Digital marketing agencies have discovered that finding good data to benchmark themselves against is pretty tough — particularly for those doing inbound marketing.
In light of that, we released the Inbound for Agencies Report 2014 in collaboration with Digital Doughnut, a digital marketing community of experts in the U.K. We were curious to see where agencies stood in the post-crash era and the challenges they face now. We discovered three major pain points that affect digital marketing agencies, and have offered solutions to them below.
Three Challenges That Continue to Persist
Digital marketing agencies outside of the U.S. still have growing pains with inbound marketing due to three persistent problems:
- Talent is difficult to come by, as there are new skills required for inbound marketing.
- Agencies are unclear on how to prove the ROI from inbound marketing.
- Agencies struggle to convince senior managers or decision-makers to open the company wallet and contribute more budget to inbound marketing.
Problem No. 1: Finding the Right Talent
Universities are still teaching the 4 Ps of marketing, so even graduates from top business schools with specialties in marketing are poorly trained in effective modern digital marketing. So how do we solve this dilemma.
Here are some fun facts:
According to Forbes, the top “worst” college degrees to have are:
- liberal arts
- film/photography/video
- commercial art and graphic design
- history
- English language and literature
And why is this of interest to agencies? I can guarantee you that more than one awesome inbound marketer came from these backgrounds. Here are a few examples to prove my point:
- Jay Baer has a degree in political science.
- Cindy Gallop got her degree in English literature.
- Seth Godin has a degree in philosophy (OK, computer science as well!).
- David Ogilvy, the father of advertising, spent his time in college studying history.
- Yours truly? I graduated with a degree in history and politics.
These kinds of graduates have been trained in storytelling, analyzing qualitative data, and structuring essays. They are creative and curious. This is incredibly useful for the content strategy portion of inbound.
According to this infographic from content marketing platform OneSpot, 92% of consumers want storytelling, not ads, from companies.
The point being that with the right training and a can-do attitude, there are innumerable hungry graduates out there with the abilities to learn digital marketing skills and become excellent, insightful inbound marketers.
The Solution:
Run an inbound training course for new hires and those new to inbound tactics at your agency.
The best businesses are those that teach. Using the extensive resources on the internet; there’s nothing stopping people from learning about inbound and applying it. An applicant doesn’t necessarily have to have Google Analytics on their résumé to qualify for a marketing role. What is important is that the candidate is interested in the psychology behind buyers’ decision-making and is willing to experiment and learn.
To build a training program, review these resources:
Gregory Ciotti: No digital marketer can be successful without understanding why people do what they do, and why they make the decisions they make at the point they make it. Ciotti’s blog (He has a marketing blog as well, but I prefer The Sparring Mind.) is a refreshing take on topics such as how people form habits, what drives our routines, and what we are searching for to begin with. These insights serve to complement your digital marketing decisions by helping you understand the data analytics beyond simple numbers.
Convince and Convert: Jay Baer is a well-known social media expert and content strategist. His blog posts are a joy to read, providing both entertainment and insight. He runs workshops, and also produces great ebooks. His knowledge and expertise are great assets to add to your arsenal of digital marketing resources.
HubSpot Academy: The HubSpot Academy focuses on the “full stack” of inbound marketing, from attracting visitors to converting them and closing them. Here, you can find in-depth explainer videos on all aspects of inbound marketing, plus certification paths and blog posts.
Content Marketing Institute: Content marketing is one part of inbound marketing, and Joe Pulizzi and his team run this top educational marketing blog. There are excellent how-to guides for those starting out, plus extra resources such as regular webinars (ask your questions live!), industry research, and the option to sign up for master classes.
Codecademy: This may seem like the odd link out, but in all honesty, being able to simply read and understand HTML and CSS is a massive advantage. The ability to tweak your website or landing pages rather than constantly ask someone else to do it will not only boost your confidence, but open up a world of creativity. Half an hour a day for a month changed my abilities completely. And it’s free!
Problem No. 2: The ROI
This is an issue that comes up year after year. While figuring out the ROI from inbound marketing can be time consuming, it is far from impossible. There are two key figures that senior management has to be able to calculate in any business.
1. CAC: customer acquisition cost
How much of your marketing budget did you have to spend to get one customer? Things to include: cost of ads, cost of freelancers you used, cost of renting venues to host events, etc. Divide the total money spent in a period of time by the number of customers acquired as a result of the activities or actions in that timeframe.
Let’s say it cost $25,000 to run an event, and 124 people came, each spending $150 per ticket. That’s an income of $18,600 ($6,400 outstanding). Let’s say out of 124 attendees, 35 people decided to sign up for your services. $6,400/35 = a CAC of $182.86 per new customer from this event.
Here’s the math: [$25,000 - (124 x $150)] = $25,000 - $18,600 = $6,400 (÷35) = $182.86
2. LTV: lifetime value
How much money are you likely to make from a customer in their lifetime as your customer? Basically, how long on average does a customer from a particular demographic tend to pay you for your services, and how much will they pay you in that time?
Let’s take one of our new customers from the event in the previous example. The person who signed up is a middle manager of a company with 200 employees in the food packaging industry. Based on the historical data you have on this kind of customer, you can assess the number of months/years they are likely to pay for your services. Let’s say this customer is probably going to pay $80 a month for 18 months before dropping off.
That’s a healthy $1,440 LTV, and it’s worth paying $182.86 to acquire!
So what managers need to focus their attention on is finding out if the LTV is higher than the CAC. If it isn’t, you are simply losing money.
But how can you figure out if tweeting for an hour is a valuable marketing activity?
The Solution:
Use an ROI template to assess your inbound marketing ROI, and prove that it reduces cost-per-lead and increases the quality (and quantity) of visitors at the top of your sales funnel.
HubSpot has provided a thorough Excel template, complete with formula, to help you calculate and present the ROI from your marketing. Without understanding which channels are providing you with the best quality leads and highest conversions, you are wasting time and money.
Problem No. 3: The Money
Thankfully, our research has shown that investing in digital marketing will continue to grow over the next year, just as it did from 2012 to 2013 (Gartner Survey). However, that doesn’t mean that the actual quantity of the budget is large in itself. And measuring the ROI of marketing campaign effects such as “branding” isn’t always so clear. But as CrazyEgg blogger Pratik Dholakiya said:
“When measuring the impossible, always tie your strategy to numbers. Especially business outcomes such as leads, sales and profits. Therein lies the true value of everything you do.”
The Solution:
This problem links strongly with the previous problem of ROI. If you can prove that certain activities and tactics will get the company more customers, as well as reducing the cost of acquiring those customers, it will be impossible for your request for a larger budget to be denied.
It continues to be difficult to convince the decision-makers in clients’ companies to spend the marketing budget on inbound rather than traditional branding and advertising tactics. With the monthly marketing ROI excel template listed above, and others such as this report on inbound ROI and this ebook on marketing analytics, the problem of proving ROI (and therefore having the data to convince senior management) is solved!
There Is Good News for Digital Marketing Agencies
Inbound marketing (which includes SEO, social media, blogging, PPC ads, email marketing) continues to prove its worth by generating more leads and reducing the cost per lead. Even more exciting for the agencies surveyed was the expectation that marketing budgets would increase, as well as the demand for inbound services from clients. Take a look at some of the results we found:
Want to read all the data collected in our survey? Download the free report by clicking below. 
As more and more agencies turn to inbound tactics, the philosophy of inbound should not be forgotten.
