes: “We’ve never tried ads. It might be a fun experiment. We already do a ton of SEO and event marketing in-house.”

    Speaking of that, around 13% would invest more in attending or sponsoring Events & Conferences, and 12% would invest in SEO.

    Why the focus on hiring people? It’s easier when you can delegate the workload. But recall that only 2% of agencies said talent acquisition was the primary goal of their marketing efforts.

    Amanda-Jane Kinburm of Fresh B2B notes: “As a very small agency of three, we don’t have time to market ourselves. It falls on my head (the founder), and I’m still heavily involved with client deliverables. This means our own marketing get’s left behind. If we had $10K [per month], then hiring someone to do our marketing would be a big help.”

    Nate Tower of Perril says: “It’s more like random acts of marketing. We have clear plans for our clients. We just do stuff and pivot quickly for ourselves.” 

    It helps to practice what you preach. Corey Morris, CEO at Voltage Digital, notes: “SEO has been our biggest inbound channel outside of our own networks. Getting more granular and focused on it, as well as being our own case study as we focus heavily on SEO for clients.”

    Agencies Aren’t Confident About Their Own Self Marketing

    Almost half (47%) of the surveyed agencies think their competitors do better self-marketing than they do. By contrast, 31% think their own self-marketing outshines the competition, while 22% think they’re on par with other agencies.

    ElementIQ’s Samuel Araki identified a new priority: “We need to create an internal structure of marketing and lead generation.”

    This sentiment is echoed by Sarah Perry from Third Angle, who adds another layer to the problem, “We struggle with truly showing our capabilities and what we’ve been able to accomplish for our clients due to the fact that we can suffer from being too humble.”

    Some agencies identify as high performers. Adam Griffith from Luminary shares, “We’ve invested for a long time. Our benchmark stats are seemingly higher than other agencies.”Kim Lawton at Inspira Marketing Group, notes: “We have a dedicated team and rigor around our work. [Self-marketing] is not an ‘after-thought’ or ‘who has time’.”

    “We market ourselves by treating our agency as one of our clients. As a marketing agency, our top priority is to do our very best for each client and deliver results no matter how tight the deadline is.

    We go above and beyond what is expected of us to ensure that we can provide what our client needs, and this is the same thing we do for our marketing agency’s marketing campaigns.

    It can be difficult at times, especially when we have deadlines to meet for our clients, so we make sure that we apply everything we do for our clients to ourselves, like scheduling our promotions and crafting content ahead of time. Of course, this does not happen without a budget, so we add that to our overhead and financial plans.

    Taking the time to market our agency is a part of the business.”

    Casey Jones

    Casey Jones

    Founder at CJ&CO

    Want to get highlighted in our next report? Become a contributor now

    Madison Testa from Digital Caterpillar also believes in her agency’s self-marketing prowess. “We stand out from other agencies because we’re really good at managing our online reputation,” Testa says. “We also think it’s important to build friendly and long-term relationships with our clients.”

    There’s always room for growth. Dan Vogel from DBV Marketing confesses, “Most agencies don’t focus on themselves (which is a mistake), and sadly, we’re no different (yet).”

    About the Respondents

    As we shared earlier, this research reflects responses from the first 210 respondents in early to mid 2023. The survey now has more than 250 respondents.

    How many full-time employees does your agency have?

    Most of our respondents have less than 10 full-time employees, although their “full-time equivalent” (FTE) count is higher when you include their freelancers and part-time employees. One-third have fewer than 5 full-time employees, while about one-fifth have 5 to 9.

    Over a quarter (27.88%) have 10-24 full-time employees, 12.5% have 25-49 full-time employees, and only 7.21% have 50 full-time employees or more.

    The range of revenue among our respondents is pretty wide. Two-thirds of respondents have less than $2 million in revenue.

    annual services revenue in 2022

    The $2,000,000 to $4,999,999 bracket holds 17.15% of our respondents, while the top-tier, those earning $5,000,000 or more, was represented by 8.57%.

    PRO TIP: There’s more to financial sustainability than revenue. You also need to take a look at your profit, and a great way to maximize agency profits is to streamline business operations. You can automate administrative tasks and reporting with Databox, making your whole operation much leaner.

    How Databox and Sakas & Company Can Help Your Agency

    You’ve seen (and probably know first-hand) just how messy running an agency can be.

    We get it.

    It’s hard to juggle all the responsibilities, budgets, and client demands while also investing time into promoting (and developing) your business. But don’t forget: you’re also your own client, and you need to dedicate time and resources to self-marketing.

    So now what?

    Do you just sit back and let the chaos continue?

    The situation has to change; and if you’re not going to do it, who is?

    Fortunately, we’ve got just the thing for you.

    Enter Databox Benchmarks. A tool that can help you determine where you stand in relation to other agencies and what aspects of your business you need to improve. If our findings are any indication, there are at least a few things that need touching up.

    To get started, contribute to our research, and make sure you also join our exclusive Best Practice and Performance Benchmark Group. In the group, you’ll get a chance to anonymously compare your own results with other agencies and access an additional research report that shows how agencies market themselves (and how much resources they allocate) in specific growth stages.

    The best part? Everything we mentioned is free.You can also get personalized expert guidance from agency advisor Karl Sakas at Sakas & Company on how to grow your agency more profitably—including finding ways to help you “Work Less” and “Earn More.”

    Learn how you stack up: Join the Best Practice and Performance Benchmark Group for Marketing Agencies today. It’s free of charge, your data stays anonymized, and you get insights instantly.

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