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How To Build a SCALE-able Agency

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Transcript

Introduction

Marcus Murphy: Marcus Murphy and I'm going to be your host today. If you're here right now you are learning and very interested in ways that you can grow and scale your agency. Well, you're in for a treat today, because we have a very special guest, the CEO and Founder of Digital Marketer, Ryan Deiss, who has joined us. Hey Ryan, how are you?

Ryan Deiss: Hey Marcus, how are you? Can you hear me okay?

Marcus Murphy: I can hear you just great. Well, thanks for making the time today. Obviously, we're excited to share what's working and hear your take on how to scale an agency but businesses in general.

While we're getting some of these answers that are coming in, would you mind giving us a quick overview of why this topic and why maybe this is near and dear to your heart?

Ryan Deiss: We get the benefit of getting to see behind the curtains of a lot of agencies that are at varying degrees of size and experience and tenure and also levels of success. It's been a really fun study over the last couple of years, diving into what are some of these combined factors? That's a bit of what I want to go into. 

Also, there's a lot of concern right now, among people about what if we go into a recession? I want to touch on that. Let's talk about, it's really fun to get to talk about this stuff. I'm excited to dive in and get started. 

I'll very, very briefly say a bit more about me and the company. The person you just heard from Marcus Murphy is. He heads all things; partnerships and business development at Digital Marketer. 

He also is our primary agency liaison. He gets to work with a lot of agencies, directly and much of what I'm going to be sharing with you today about how to build a truly scalable agency came from a lot of the data that Marcus has gathered as well. 

What Does it Mean to Have a Scalable Agency?

I really want to emphasize this notion of scale. What does it mean to have an agency that is able to scale? Okay, what does it mean to build an agency that is able to scale? Because agency life can be really, really great. It can be a phenomenal business and certainly, it's doing great work. 

The work that you do is valuable, you're helping other businesses grow. In helping those businesses grow, you're not just helping the business owners, you're helping the employees and ultimately, you're helping the people that they serve. 

The downside, the agency life is very often it doesn't scale. Oftentimes, people get into the agency game or they become a consultant almost by accident. 

You start off doing a little bit of work for somebody the next thing you know, you pick up another client and then another client and you're doing a little bit of everything for a little bit of everyone. It can be really difficult to then build a business that is able to scale. We're going to talk about really how to build a business that is able to scale. 

Also, one of the big questions and concerns that we've been hearing a lot from our community is, what does it mean for us as agencies, if there's a recession? We've had this unprecedented bull market really across the entire planet across not just in the States and Western Europe, but there's been a boom, an economic boom, I know, different era, varying degrees in the Fahrenheit but in general, it's been pretty good for the past 10 years. These cycles usually don't last as long as this one does.

A lot of people are saying, what does it mean? How can I make sure that I guard my agency, but I'm that I can be okay if there is a downturn? Personally, I'm optimistic. I think that the things are going to be still pretty solid for a while, but whether your goal is to grow in good times or sustain in flat or even downtimes, these critical skills that I have to share with you, I believe are going to be really meaningful and really helpful, no matter what happens. 

With that said, let's dive in and talk about really three critical skills that you need to master as an agency, if you want to scale and if you want to be able to sustain. 

The Importance of Copywriting in Digital Marketing

The first really critical skill that I believe you must master as an agency is copywriting. The reason I say that you must master copywriting as an agency is that I believe, clients will always demand better performance from their existing campaigns. In good times, clients want it to be better. 

If things are going well, and everything is just up into the right, clients are wondering why it's not better. If things are beginning to dip and decline, that's when clients start to panic, and they start to say we want to get more from what we're already doing.

The simplest way to do that is simply to have a better copy. I know this sounds simple, I'm not exactly starting out with some massive breakthrough, and I apologize for that. It's so important that I wanted to start with it. 

Because I see so many agencies today, especially digital agencies...they're very heavy on the technical side. We forget that just because you get found, just because your clients...because people find them in Google because they see their ads; if the copy isn't strong enough, then they're not going to click on it. 

Much worse than that, if you do succeed, so you succeed, and you get your clients to rank. Whatever it is that you're doing, if it works and you get that visibility that your clients say they want, if it doesn't convert, once they get the traffic, they're still going to blame you. Having some background in Copywriting is really, really, really critical. 

Why copywriting? Why do I believe that you should absolutely be spending a lot of time focusing on this area and making sure you're brushing up on it that you have somebody in your team who is a true copywriting professional? 

Number one, it's essentially free to deliver. The margins are outstanding if you can start getting paid to craft a high converting copy. Once you've mastered that skill personally, there's no additional cost of delivery. 

Also, I'll be honest, it's hard. Being great at writing copy. Being a truly exceptional copywriter is difficult. That's why no one wants to do it. If you can begin to start writing copy on behalf of your clients, it's a great way to get them to stay. 

It's really good for stick and retention, and then also the bar is just really, really low. While it's difficult, being better than everybody else is not that hard because everybody else is so terrible at it. They're also not learning how to do it the right way. They're not going to the best sources. I'll give you some of the best sources to go if you really want to, brush up on your studies. 

I truly believe it's the ultimate force multiplier. Because everything is copy. Ads is copy, the emails that get written is copy, landing pages involve copy. If you can develop great copywriting skills within your agency or within your consultancy, it's just going to make everything that you do that much more effective. 

One of the things that we teach at Digital Marketer, our overarching concept that we share is really the eight critical core disciplines of digital marketing. The ability to strategize and to craft and architect a high converting conversion funnel. 

Being able to think holistically about how do we acquire? How do we engage? How do we then convert? How do we get them to ascend and retain? Thinking through the entirety of the customer journey, we think that's critical, as an agency.

Also, the ability to understand some basic content marketing and basic paid traffic. Again, whether it's search marketing or social ads, email marketing is going to be critical. 

Data analytics, the ability to test and track and then, of course, testing and optimization, continuous improvement. These are the eight critical core disciplines of digital marketing. At Digital Marketer, we have created eight flagship certifications around each of these eight areas.

The reality is there is one that we believe is overarching that you got to have, you want to do all these well, and again, that comes down to copywriting. If you are great at crafting copy, every single one of those other things becomes that much more effective. 

Whereas if your copy is bad, it doesn't matter how technically great you are at acquiring traffic or optimizing for search engines or at running split tests. If the message is bad, the marketing will fail. 

When it comes to how do you get better at writing copy? Thankfully, the rules haven't changed. I'm going to give you some book recommendations. If you haven't read Ogilvy on Advertising, read Ogilvy on Advertising. It's a classic, and it's a great book.

Another one: Scientific Advertising by Claude Hopkins. This book was written in the early 1900s. Okay, but Claude Hopkins was one of the first truly great ad writers. Claude Hopkins took Schlitz beer, which was a no-name beer company in the states and made it the number three beer company in about 12 months just through better copy. They didn't change the formula. They didn't really change their ad budget or where they're placing ads, he just changed the messaging and propelled it to number three, probably the best.

If you told me like Ryan, you can only have one, one book on copywriting and advertising it would be this one, Breakthrough Advertising by Eugene Schwartz. This book is pretty expensive if you can find it but definitely do a Google search. It's worth having in your library, and it's definitely one that's worth reading. 

Tested Advertising Methods by John Caples, if you've ever heard of the ad, "They laughed when I sat down at the piano, but when I started to play..." John Caples wrote that ad, it's one of the most famous headlines that's ever been written. 

Another one, The Wizard of Ads. This is actually the first book in a three-part trilogy, I would get all three books, I would read all of them, have them all in your library. 

I know I'm spending a lot of time frankly, just making book recommendations, but it's because the best stuff was written down in books decades ago. The information is there I'm just telling you, most of your peers, your competitors, they're not reading this stuff. They're only reading blogs on how to optimize stuff and do their testing. They're forgetting about the tried and true practices. 

I want everybody here to remember that marketing did not start with the advent of digital. This has been around since before, basically, all of us were born. We have so much to learn by going back and studying those who came before us, and at all times we are standing on the shoulders of these advertising, of these marketing giants.

Commit to being the type of agency, the type of consultancy that can crank out high converting copy because still to this day, copywriting is the highest paid profession in all of marketing and advertising. 

If you go to all the biggest advertising agencies out there the copywriters get paid more than just about everybody else who's on those teams because great agencies, great consultancies, they know that copy is where everything begins, and where everything ends. 

Before I get to critical skill number two, Marcus, do we have any questions? 

Marcus Murphy: Yeah, it's like you read my mind. Do you recommend that the person who's running the agency should be the one writing the copy? If also, they're writing the copy? When should they start looking for someone to hire to take that over?

Ryan Deiss: Okay, cool. The question about should the owner do it? Should you hire somebody else? I think it's worth doing yourself. It's high enough leverage activity that it's worth doing. Look, if you hate writing, if you don't want to do it, then I think you got to hire somebody sooner rather than later. What you do is have them read those books that I just shared with you. 

You can absolutely learn to be a great copywriter or have somebody in your team learned to be a great copywriter, by having them read those books. Then and this is key, have them actually start writing great copy and begin to test it. I think, as the owner, it's worthy of your investment as well.

I think if you want to have an agency that scales, then write great, get good at writing great copy. Because you can hire people who know how to do search. You can hire people who know how to do social, you can hire people who understand how to do all the technical aspects, but if they're doing the technical aspects for messaging that doesn't convert particularly well. 

The Importance of Email Marketing for Agencies

All right, critical skill number two, Email Marketing. What's the way that you can deliver more sales from less spend? The first is you have copy that converts better, and the second is email. 

Email today is still the channel that drives the bulk of sales for the bulk of companies. It is still the thing that works. When we think about, why email? Simple, it's still the thing that works the best. It's not dead. 

Slack was supposed to kill email. Social media was supposed to kill email. Millennials were supposed to kill email, yet still I bet, the first thing that you do every morning when you wake up...your email and everybody else does multiple times, every single day. It is still the channel.

Think about social, and having to advertise within social, you're competing with people who are willing to just do crazy things. You're competing, its adorable cats and puppies, you're competing with this constant feed of stuff that's designed to be distracting, that's what it's there for. 

Yet, when you put a message in somebody's inbox, or when you put a message in somebody's inbox on behalf of your client, they're reading that message, or it is as distraction-free as digital can get. It's also just more intimate, right? 

They're not having to download another app, you're not having to have them login to another area to make it work. Everybody knows how to use email. Everybody knows how email works. One of those is it just works. It just works because everybody knows how to use it.

Still, to this day, average email open rates are around 22%. It dropped, but it stayed. There's places where they get way, way worse than that, but some get up to 40%. Especially, if you do what I'm about to show you how to do or help your clients. Do what I'm about to show you how to do, email just still works. 

It's been forgotten because it's boring. It's been forgotten because it's old. It's not the cool, sexy thing. Probably your clients aren't even asking you about email, and yet, if you can do better email on their behalf, they're going to generate more sales and they're not really going to care about happened. They're just going to be glad that it did. It's a bit like better copy. It's the thing that everybody ignores. It's the thing that the people haven't been improving, and yet it just continues to work. 

I think that doubling down on email is an opportunity to zig while everybody else is zagging. Just my take.

Now with that in mind, I want to talk about what I think the next big thing is. I believe the next big thing in marketing is the Email Newsletter. Yes, that's right. I think the next big thing in marketing is an email newsletter actually done well. 

I can tell you, for us at Digital Marketer, we made a huge mistake. We used to send out an email newsletter. We would send emails, and we put content in people's inboxes. 

Then when blogging happened, a lot of that content shifted from being sent directly to people's inboxes to just, "Well, we'll just put it over here on a blog. Then they can go and read it." We'll send an email telling people to click a link and go and read it on the blog. 

Well, the problem is that as there's some so much content out there, as there's so much blogging going on, the content that's on the blog is getting devalued. Also, people don't want to necessarily click a link to go and read on the blog. 

On just about everybody's homepage is an email app. You have an opportunity to put content not merely on a blog for others to read or for search engines to find that's great. I'm not saying you shouldn't be doing any type of content marketing, blogging, especially for search, you’ve got to. You have a phenomenal opportunity to push content directly in the email inbox through email newsletters.

If you will start putting content in the inbox again, you will find that email as a whole starts performing a lot better for you and for your clients. I wish I could take credit for noticing this trend again. If you look at some big media brands, they recognize this, they made a pivot. 

Quartz is a massive, digital-first media company. They've got high traffic site, lots of great content on their site, but what they realize is the people who were going to the site where people who are clicking on emails, or they were beginning to read a portion of the content in the email, then they were clicking on it to read the rest. 

They said, "What if we just send out newsletters these folks and advertise?" Within that, they found it was one of their most engaged audiences. They were also a tremendous more advertising in those newsletters than even on the website. Vox, which is another very modern media company, they now have an entire division at Vox that's just around newsletters. 

Now, if you're thinking, "Okay, this is all fine. These are a lot of consumer examples. For me and for my clients were more B2B." I would refer you to CB Insights. CB Insights, the thing that really launched this brand, and what the founder credits for the bulk of their success is an email newsletter. 

I will also say they win Digital Marketers’ Award for the best email subject lines. I would take a note cbinsights.com/newsletter, you'll see the link down there at the bottom. You will see, they have a list of a lot of their subject lines and they're crazy. One of them that I saw, the subject line was “Yum, Plant Blood”. What a crazy subject line for a B2B type of offering. 

You can learn a lot all of these different examples. You can see because I would write these down, I would subscribe to all of them to see how they do it.

My advice as an agency, double down on email, get really great email marketing. Once you've helped your clients acquire leads, then following up with those leads is practically free for them, but it's going to make all the marketing that you do work that much better. I highly recommend you help your clients launch an email newsletter, and it might even make sense for you to launch an email newsletter as well. 

How Partnerships Facilitate Scalable Agencies

Okay, critical skill number three, and this really gets them to how do you organize and what should be the structure of your agency if you want it to be scalable? That comes down to partnerships. 

How do you get to the point where you can say yes to a client without having to learn to do everything yourself? I think the harsh reality is size is a liability for just about any business, in growth, but especially if we do take a downturn, the size of your company, the more people that you have, the more mouths that you have to feed can be a tremendous liability. 

Now we have a lot of folks have sought to overcome this is through outsourcing. "Okay, great. We'll just outsource this to somewhere else in the world. Somewhere, elsewhere, we can get it done for less money." That's okay. The reality is, is that outsourcing still digs into margins. Maintaining the standards is difficult, if not impossible.

Outsourcing can be good for scale, but to proclaim it as the answer, I think it's a bit of a challenge. If you've done a lot of outsourcing you probably experienced this as well. At the end of the day, you add headcount, you're adding overhead, your margins are going down.

Well, for companies to grow, they need to go out and just take whoever they can take, whoever's willing to pay. This creates a reduction in specialization; we can no longer specialize. 

This reduction in specialization to the sake of scale leads to an increase in commoditization. Now that you're no longer doing anything special, the services that you're doing are a commodity that can lead to mechanization.

In other words, service degrades as you scale. The desire to add more clients can actually cause you to lose more than you gain. If you're an agency that's attempted to scale and you added a bunch of headcount, so you can grow and then you found that didn't work.

What's the solution? Just taking a step back and looking at organizational models as a whole, the first organizational model that most of us are familiar with is the Corporate Model. 

We need to grow our team, we hire a team, they're going to work on long term open-ended jobs that last for years. Hire employees. This is the Corporate Model, this is the way most companies are structured. 

The other model that's coming to popularity lately is the Gig Model, working with freelancers. This is where you're going to have short term tasks done on a project basis by a handful of people. 

What's cool though is there is this happy middle between the Corporate Model and the Gig Model, and it's called the Hollywood Model. This is something that Hollywood has been doing for literally decades, but agencies haven't looked at it and realized, "Well, I can do that. We could adopt that same model." 

The Hollywood Model is where a project is identified, we're going to make this movie. We're going to make Terminator 7 or whatever one we're on. A project is identified, a team is assembled. It works together for as long as it's needed to complete the task. The movie is over and then it disbands. Then they'll come back together to work on another project, and then the work on another project. 

Let's look at the Hollywood Model and compare it to the Agency Model and see what we can learn from it. The first role in Hollywood Model is the producer, the producer is the person especially the executive producer, they're funding the project. They're the ones who expect the positive ROI. In this case, that's your client. In the movie business, there's a producer, in the agency business there's a client. 

Then you have the director, the director owns the entire journey. They coordinate the process. From an agency perspective, this is the strategist. If you're going in there and you're setting the entirety of the strategy, then this is you. 

Then you have the star, the star is the spokesperson or the face of the brand. Essentially the star is the brand, whoever the brand or whatever the brand is. Then we have specialists, if we think about specialists in the movie business, this is everybody, this is the cinematographers the folks handling lighting. In the agency space, this is an outside team, that consultant, that group who's really phenomenal at a specific task. 

Then lastly, we have the supporting cast, the supporting cast. Ideally, you're working with clients who have their own in-house team so that you can avoid adding some overhead but maybe this is where you're bringing in some contractors or some freelance stuff, and marking that up having the clients pay for it and marking it up. So for you as an agency owner, what is your role? Which one are you? 

Remember, there's the producer, there's the director, there's the star, the specialist, and the supporting cast. Which one are you? You are obviously not the client. You also shouldn't be the star, that's the spokesperson, that's the brand. Hopefully, you're not the supporting cast; you're leveraging, some outside folks to do that. 

If you want to be an agency that is able to scale, you need to choose, are you the director? Or are you the specialist? If you are the director, if you are the one setting the strategy, then your number one goal is to figure out how do you partner up with the specialists who can do the specific work that you can strategize around. 

Because if you try to be both the strategist and the specialist, you're going to have to hire a massive team, you're now going the corporate model. Good luck with that.

Similarly, but alternatively, if you're a specialist, you're saying, "You know what, we do Facebook ads better than anybody else in this particular industry." Or, "We do search marketing really, really great." Or, "We do email copywriting." 

Then your job is to figure out how to partner up with the strategists who are setting the strategy so that you can begin to work through them. You don't have to do a lot of your own prospecting. You don't have to build your own sales team. 

That's why I believe that the key to being a scalable agency is partnerships; know which one of those that you are and partner with the other. I'm going to make an insanely unpopular opinion, I believe that there is no such thing as a full-service agency. 

I believe there are lots of agencies trying to go full service, I don't believe that they actually exist in a way where they truly can deliver full-service offering in house. To sum it up, the stable agency does not build a massive in house team, but instead will learn to work with outside specialists as well as with the client's own team. This is what I believe it means to build a truly scalable agency.

Now's the time to begin forging those relationships. Who is doing the work you don't want to do and you can do the work and they either don't want to do or they don't have the time to do? Make that your mission as you head into 2020, and beyond, that you're going to form those types of partnerships. 

If you're looking for a community where you can meet these types of folks and make these types of relationships, just know that, that's what we do at Digital Marketer. It's what we love doing, and we love making these connections. That's quite literally what Marcus spends a significant amount of his time doing. 

Whatever type of market you're obviously I would love, if you're an agency or consultant, I'd love to have you in our certified partner community. Even at the most basic entry-level, get in our lab community, just talk to other marketers and form these relationships. I truly believe it's the key to scale is making these relationships.

All right, so just to recap, and then we'll open it up for some questions that we haven't got to master the art of salesmanship in print. Great copywriting makes everything you do perform better, it's going to make you look a lot smarter and better looking. 

Double down on email marketing, sounds simple, it sounds old, it sounds outdated, and yet nothing that we're doing today is outperforming it. Then invest in your network, either be the strategist or be the specialist, but "full services" is a myth. Form the relationships be okay saying to your clients, "You know what, I can get that done for you."

Marcus Murphy: You answered the majority of the questions that came up by the way just by getting through your presentation. 

Ryan, thank you so much. This was really helpful. All the comments, people were saying thank you. Thank you. Thank you. Great job. Yeah, thanks for making the time.

Ryan Deiss: Awesome. Thanks, Marcus, for moderating. Thanks, everybody who came. Thanks for the great questions and go out there and build a scalable agency. 

Marcus Murphy: All right, thanks so much. Take care, everybody.

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