Mar 16, 2020

Seven Ways Advertising & Marketing Agencies Deceive Clients – And How You Can Catch Them in the Act

Through the years, Elevation Marketing has been blessed to add hundreds of new B2B enterprises to our client roster. As part of that process we get a sneak peek into the work other agencies do for clients as we transition those B2B accounts to our team. While most of the work we see is well above board, we do see some common threads where agencies deceive their clients.

I believe the deception is mostly margin related. Some agencies have a tough time distinguishing themselves in the hunt for new clients, so they tend to reduce their pricing to win business. I call this the “race to the bottom.” At the bottom, agencies take shortcuts to make money. Below are the deceptive practices we see some agencies engage in to desperately win business.

Deceptive Research & Analysis

During the B2B analysis research phase, agencies typically do qualitative interviews and research. To reach high-quality targeted audiences, agencies use a variety of incentives for participation that they pass along to their clients. Some agencies cut corners by lowering the incentive they are willing to pay and widening the research field, then they pocket the difference. This also makes for flawed data.

We also see agencies manipulate and interpret the data they collect to reveal a specific outcome or problem. With flawed data and manipulation, that outcome or problem is likely engineered to require a certain strategy and solution that is the most profitable one for the agency.

Tip: Always ask for the hard data, the transcripts, and any other research, so you can use it and analyze it yourself.

Bots to Drive Website Traffic

It’s a bit brazen, but some agencies will actually hire “Bots,” typically offshore, to drive artificial traffic to a website. So, instead of utilizing best practice SEO or organic methodologies, they skip that time-intensive activity and drive non-qualified, artificial, traffic to a client’s website and then report the traffic as part of their KPI success. I see this a lot when desperate agencies drive hard to reach B2B audiences, which requires a lot of time and effort.

Tip: Remember, at the end of the day, closable leads are what matter. Judge your agency by the number of MQL’s (marketing qualified leads), SQL’s (sales qualified leads) and new business wins.

Retainer Manipulation

I am shocked by the lack of transparency most agencies provide when running a retainer for a client. A retainer balance, positive or negative, should be carried over month to month. Just because a client doesn’t use a retainer in a particular month doesn’t mean those funds should go away.

I have seen clients get billed amounts of 3X-5X more for certain deliverables than the standard rate. Some agencies dump time into retainers to meet monthly numbers and staff “utilization rates.”

Tip: Ask for monthly details as part of the invoicing process and a reconciliation of budget vs. spend.

Commission Double Dipping

A bit of a grey area here, but your agency should be transparent when it comes to paid media commissions. Most agencies work in one of two ways. They bill you for the time they spend and the media is passed through at cost or they charge you a commission on the media they buy and that covers the planning, execution and creative. Some agencies may do a bit of both, charging for creative and planning, and then charging a reduced commission rate for execution. That, in itself, is ok.

Where most clients get a bad deal is when agencies don’t disclose they are charging full rate for their services then take commissions off the top of a media purchase or through a kickback from the companies through whom they purchase the media. This double dipping reduces the actual amount of media spend and ROI.

Tip: When paying for pass-through media, ask for copies of invoices, insertion orders and receipts as part of the reconciliation process.

Inflated Third-Party Costs and Kickbacks

Some agencies put estimates together using an above and below the line methodology. For instance, if they are making a video or shooting a commercial they need to use a studio, hire talent, and do a variety of things that are one-time costs. They usually show these items at cost and then charge separately for their own internal creative time, etc.

Many agencies have been caught having third-party vendors inflate prices to then offer kickbacks to the agencies. Commissions can fall a bit into a grey area (if you book a hotel for a client conference, for example, the hotel usually offers a commission back to the booking agency), but a client should never pay more than the retail price (hopefully less) for what the third-party vendor typically charges in the area.

Tip: Do your research and make sure the third-party vendor pricing is in line with market rates.

Non-Purchase of Digital or Traditional Media

You can Google many stories about deceptive media purchasing practices. At one point, a few years back, it was estimated that 60% of all digital ad placements were not seen by human beings. Both the agencies themselves and their clients fell prey to this practice.

However, desperate agencies also skim by billing clients for media they supposedly purchased on behalf of the client. Traditional media placements in journals, magazines and websites are common areas of manipulation. If an agency is charging its client to place ads in 30 digital or traditional publications, it’s easy to only place 25 ads and pocket the difference. It’s also easy for an agency to say it ran $15,000 in Google Ads yet only run $10,000-worth and, again, pocket the difference.

Tip: Ask for a copy and screen shots of all ads that run on your behalf and copies of vendor invoices, vendor insertion orders or credit card statements if the agency is running digital or traditional media on your behalf.

Falsified ROI/KPI Reporting

We see this one more of late. Small and midsize companies may not have fully-connected technology stacks, so their agency is tasked with self-reporting KPI’s that are not easily verified. The agency may create a customized dashboard and pull data from various sources. It then starts to inflate both vanity KPI’s (blog visits, website visits, open rates, trade show leads, etc.) and then plays games with categorizing SQL’s and MQL’s. They then start to paint a picture that their efforts are working but sales lacks the talent to close.

Tip: The best fix for this is to self-audit the raw data and run samples from a specific time period to make sure the numbers connect.

Final tips to avoid bad players

How do you avoid deceptive agencies, you may ask? These five steps will help you identify which agencies truly have your best interest in mind.

Avoid those who try to be overly likable or lead with creative.

All agencies know clients buy people they like first and pretty pictures second. Instead, focus in on strategic and business conversations, note the questions agencies ask (Are they deep?), and have them demonstrate proven results with the work they share.

Pay attention to client growth and experience.

Look for growing agencies that are fully transparent and show you how they track performance in the areas they could manipulate. Have prospective agencies show you real examples, not hypothetical. I would also look at an agency’s breadth of clients and number of case studies on its website. Are the case studies deep dives into problems solved, with listed deliverables, results, and client quotes?

Look at an agency’s LinkedIn page

Find out if it truly is roughly the size it claims to be and if it has the number of full-time personnel that would indicate it has the expertise and firepower to execute internally. In addition, ask the agency what percentage of its work is outsourced vs done in-house. Agencies who outsource are more likely to cut corners.  

Watch out for low-ballers.

For example: if you send out RFP’s and project bids and two agencies bid $320k and $350k, and the third comes in at $175k, that might be a sign of an agency taking shortcuts; or it may be one that doesn’t truly understand the scope of work, which reflects poorly on its experience and professionalism.

Transparency is key.

Finally, agencies should always be willing to provide client data, invoices, budgets and other information that aids transparency and allows you to easily understand and verify what you’re seeing. Don’t let an agency say “we don’t do it that way” to a request for more transparency. If they don’t want to dig in to do the extra work to verify claims and earn your business, that’s a sign there’s other work they won’t do for you – and say that they did.

Related Articles:

Top 10 Questions to Ask Your Prospective B2B Marketing Agency

The Importance of Partnering With a B2B Agency to Market Your B2B Product or Service

Signs That Show it’s Time to Hire a Marketing Agency

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