How to really crank a digital marketing agency

There are a lot of digital marketing companies around, or at least a lot of organizations that claim to be a “digital marketing agency” except they’re not.

Mostly, they’re purveyors of new logos, websites, letterhead, biz cards, search engine optimization, branding, social media chatter, YouTube videos… everything except what they purport to be.

A true digital marketing agency is one not a whole lot unlike a Madison avenue advertising agency from the 1960s–like those made famous by the TV series, Mad Men. Their job back then was to create great television, radio, newspaper, magazine and billboard campaigns (for which they were (mostly) paid handsomely) and then roll them out on a national or international basis. They got paid for their creative and then (typically) 15% of what they spent on television spots and any other media placements. If they were smart, they might also ask for a percentage of revenues (or, at a minimum, a percentage of the increased revenues their campaigns generated).

So, a digital marketing agency today might rake in the cash this way:

$/month retainer from clients + %age of digital ad spend on behalf of clients + %age of increase in client sales/revenues…

But I was also thinking of a formula I used in one of my books where an agency might get paid based on other measures as well–something like this:

McConnell Residual (R) Contract

R = $A/1,000 views + ¢B/fave + $C/chat + $D/new signup + $E/returnee, paid monthly in arrears

Where A = $20, B = 10¢, C = $1.25, D = $100, and E = $100

Thus, a digital marketing agency could rake in yet more dough plus get a residual (CMRR, committed monthly recurring revenues, the holy grail of business) income from increasing mindshare (not just sales).

Comprehendo?

I include an excerpt from that learning outcome novel I wrote, which explains it better; see below.

Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD
ROYAL LePAGE Performance Realty broker
Ottawa Senators founder
Real Estate Investment and Business coach
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MAKING IMPOSSIBLE POSSIBLE

Excerpt from Jenna’s Story, https://brucemfirestone.com/product/jennas-story/:

“I want something else.” [note: this is Jenna McConnell talking here]

“Another condition?” [this is the owner of the San Francisco-based biz she is going to work for, Tom Hatch, speaking here; he runs a network of summer camps called We Camp; he’s in love with Jenna but not she with him, at least not yet…]

“In a way. I want to be paid properly. I want residuals.”

We Camp pays their staff really badly—they figure it’s a privilege to work there; it’s part of their culture.

It’s so pathetic that almost all their junior staff finishes up broke at season’s end—they’ve spent more on room and board, and other services than they’ve made. As a result, they often leave camp owing it money.

Senior staff is better compensated but still it’s pretty horrible.

Her residual formula, which takes only minutes to approve since Tom will sign off on it practically without looking at it, goes something like this—

McConnell Residual (R) Contract

R = $A/1,000 views + ¢B/fave + $C/chat + $D/new signup + $E/returnee, paid monthly in arrears

Where A = $20, B = 10¢, C = $1.25, D = $100, and E = $100

So if Jenna’s agent (ie, her avatar), for example, gets 3,500,000 views a year plus another 290,000 faves, does 175,000 “live” chats (145,000 of them with new potential customers), signs up 20% of those client contacts and convinces 85% of existing campers’ parents to re-up their kididily, then she’ll receive a hunk a chunk a change, calculated as follows— [this is set in the future so Jenna is training an advanced avatar of herself to do most of the actual work—marketing and sales]

The only argument they have is over whether Jenna should receive the same amount for returning campers as she will for new signups.

Denton argues that she should get ½ of what she receives for signing up existing campers as she will for inducing new suckers, uh, parents, to splurge on their kids’ summer holidays at a We Camp. [Denton is a financial adviser to Tom]

Sophinie takes the opposite view, “Monsieur Hatch, what is zee best way to find new clientele?” [Sophinie runs a marketing agency, Dagust Brands, and is also advising Tom—she’s very French btw]

“Ah, by spending more marketing dollars with Dagust Brands?”

“Mais non. By re-enlisting established clientele. If we reduce zee churn rate for zee ‘way’ camp, we become more efficient, we build zee bigger biziness. What is zee point in signing up a 1,000 new clientele (she pronounces ‘thousand’ as ‘Tao-sand’) if we lose a Toa-sand old ones?”

“I agree. I personally detest the way so many organizations treat new clients better that the ones who got them there in the first place,” Tom adds.

So Denton loses his argument—Miss Jenna will get paid the same for retaining customers as for landing new ones.

…