What is the ROI of an Agency? Why Are Agencies Worth it?
Business marketing has changed a lot over the last several years. Tried-and-true marketing strategies such as sales calls and print ads rarely work like they once did, and new social networking sites pop up all the time to give marketing teams something new that they need to learn. To make matters even more complicated, simply maintaining a digital marketing campaign across all of your business’s social media accounts is often a full-time job in itself, especially once your business starts to grow. Whether you don’t quite understand how modern business marketing campaigns work or you simply don’t have time to manage one yourself, taking care of your business’s marketing in-house may not always be feasible. This is exactly why you should consider hiring a digital marketing agency to handle your next campaign. A good digital marketing agency places your next campaign in the hands of experienced marketers and experts while saving you the time that you need to manage your business. It’s definitely a great investment, but like all things related to your business, you will need to figure out the ROI of an agency before you decide to hire one.
The ROI of a Marketing Agency
For new entrepreneurs and others who might be new to the world of marketing, ROI stands for Return On Investment, which is the direct measure of the return on a given investment relative to the investment’s cost. Basically, it’s the idea that your business has to pay for an investment with the hopes that the investment will eventually turn a profit. Ideally, you want to find an investment with a large enough ROI to make it worth the money you are paying. It can sometimes be difficult to figure out, and what seems like a great investment on paper will only lose money down the road.
If you want to get an idea of the ROI of an investment, take the current value of the investment, subtract the cost of the investment, and divide it by the current value of the investment. The percentage that you get is the ROI. For example, if you were to invest $1,000 in something that makes you $1,200, you will have made a profit of $200, and your initial investment has an ROI of 20 percent. Naturally, you want to make investments that have higher ROIs, and you certainly want to avoid anything that gives you a negative ROI. That seems like an easy metric to calculate and understand, but there aren’t any guarantees when it comes to marketing and business. There are always uncertainties, and everything you attempt will be a gamble. Still, calculating the ROI is usually a good place to start when deciding to make an investment.
With that being said, what is the ROI of a marketing agency? That is a little more difficult to calculate, especially since the success of a digital marketing campaign can’t always be measured in money made vs. money spent. The success of a digital marketing campaign is often measured in metrics such as web traffic, the number of likes a post receives, and the number of new subscribers to a newsletter. These can and often do result in more sales for your business, but what they really measure is the amount of interest that you and your marketing efforts generate. For example, a marketer who specializes in writing blog posts will want to prove that what they write is generating traffic and getting readers to subscribe to the blog. If a marketing campaign is going to focus on social media accounts on Facebook or Twitter, the metrics that would be measured would be likes and retweets. Since these don’t translate directly into sales so it’s hard to put a dollar amount on them and prove that they have a good ROI. Still, a digital marketing campaign does have an ROI that can be calculated by looking at some of the metrics that we discussed.
To really know the ROI of a digital marketing campaign from an agency, you need to look at things long-term. It takes time for SEO campaigns and conversions from blog posts and email campaigns to show up as a profit for your business, so it’s easy to get discouraged when it looks like your investment isn’t immediately paying off. And yet, it’s still in your best interest to invest in a marketing agency. Even though all the likes, blog views, and email newsletter subscribers don’t necessarily guarantee increased sales right away, they will still indicate that people are not only seeing your content and learning about your business, but that they are interested in it. Digital marketing is all about playing a longer game and finding customers who will be loyal to your business long after they’ve made their first purchase from you. That alone is worth investing in a good agency, but there are other factors to consider. First of all, an agency that can take care of all of your marketing needs gives you the freedom to focus on other aspects of your business. Second of all, it places all of your marketing efforts in the hands of experts who know how the process works. While the owner of a small business has to wear many hats to get their operation off the ground, a marketing agency is devoted entirely to promoting your business. They will be savvy to current marketing trends, and they will know how to get the most out of them. Thanks to their experience and devotion to their field of work, they could very well do a better job of marketing your business than you ever will.
While it may be more difficult to determine the ROI of a marketing agency compared to other investments you could make, it is still well worth your time and money to hire some experienced marketers to help promote your business. If you are in need of an experienced marketing agency, contact Studio MFP today. We will be happy to answer any questions that you may have about our marketing services.