State of the Online Marketing Services Industry


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The goal of the survey was to profile the online marketing industry as a whole, and identify what service offerings and business processes were being leveraged by the most successful agencies. We also probed respondents around their biggest pain points, aiming to understand what financial, service and operational challenges were most prevalent. The following report contains data and charts derived from these questions, as well as interpretations of that data by HubSpot.

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State of the Online Marketing Services Industry

  1. 1. State of theOnline MarketingServices Industry A Publication of HubSpot’s Partner Program
  2. 2. Table of Contents4 Executive Summary5 Breakdown of Agency Size & Structure15 Size & Types of Agency Clients18 Biggest Agency Challenges25 Key Agency Takeaways39 Conclusion41 More Resources
  3. 3. 1 Executive Summary
  4. 4. Executive SummaryThe State of the Online Marketing Services IndustryReport was conducted by HubSpots Partner AgencyTeam in the summer and fall of 2011. The surveyconsisted of 45 questions, which spanned topics fromagency size and annual revenue to service offeringsand business processes. 750 survey responses werereceived. STATE OF THEThe goal of the survey was to profile the online ONLINE MARKETINGmarketing industry as a whole, and identify what SERVICES INDUSTRYservice offerings and business processes were beingleveraged by the most successful agencies. We alsoprobed respondents around their biggest pain points,aiming to understand what financial, service andoperational challenges were most prevalent. Thefollowing report contains data and charts derived fromthese questions, as well as interpretations of that databy HubSpot.
  5. 5. 2 Breakdown of Agency Size & Structure
  6. 6. Agency Breakdown: Full-Time Employees Question: How many full-time employees (not contractors) are currently employed by your company? 2% 3% Marketing 6% Professionals* 2-5 Data indicates 7% 35% 6-10 that the industry is dominated by 11% 11-20 independent 21-50 consultants and 50 - 100 smaller-sized 36% agencies. > 100*Single Employee Agencies 6
  7. 7. Agency Breakdown: Organizational StructureQuestion: Does your agency have Question: Which specific business functionsprofessionals dedicated to specific does your agency dedicate resources towards?functions (e.g. sales, copy writing,etc.) vs. multi-disciplinary? Account Managers 21% Designers/Creative 16% No Technology 16% 33% Sales Professionals Yes (For New Business) 12% 67% Copywriters/Bloggers 11% Internal Marketing 9% Other 15% Note: percentages are based on the number of employees dedicated to a function out of all employees dedicated to specific functions (sums to 100%) 7
  8. 8. Agency Breakdown: Top Service Offerings Question: What are your agencies top 3 service offerings? Web Design 15% Brand Marketing 14% Social Media 12% Search Engine Optimization (SEO) 11% Full-Service Marketing Outsourcing 11%Content Creation (e.g. ebooks, white papers) 6% Email Marketing 5% Public Relations (PR) 5% Pay per Click (PPC) 3% Blogging 3% Direct Mail 2% Marketing Automation 2% 3 of the top Video Production 2% 5 services Application Development… 2% offered are Media Buying – Non-Digital 2% web-related. Media Buying (Digital) 1% Promotional Products 1% Trade shows 1% Affiliate Marketing 1% Appointment Setting 1% 8
  9. 9. Agency Breakdown: Top Service Offerings Question: What services do you currently offer? What services do you plan to add in the future? Social Media 83% 7% Brand Marketing 81% 3% Email Marketing 81% 6% Web Design 81% 4% Search Engine Optimization (SEO) 75% 9% Content Creation (e.g. ebooks) 67% 11% Blogging 67% 11% Pay per Click (PPC) 53% 12% Full-Service Marketing Outsourcing 50% 7% Direct Mail 47% 5% Public Relations 45% 12% Video Production 44% 15% Media Buying – Digital 36% 14% Trade shows 32% 7% Promotional Products 30% 6%Application Development (e.g. mobile) 29% 25% Media Buying – Non-Digital 28% 8% Marketing Automation 27% 13% Currently Offer Service Affiliate Marketing 17% 14% Plan to Offer the Service in the Appointment Setting 12% 7% Future 9
  10. 10. Agency Breakdown: In-House vs. Contracting (Pt. 1) Question: What percentage of work (based on revenue) is performed in-house versus contracted? In-House Contracted 89% 88% 83% 79% 78% 73% 75% 31% 27% 22% 24% 19% 12% 13% Marketing 2-5 6 - 10 11 - 20 21-50 50 - 100 > 100Professionals Employees Employees Employees Employees Employees Employees 10
  11. 11. Agency Breakdown: In-House vs. Contracting (Pt. 2) Question: What services do you currently outsource to contractors? What services do you plan to outsource in the future? Web Development 51% 10% Designers/Creative 48% 8%Copywriters/Bloggers 35% 16% Content creation Technology 31% 8% represents largest increase Search in contracted 27% 13% Engine Optimization services. Pay Per Click 19% 13% Social Media 17% 13% Account Managers 7% 7% Currently Contract for Service Other Additional Agencies that Plan to 12% 3% Contract for the Service in the Future 11
  12. 12. Agency Breakdown: Technology Used by Service Question: Do you use technology/software to deliver services to your clients? Email Marketing 73% Web Analytics 71% Social Media 64%Content Management System 60% Blogging 53% 91% of SEO (Search Engine… 53% agencies use software to PPC (Pay per Click) 33% deliver their services. CRM (Customer… 32% Marketing Automation 21% Media Buying – Digital 14% Media Buying – Non-Digital 9% 12
  13. 13. Agency Breakdown: Technology Used by Service Question: Do you recommend or resell software in any of the following categories? Email 58% CMS 52% Web Analytics 51% Social Media 46% Blogging 39% 82% of SEO 36% agencies CRM System 30% recommend or resell Marketing automation 23% software. Pay per Click (PPC) 22% Media Buying – Digital 18% Other 7% Media Buying (Non-Digital) 5% 13
  14. 14. 3 Who is your Typical Client?
  15. 15. Client Breakdown: Revenue by Client Size Question: What percentage of your revenue comes from the following company sizes (broken down by agency size)? Client Size Agencies w/1-5 Employees Agencies w/More than 5 Employees (Employees) 1-5 33% 7% 6 - 10 16% 8% 11 - 25 14% 9% 26 - 50 12% 13% Smaller agencies 51 - 200 13% 21% rely on Larger 201 - 1,000 smaller agencies 6% 19% clients. serve1,001 - 10,000 3% 12% bigger clients. 10,000+ 2% 10% 15
  16. 16. Client Breakdown: B2B vs B2C Question: What is your B2C/B2B client mix (based on revenue)?%B2C / %B2B 0/100 35.54% Most revenue 25/75 comes 29.46% from B2B clients. 50/50 14.40% 75/25 14.53% 100/0 6.08% 16
  17. 17. 4 Biggest Agency Challenges
  18. 18. Agency Challenges: Biggest Pain Points Question: On a scale of 1 to 5 (with 5 being the most painful), how painful are the following challenges? Cash Flow is Too Variable 3.64 Not Generating Enough Leads 3.44 Difficulty Signing Up New Clients 3.39 Retainers are Too Low 3.23 Client Contracts are Too Short 2.87 Difficulty Staying Up to Date with 2.63 Technology Difficulty Keeping Up with Client 2.62 Requests Difficulty Hiring and Retaining 2.53 Employees and/or contractors 18
  19. 19. A Solution: Grow your Firm’s Retainer BaseThe most acute agency pain points (from the previouspage, 3% and higher) are, at their core, functions ofsales and/or marketing deficiencies. HubSpot believesthat shifting from project-based revenue and adoptingprocesses that position your firm to earn retainerbusiness is the optimal way to overcome thesechallenges.Retainers are a clients commitment to employ theiragency for a defined period of time, for a fixed fee permonth. Most agencies will define the scope of servicestheyll provide as part of their retainer, as well as anestimation of the frequency of those services and/or timerequired to deliver those services.Our most successful Agency Partners have adopted this model and continue to experiencesignificant growth. We used data from a series of survey questions to test this hypothesis. Thefollowing slides segment respondents into four quartiles, according to what percentage of theirbusiness is retainer-based. We then compare these cohorts to see how agencies with small amountsof retainer-based clients compare to those with large amounts of retainer-based clients.
  20. 20. Retainer Revenue: Percentage by Quartile Question: What percentage of your agency’s revenue is from retainers (split into quartiles)? 1st Quartile 70% - 100% 2nd Quartile 40% - 70% 3rd Quartile 20% - 40% 4th Quartile 0% – 20% 20
  21. 21. Biggest Challenge: Challenges by Quartile Question: On a scale of 1 to 5, how painful are the following challenges (broken down by retainer quartile)? Cash Flow is Too Variable 3.85 3.18 Agencies who sell more Not Generating Enough 3.69 retainers are Leads 3.36 less affected by the industry’s Difficulty Signing Up New 3.71 3.33 biggest Clients challenges. Retainers are Too Low 3.30 3.11 Client Contracts are Too 3.19 Short 2.29Difficulty Staying Up to Date 2.82 with Technology 2.64 Difficulty Keeping Up with 2.53 Client Requests 2.60 4th Quartile Difficulty Hiring and 2.40 1st Quartile Retaining Employees… 2.57 21
  22. 22. Retainer Comparison: Length, Value & 3-Year Growth Higher Longer Larger Revenue Retainers Retainers Growth 14.63 66% $4,090 9.14 38% $2,065Avg. Retainer Length (months) Avg. Retainer Size ($) % of Agencies w/greater than 10% Growth Over Last 3 Years 4th Quartile 1st Quartile 4th Quartile 1st Quartile 4th Quartile 1st Quartile
  23. 23. Key5 Agency Takeaways
  24. 24. Channeling the 1st Quartile: Three CharacteristicsAccording to the data presented in the previous slides,marketing agencies in the first quartile have the highestrevenue growth, are more financially stable and are leastaffected by the industries biggest challenges.What is it about their sales processes that position thesefirms to earn more long-term retainers? What deliveryprocesses and tools are helping these firms continuouslydeliver and maintain strong client relationships? In the mostgeneral sense, what makes these agencies different andmore attractive to work with?Our analysis yielded three key differentiators of agencies inthe 1st quartile: Services Offered, Processes Used, BeingMetric-Oriented. The following slides explore those threecharacteristics in detail. 24
  25. 25. Characteristics of the 1st Quartile: Services OfferedOnline marketing is fueled by content that grows and appreciatesover time. This uniquely positions agencies that offer these types ofservices to pitch and deliver a strategy that is long-term in nature.By helping clients craft and execute on this type of strategy,agencies in the 1st quartile make themselves an integral piece oftheir client’s sales and marketing process.Marketing dollars are shifting in a significant number of verticals.But the skill sets of internal teams lag behind, and as a result,businesses wanting to take advantage of ROI-charged onlinetactics like blogging and social media are looking to outsideagencies for help. Download HubSpot’s eBook on, The Four CoreServices of Inbound Marketing and learn how to deliver whatmatters most.
  26. 26. Services Offered: Top Services by Quartile Question: What are your 3 main service offerings (1st quartile)? Social Media (Twitter, Facebook, LinkedIn) 13% Brand Marketing (messaging, etc.) 12% Search Engine Optimization 12% Full-Service Marketing Outsourcing 11% Web Design 10% Content Creation (e.g. ebooks, white… 7% Public Relations (PR) 6% Pay per Click (PPC) Mgmt 6% Email Marketing 6% Blogging 5% Marketing Automation 2% Video Production 2% Media Buying – Non-Digital 2% Direct Mail 2% App. Development (e.g. mobile) 2% Media Buying – Digital 1% Appointment Setting 1% Affiliate Marketing 1% Trade shows 0% Promotional Products 0% 26
  27. 27. Services Offered: Top Services by Quartile What is the Delta between the 1st and 4th quartile’s main service offerings? 4th Quartile Agencies 1st Quartile Agencies Focus Focus More on These More on These Services Services Social Media (Twitter, Facebook, LinkedIn) 2% Brand Marketing (messaging, etc.) -3% Search Engine Optimization (SEO) 2% Full-Service Marketing Outsourcing Web Design -9%Content Creation (e.g. ebooks, white papers) 3% Public Relations (PR) 2% Pay per Click (PPC) Mgmt 4% Email Marketing 2% Blogging 2% Marketing Automation 1% Video Production -1% Top agencies Media Buying – Non-Digital don’t just focus on Direct Mail -3% common services App. Development (e.g. mobile) like web design - Media Buying – Digital they offer differentiating Appointment Setting services. Affiliate Marketing Trade shows -1% Promotional Products -1% 27
  28. 28. Characteristics of the 1st Quartile: Processes UsedOnline marketing agencies that have robust sales and marketingprocesses sell and deliver more efficient results. Having softwaretools and methodologies in place, as well as staff trained toimplement and deliver, enables agencies in the 1St quartile to conducta goal-oriented sales process and accurately scope clientengagements. These factors allow them to reliably demonstratemeasurable return on their work.An effective online marketing sales process starts with the InboundMarketing Assessment. Its the meeting where you discuss aprospects website and the ROI of their current online marketingefforts. You poke. You probe. You get a sense of what is working andwhats not. You uncover their goals, determine what they need andposition your agency as the solution. Download HubSpot’s InboundMarketing Assessment eBook to learn a repeatable process fordiagnosing prospect need.
  29. 29. Agency Processes: Robust Sales ProcessesWhat percentage of firms (by quartile) use a Agencies thatnumber of sales process activities? have robust sales processes are 2x as likely to be in the top quartile. 4th Quartile 1st Quartile 39% 35% 36% 30% 29% 25% Sample Sales Processes 23% 20% 21% 18% 17% 1. Use a documented sales 14% process 2. Completed sales training 3. Have a standardized set of questions to qualify prospects as 0 1 2 3 4 5 opportunities 4. Use a CRM to track Number of Sales Processes Agency Undertakes sales activities and (out of 5 processes on right) forecast revenue 5. Have a process to helpExample: 39% of firms that perform all 5 sales processes are in the top quartile prospects establish sales and marketing goals 29
  30. 30. Agency Processes: Robust Delivery ProcessesWhat percentage of firms (by quartile) use a Agencies thatnumber of different business process tools? utilize business process tools 4th Quartile 1st Quartile are more likely36% to be in the top 33% quartile 31% 30% 31% 25% 27% 23% 24% 21% 20% 19% Sample Business Process 14% Tools 8% 1. Content Management System (CMS) 2. Customer Resource Management (CRM) 0 1 2 3 4 5 6 3. Project Management 4. Time Tracking Number of Business Process Tools Used by Agencies 5. Internal Social Network (out of list on the right) (e.g. Yammer) 6. Wiki 7. OtherExample: 33% of firms that use 6 business process tools are in the top quartile 30
  31. 31. Characteristics of the 1st Quartile: Reporting on ROIThe internet is an endlessly measurable place. This indisputablefact translates into two realities for online marketing agencies:instant accountability for underperformance and undeniable proofof success. Agencies in the 1st quartile leave no question aboutthe effectiveness of their work. They measure everything they do,and report back to their clients on the progress made toward keygoals. Reporting regularly clearly quantifies the success of theirefforts and serves as the foundation for a long-term clientrelationship.Marketing agencies who want to position themselves for long-term retainers should report back to their clients early and often.You need to tie online campaigns back to the types of results yourclients ultimately care most about: Traffic, Leads and Customers.Download HubSpot’s eBook How to Report Inbound ROI to learnhow to showcase the data your clients care about most.
  32. 32. Reporting on ROI: Tracking ROI Efficiently Question: Does your Question: Does your agency agency track ROI? find It difficult to track ROI? 72% 64% Agencies track ROI… 36% …but find it hard to do so. 28% Yes No Yes No 32
  33. 33. Reporting on ROI: Quartile Comparison Question: Does your agency track ROI? 75% Yes No Agencies in the 1st quartile are more 51% 49% likely to track ROI for their clients. 25% 1st Quartile 4th Quartile 33
  34. 34. Reporting on ROI: Metrics Tracked What percentage of agencies track the following metrics? Website traffic 82% Search rankings 68% Organic traffic (non-paid) 64% Leads generated 57% Inbound links 47% Are agencies Paid traffic 47% tracking what Social Media Reach 46% matters mostSocial media engagement levels 41% to their clients? Customers Acquired 38% Content downloads 38% Referring sources 37% Blog subscribers 36%Registrations (for webinars, etc.) 32% 34
  35. 35. Reporting on ROI: Metrics Tracked by Quartile What percentage of Agencies tracking the following metrics (by quartile)? Website traffic 87% 73% Search rankings 74% 73% Leads generated 72% 42% Organic traffic (non-paid) 69% 52% Social Media Reach 56% 1st Quartile 30% 53% 4th Quartile Inbound links 37% Paid traffic 51% 39% Customers Acquired 50% 31%Social media engagement levels 50% 27% Top quartile Blog subscribers 46% 26% agencies are Referring sources 45% more metric- 31% oriented Content downloads 45% 31%Registrations (for webinars, etc.) 36% 27% 35
  36. 36. Example: Recommended Sales MethodologyHubSpot recommends a goal-oriented sales process 1. Generate Leads(right) to its community of Agency Partners. Find Prospects to Call OnOnce a prospect is qualified, an agency’s focus shouldshift to uncovering the prospect’s most pressing needs 2. Research and Prospectand business goals. These goals drive how the Get to a Connectagency proceeds, which of it’s service offerings itleads with and what expectations it sets around timingand retainer size. 3. Connect Schedule the AssessmentBuilding an action plan based on your prospects goalswill position your service offerings as strategicrecommendations. Being able to refer back to and 3. Qualify Determine worthiness for next stepreport on these goals throughout your engagement willmake quantifying your success and advocating forincreased scope easy. 5. Diagnostic & Goal Setting Align business goals with activitiesThe following page is an example of how using a goal-oriented sales process and tracking ROI can lead toincreased retainer size. 6. Presentation & Experimentation Present Solution and/or Trial 7. Contract & Close Agree to Proceed 36
  37. 37. Example: ROI Tracking & Processes Drive Retainers Premise: How do agencies that track ROI and have set processes for establishing sales and marketing goals compare to those that do not do? Percentage of 1st Quartile Agencies: The Financial Impact: 51% $3,055 $121 $2,500 $104 13%Do you track ROI & do you have a process to Avg. Retainer Size Avg. Hourly Bill Rate set sales and marketing goals? Yes & Yes No & No Yes & Yes No & No Yes & Yes No & No Agencies who set goals in the sales process and report ROI have larger average retainer size and higher billings 37
  38. 38. 6 Conclusion
  39. 39. ConclusionThe 2012 State of the Online Services Industry Reportprovided a detailed glimpse into the online marketingservices industry. It clearly outlined the biggestchallenges being faced by agencies today, as well as thebest practices firms in a growth pattern are leveraging.Several compelling takeaways:- Retainers are Key to Growth – Having an agency STATE OF THEbusiness model equipped to sell and deliver retainer STATEMARKETING ONLINE OF THE SERVICES INDUSTRYservices is key for agency growth and stability.- Online ROI Needs to be Tracked – Agencies that SERVICESmeasure the effectiveness of their campaigns and report INDUSTRYon the resulting traffic, leads and customers securelarger retainers and boast higher hourly bill rates.- Processes Are Necessary– Agencies with provensales and delivery processes close more retainerbusiness and deliver measurable results more efficiently.- Inbound Represents Areas of Growth – The amountof agencies from the 1st quartile offering (or planning tooffer) content creation, and other key inbound marketingservices was significant.Thank you for reading the State of Online Marketing Services Industry Report. What were your keytakeaways from the findings? Join the conversation on Twitter using the hashtag #AgencyState!
  40. 40. HubSpot’s Partner Program 101One of our Partner Agencies biggest challenges is that theyhave to adapt to a world where clients are asking for oneagency that can do everything. The worlds of PR,advertising, marketing, SEO, PPC, social media and webdesign and development are merging. STATE OF HUBSPOT’SHubSpot partners with marketing agencies of all sizes to help PARTNER AGENCYthem cost-effectively provide a broader set of inbound THE PROGRAMmarketing and demand generation services to their INDUSTRYcustomers. The lead generation resources, sales coaching,premium support, expert consulting, certifications andrevenue sharing we provide to our Partner Agencies isdesigned to help them grow. Learn more about how’s HubSpot Partner Program can help your agency craft service offerings and hone a streamlined sales process proven to drive retainer business. Request a Strategic Agency Consultation.
  41. 41. About the Authors: Peter Caputa IV & Patrick Shea Peter Caputa IV is HubSpot’s Channel Sales & Marketing Director. Pete has helped hundreds of online marketing agencies scale and grow their businesses by adopting inbound marketing. Follow him on Twitter: @pc4media Patrick Shea is the Marketing Manager for HubSpot’s Value-Added Reseller Channel. Patrick has written and presented extensively on agency growth strategies, and runs a weekly webinar on agency-specific topics. Follow him on Twitter: @mpatrickshea
  42. 42. A Publication of HubSpot’s Partner Program