Advice To The New CMO: How To Deal With Your Existing Agency

One of the most frustrating parts of working at an online marketing agency is losing a client for the wrong reasons. Ask any agency veteran, and they are sure to have numerous stories that sound something like this:

We had an incredible relationship with the client for five years. We completely restructured their campaigns, doubled revenue, and totally dominated the competition. The results were so good that the client was finally able to afford a pricey chief marketing officer. A month after joining, without even meeting with us once, the CMO sent us a curt letter telling us he was terminating our contract in favor of an agency that had no experience in the client’s vertical!

Agencies fear the dreaded “change in management” — when a new VP of marketing or CMO joins a client — more than anything else, because stories like the one above happen all the time.

And surely illogical agency firings can’t be good for the new CMOs either. Given that the average CMO only lasts for 48 months, it’s clear that at least some of these firings are “career-limiting” moves for CMOs as well.

So I’d like to address the following to the new CMOs out there who’ve recently joined a company with an existing agency relationship.  Having worked with more than 100 CMOs in the last eight years, I’ve got seven top tips for working with an agency.

1. Observe First And Change Second

I think a lot of newly minted CMOs think that “doing something” is better than “doing nothing.” They assume that they have been brought into a company to “make changes” and that their initial performance will be judged by how quickly and how dramatically they “do stuff.”

While I’m sure it is true that some CEOs initially judge their new CMO by the speed of change (and I would argue that this is a sign of an immature CEO), most CEOs would prefer consistent, long-term results over short-term change for the sake of change.

The best CMOs set expectations with their CEO immediately, indicating that they plan to observe the state of their marketing programs before they make any changes (if at all).

For an agency relationship, I think a CMO should commit to a minimum of three months of close coordination with the agency before deciding whether to double-down on the existing agency or open up an RFP (request for proposal) for new support. This gives the CMO a chance to meet the agency staff, evaluate their strategic thinking, review reports, and assess their responsiveness.

2. Price Is Relative

Again, many new CMOs seem to think that if they can save the company money, they must be doing the right thing. Of course, with agencies, you often get what you pay for, which is why the better agencies typically charge a lot of money.

An NBA coach who traded LeBron James for a couple of late-round draft picks would not last too long at the helm — the same applies to a CMO who makes decisions exclusively based on the cost of the agency.

This doesn’t mean that the CMO should just accept the agency’s contract without question, and comparison shopping similar agencies to ensure the price is within an appropriate range is fine, too. Agencies, however, should be judged not just on price, but on value — i.e., how much additional money the agency is making the client versus another agency.

Only after analyzing both cost and value should the agency’s contract become a relevant issue for the CMO to consider.

3. Consolidation Isn’t An Inherent Good

As technologies, devices and channels fragment, the number of agencies and vendors a CMO must work with can seem overwhelming. It is, therefore, a natural conclusion for some new CMOs to decide to consolidate many agencies down to one in an effort to reduce meeting times and increase coordination.

This can work well — assuming you find an agency that has subject-matter experts across multiple channels and is actually set up to coordinate internally or externally efficiently.

Too often, however, I see CMOs make consolidation decisions without regard to whether the mega-agency replacing their many expert agencies actually has the experience or structure to do the work.

A few years back, for example, we lost a client’s search engine marketing (SEM) work because the new CMO wanted to consolidate with one agency. A day after we received notice from the client, we saw a posting on Craigslist from the new agency desperately trying to hire someone to be their first SEM team member!

4. In-House Is Not An Inherent Good

I’ve written at length on the relative pros and cons of in-house teams versus agencies, so I won’t repeat that argument here. Suffice to say, just because you can bring in internal resources and let your agency go, that doesn’t mean you should.

Some new CMOs think that if they don’t have an empire of employees reporting to them, they somehow aren’t really a CMO. Indeed, I’m certain that at some companies, the C-level with the most employees has the most power, so there’s probably a perverse incentive to hire, hire, hire without regard for results.

There is no right answer to this question, other than to come into the situation with an open mind and make a judgment call based on observation (see rules No. 1 and No. 4 above). We have clients who spend millions of dollars a month with virtually no internal team, and others who have replaced us with in-house support with less than $10,000 per month of spend at play.

5. Establish Multiple Benchmarks

Agencies should sing for their supper like anyone else, and good agencies love it when a new CMO gives them clear benchmarks to assess their performance. My recommendation is to establish both qualitative and quantitative benchmarks to judge your agency.

Often the quantitative benchmarks are pretty straightforward — growth in ROI, improvements in conversion rates, etc. These quantitative marks, however, can be deceptive. For example, if your business sells umbrellas and there is an unexpected and drastic drought, can you really expect your agency to deliver 10 percent year-over-year growth?

For this reason, I recommend also establishing qualitative benchmarks that can help you assess your agency regardless of account performance. This could include things like the implementation of new technology, improvements to reports, Net Promoter Score ratings from the internal team, and so on.

6. The Grass Is Not Always Greener

No agency is perfect, and at no time is this more apparent than when another agency audits your existing agency’s work. Audits are a great way to get free information about your account, and they are a good way for agencies to win new business.

It is important to recognize, however, that just because Agency A says something different than your existing agency — or indeed finds legitimate cause for concern — this does not immediately infer that the new agency will be better than your current one.

7. Trust Until You Have Reason Not To

An agency’s best relationship with a CMO is one where the CMO makes it feel like it is part of her team — a true partnership. In this sort of relationship, the agency is highly motivated to work extra hours for the CMO and to make bold moves that will mostly drive great results but occasionally fail.

Some new CMOs (perhaps once bitten, twice shy) start with the assumption that the agency-CMO relationship is an adversarial one, where the agency must be watched like a hawk and where “the squeaky wheel gets the grease.” This is a great way to get exactly what you asked for — but nothing more.

And ultimately, if an agency is just doing your bidding (for a search agency, literally and figuratively), you are selling yourself and the agency short.

Summing It All Up: Be The Tortoise, Not The Hare!

Becoming a CMO for the first time must be an incredibly exciting and nerve-wracking moment for any marketer. My experience suggests that the best CMOs do their darndest to remain calm amid the jubilation and pressure of their new responsibility. This ultimately means acting slowly when determining whether to keep, promote or fire your existing agency.

No doubt there will be situations when it is more than apparent that the existing agency needs to be removed as soon as possible, whether due to horrible results, bad service, or irreconcilable differences with the in-house team. In most cases, however, the agency won the business (and kept it) for a reason.

Throwing out the agency without a thorough understanding of their strengths and weaknesses might be a huge mistake that isn’t evident until it is too late.