No more fixed budgets, rigid marketing calendars and long lead times: meet the new ad agency model

The new model centres around continuous scale wherever possible, as long as you’re hitting the required KPIs.

Over the last couple of years, the most interesting thing I have noticed when studying the brands dominating in the digital era is that most of the successful new big market disruptors - those making millions of dollars a month from online ads alone - have risen to fame thanks to their own internal marketing teams. This is especially true for those in the e-commerce space, who have grown predominantly through Facebook advertising.

Why are not these Facebook “unicorn” success stories as common amongst clients managed by agencies?

It was only a few years back that Facebook was seen as the channel for engagement and page likes. The introduction of custom audiences, pixels and dynamic ads transformed what Facebook could offer for performance marketing. However, it is a lot faster to innovate than it is to change market perceptions.

As a result, the small percentage of total budgets being allocated to Facebook meant less attention on the platform from larger agencies, and in turn, lower competition in the auction. This created an opening over the last few years that many ‘digital disruptors’ have taken full advantage of, and still are.

Companies such as HiSmile and The Fox Tan are some examples of brands who have excelled at scaling profitably through Facebook ads on a global scale. As explained by Justin Gaggino of HiSmile, they ditched the traditional advertising route as they felt that agencies would not understand or care about their brand the way they do, and would have difficulty managing their account 24/7.

Rather than allocating eight to 12% of their total budgets to social platforms, which would be the norm for many agencies, a staggering 90% of HiSmile’s budget is spent on social media advertising. Launched in 2014, HiSmile is now on track to turn over $100m by the end of 2018!

Working at Facebook for two years and helping numerous brands disrupt through Facebook and Instagram advertising to scale globally, led me to see what I thought was a huge opportunity in the market to offer a different level of service to potential e-commerce disruptors.

How does the new ad model work?

The new model centres around continuous scale wherever possible, as long as you’re hitting the required key performance indicators (KPIs). No more fixed budgets, rigid marketing calendars or long lead times on creative production that’s intended to be a one-size-fits-all approach. For instance, in May, we used the new ad model to help The Fox Tan, achieve $1m in Facebook ad revenue that month.

The new model tends to function seven days a week, with almost 24/7 coverage, and is incredibly responsive. The traditional weekday 9-to-5 timing is no longer a sufficient service model if you’re looking to help your clients compete at the highest levels.

But what about automation? The tools to automate campaigns are not foolproof, especially when you’re spending a million dollars a month on a single ad account, or $10,000 an hour for a client during primetime hours. For instance, we once had an incident where at 5am on a Saturday morning, the Facebook API was not syncing with third-party automation. If we hadn’t manually turned on all ads that were on dayparting, the client would have missed out on $7,000 in ad revenue over the next two hours alone. Nor can they call your clients at 1am when Facebook cannot process their credit card which would result in lost revenue through the night.

Another aspect of the new model is the shift away from long-term contracts. It does not take six to 12 months to demonstrate results online. The new model is shifting towards a “Try before you buy” approach.

There are still many clients in the market who would be satisfied with the traditional ad agency model. However, for those looking to capitalise on this narrowing window of opportunity within Facebook advertising, the only way they can compete successfully is by ditching the old model approach.

Rich Burns is the founder and chief executive officer of ROAS Media.

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