The Great Agency Mistake: Why you should growth hack.

The Great Agency Mistake: The reason why tech companies have moved away from agencies, media companies and PR houses is because of a logical error, lack of return on investment and a poor value proposition.

The Agency says to the client give us X money and a fat retainer for very little work, and  take a risk that we may deliver.
Already a lousy deal, because if a company is half as good as it says it is, then delivery should not be a problem.

The Tech company then says ok Agency, tell you what we still like you even though what you propose is insane, how about we pay you more but only if you deliver.

The agency clearly shocked says but that means I have to take a risk, we can’t do that, and the tech company says then why should I? If you were half as good as you claim, it would not be a risk.

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So how did this insane bad value model even come to be: A brief history.

During the 80's and 90's this is how all Ad Agencies worked, they had their major clients tobacco, booze and usually one other as a trinity. This trinity functioned as a fat cash cow where they never had to justify any return. Ad agencies then did other work for other smaller companies at the same rates, those clients would eventually run out of money and fail, but new ones bright eyed and sold on the miracle of "Advertising" would soon popup blindly and take the place of the formerly deceased smaller advertising clients.

Then when in the Mid 2000's in a galaxy that looked exactly like our own. PR companies and Digital Marketing agencies emerged in the late 2000's and with no model to work from adopted the Ad agency model and everyone was as happy as a homeopath selling coloured water.

Fastforward to today, big brands realised they were paying tens of millions a month to retain 5 or 6 people, and that it was the worst business idea in history. So not being able to quit advertising, they ended up in the case of tobacco buying out their ad agencies, or in the case of other businesses just moving it in house and hiring 5 or 6 people for decimal fractions of what it used to cost them.

If you look at the landscape today, most of the great names that used to exist, are actually owned by former clients as their inhouse agency. The bubble had burst, because they had failed to adapt to a modern age of business where MBA's could work out ROI, and geeks could do the math and both smelled a rat.

This is why today's tech companies Growth Hack, and those that don't pay for CPA. So should You!