In episode #2681 of Marketing School, hosts Eric Siu, Neil Patel, and Ralph Burns along with Kasim Aslam from the Perpetual Traffic podcast delve into the future of agencies and the evolving landscape of digital marketing. They explore the challenges agencies confront in an era dominated by automation and AI, emphasize the necessity for agencies to deliver value beyond mere media buying, and underscore the significance of possessing profound expertise and fostering client success. Additionally, the hosts discuss the oversaturation of the agency market, the transition from percentage-of-spend management fees to performance-based models, and the potential for agencies to introduce equity or profit-sharing arrangements. Ultimately, the conversation underscores the imperative for agencies to adapt and innovate to thrive in the dynamic digital marketing industry.

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Check out more of Eric’s content (Leveling UP YT) and Neil’s videos (Neil Patel YT) 

TIME-STAMPED SHOW NOTES:

• (00:00) Introduction to the collaboration between Perpetual Traffic and Marketing School.
• (00:23) Ralph introduces himself and his agency, Tier Eleven.
• (03:18) Kasim talks about the challenges agencies face and the need for value-producing services.
• (05:05) Eric asks Ralph and Kasim about the future of agencies and the percentage of ad spend management fees.
• (06:07) Kasim discusses the obsolescence of media buying agencies and the need for deeper services.
• (07:05) Ralph talks about the oversaturation of agencies and the outdated model of selling specific ad platforms.
• (08:11) Ralph mentions the importance of client success and the need to prioritize clients over profit.
• (09:56) Ralph discusses the challenges faced by agencies and the high turnover rate.
• (12:03) Percentage of media model can still work if providing value.
• (13:06) Agencies need strategy and problem-solving skills to provide value.
• (14:54) Agencies' value and multiples are more realistic now, not artificially inflated.
• (16:10) 15-20x multiples for agencies will not come back.
• (16:49) Platforms will win with automation, agencies need to find value outside of that.
• (17:50) Charging per meeting, page, or lead can be an alternative pricing model.
• (19:13) Big corporations prefer fixed costs, not performance-based pricing.
• (20:36) Agencies may seek equity or profit-sharing to justify the effort and value provided.
• (21:43) Large accounts may still pay fees, but small accounts may require alternative pricing models.
• (22:23) SMBs struggle to afford comprehensive agency services.
• (23:19) Agencies need to understand the value of each customer to determine pricing.
• (25:08) That’s it for today! Don’t forget to rate, review, and subscribe!

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