Agencies, Be Better!

Agencies Are Driven by Incentives, Not the Client's KPIs

Let’s talk about something that’s been making waves in the marketing world lately. Recent documents from an ongoing antitrust trial shed light on a troubling reality: agencies are often driven by incentives that push them to buy certain types of media, which leads to big payouts from media platforms. We're talking about over $400 million set aside for agencies meeting targets on flashy channels like YouTube and display ads. But here’s the kicker—why are these agencies throwing huge budgets at media types that often don't pull its weight in conversions? When marketers raise concerns about these spending habits, they often get vague answers from agencies, with excuses like, "More awareness will lead to more conversions!" Sure, that sounds nice in theory, but if we don’t have the numbers to back it up, how does anyone know what’s really working? Marketing managers are left with a nagging feeling that something isn't right, and those recent documents only confirm those gut feelings. Trust is wearing thin as agencies prioritize their incentives over what actually matters: the client’s KPIs.

The Impact on Media Channel Selection

You know, similar incentive schemes were popular in the insurance brokerage industry over two decades ago before regulation kicked in. Brokers are supposed to have their clients' best interests at heart, not those of the insurance companies. Agencies should learn from this model, but all too often, they get sidetracked by their own incentives, which can lead them to neglect powerful channels like search.

For agencies that are feeling the financial pinch, high-impact channels like search can seem too resource-intensive to bother with. That’s where the temptation comes in to chase after quick wins through easier, incentive-driven options. But let’s face it—this approach can seriously hurt their clients. When agencies don’t strike a balance between awareness and conversion-focused strategies, clients can see a drop in sales. For small and medium-sized businesses, that shift could mean life or death for their operations.

By sidelining effective media strategies for a quick payday, agencies threaten not just their clients’ success, but their own reputations too. Marketing managers must see through these dynamics to make sure media investments truly align with their business goals.

Broken Trust Between Agencies and Clients

John Wanamaker once said, "Half of the money I spent on advertising is wasted; the trouble is I don't know which half." Today, with agency incentives in the mix, we might as well say, "All the money spent on advertising is wasted; the trouble is I don’t even know about it!" That’s a scary place for marketing managers to find themselves, especially after painstakingly selecting an agency they thought would be a partner in navigating the tricky marketing landscape. But when agencies are more focused on their incentives, it can feel like marrying someone who’s already cheating. You might be doing everything you can to make it work, but your agency's priorities are elsewhere. That kind of betrayal can take a real emotional toll, and psychology shows us that trust violations can do serious damage to relationships.

As Arielle Garcia from Check My Ads puts it, “[Media platforms] tend to recommend things that benefit themselves more so than advertisers” in the article written by Adweek on the subject of incentives . This self-serving behavior doesn’t just hurt agencies' credibility; it also affects the broader economy, especially in rapidly developing markets like South Africa. Small and medium-sized enterprises (SMEs) are the backbone of our economy, and when agencies focus on lining their own pockets instead of boosting local businesses, they’re undermining the very community that sustains them. In a world where transparency around advertising spending is essential, a lack of honesty only complicates matters more. Trust is fragile, and when it gets broken, it doesn’t just impact agency-client relationships—it also sows doubt in the entire advertising ecosystem.

Where to From Here?

So, what can we do about this mess? Agencies need to rethink their approach. Sure, chasing incentives can be tempting, but there are smarter and more transparent ways to hit those KPIs while still benefiting from rewards. The secret is ensuring that key departments—especially search—are running profitably, and that’s where technology and AI come into play.

By implementing adtech like Adbot , agencies can automate the nitty-gritty of campaign management, freeing up humans to focus on strategic moves that really matter. This way, they can enhance profitability and drive real effectiveness without sacrificing service to their clients. Plus, Adbot can help agencies keep a balanced media mix that doesn’t compromise profits.

But it's not just on agencies. Marketing managers also have a role to play. Get proactive! Ask about the incentive goals set by media platforms. Push for clear reporting on media ratios so that you know exactly where your budget is going. Compare those ratios against industry standards to protect yourself from any misleading practices.

And why not take control of your Google search campaigns directly with tools like Adbot ? This way, you get a better handle on your conversion channels without getting bogged down in the daily nitty-gritty. In fact, one of our clients saw a jaw-dropping 300% increase in CTR just by making that simple switch!

As regulations tighten, it's crucial to recognise that accountability doesn’t rest solely with media platforms. Agencies will be under scrutiny too, particularly as the demand for transparency grows. The challenges facing agencies right now are a wake-up call—a chance to tap into new technologies and drive meaningful change. At the end of the day, agencies have a responsibility to their clients.

By focusing on building authentic partnerships and fostering transparency, we can spur growth that benefits not just individual businesses, but our entire economy.

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