Many of nexus-security’s customers are marketing agencies using nexus-security Advisor for Agencies to enhance their client services. We wondered – could we gain insights into today’s typical agency operations by surveying this customer group and then share that data?
That’s precisely what we did! We surveyed our agency clients, gathering data from nearly 200 marketing agencies globally, of varying sizes, all offering paid search marketing services. These agencies answered 10 questions about their target industries, service offerings, pricing models, biggest hurdles, growth strategies, and more.
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Discover the findings of our State of the Industry report below – learn how agencies are thriving in 2017! (And don’t miss our 2018 State of the Agency Report).
How do agencies determine pricing for paid search services?
Agency pricing models Almost half of the respondents determine fees for paid search services based on a fixed fee or retainer. Less than a third (28%) base their pricing on a percentage of ad expenditure, while only 12% utilize billable hours. (Using billable hours might undervalue your services if agency software enhances your efficiency.)
What percentage of ad spend do you charge?
How agencies determine fees based on ad spend percentage Among agencies using a percentage-based pricing model, the majority (39%) charge 15-20% of the client’s ad spend, while a quarter (25%) charge 10-15%. A mere 5% of agencies charge below 10% of the ad spend.
Do you charge new clients a setup fee?
Agency set-up fees Around two-thirds of agencies have a setup fee for new clients, which is logical since establishing a new account or reorganizing an inherited one can be among the most demanding and time-intensive aspects of paid search management. If you’re not charging a setup fee, it might be worth considering.
Do you have dedicated full-time paid search employees?
Agencies with dedicated full-time paid search personnel Very few of our agency clients have over two full-time employees solely focused on paid search, implying that most personnel wear multiple hats and juggle various tasks. Approximately one-third of respondents have only one full-time employee dedicated to paid search, while another third have none exclusively assigned to it.
What other services do you offer?
Services provided by online marketing agencies A significant majority (around 85%) of surveyed agencies also provide SEO services. Web development, social media management, and content marketing services are also prevalent, at 83%, 81%, and 77% respectively, followed by email marketing, display marketing, and creative services. “Other” responses included a wide range of services like video production, conversion rate optimization, local advertising, branding, PR, reputation management, managed chat/texting services, sales coaching, and print advertising.
What amount of time does your agency dedicate to paid search?
Time allocated to paid search management at agencies We’re pleased that our software helps most clients dedicate less than 25% of their time to paid search management!
Want to revisit this report later? Download it free here.
What are the most significant challenges facing your agency this year?
Top challenges encountered by digital marketing agencies The primary hurdles for digital marketing agencies in 2017 are time management (39%) and client acquisition (38%). Less than 10% of agencies grapple with client retention, training deficits, or staying updated with paid search developments.
Do you anticipate an increase in managed paid search spend this year?
Marketing agencies’ growth projections A considerable 61% of our agency clients project an increase exceeding 25% in the paid search spend they manage this year. Roughly a third anticipate growth below 25%, while only around 5% of marketing agencies aren’t projecting growth in the paid search domain.
Which industries do your clients operate in?
Predominant industries served by digital marketing agencies The industries leveraging agencies to handle their online advertising are diverse. Popular sectors within these agencies’ client portfolios include e-commerce, home services, real estate, automotive, and legal. “Other” responses were again varied, encompassing verticals such as food/restaurants/hospitality, tourism/hotels, education, fitness, healthcare, finance, non-profits, and construction.
What percentage of the paid search accounts you manage were not initially set up by your agency?
Agency-created versus inherited paid search accounts Less than 10% of agencies primarily handle inherited paid search accounts they didn’t establish. 63% of respondents state that less than a quarter of the accounts they manage were not created in-house.
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State of the Agency in 2017: Key Findings
These survey results highlight a few overarching trends:
- Agencies are incredibly busy! They offer a wide array of services to businesses across various industries, often without dedicated personnel for each task. This makes time management crucial, and growth hinges on finding ways to enhance client work efficiency without compromising quality.
- Retainer pricing with a set-up fee is the most popular pricing model. Agency pricing models differ, but flat-fee or retainer structures are almost twice as common as percentage-based pricing. Furthermore, the number of agencies using a set-up fee is almost double that of those who don’t.
- Growth presents its own set of challenges. Most agencies aim to increase their managed paid search spend by over 25% this year, yet attracting new clients is identified as a major obstacle. Again, efficiency is key to enable agencies to allocate time for client acquisition amidst their demanding schedules.
For comparisons with other years, here are the other reports:
- State of the Agency 2018
- State of the Agency 2019
- State of the Agency 2020 Were there any surprising findings? Any other burning questions about agencies you’d like answered? Let us know!