3. Executive Summary
The State of the Online Marketing Services Industry
Report was conducted by HubSpot's Partner Agency
Team in the summer and fall of 2011. The survey
consisted of 45 questions, which spanned topics from
agency size and annual revenue to service offerings
and business processes. 750 survey responses were
received.
STATE OF THE
The goal of the survey was to profile the online ONLINE MARKETING
marketing industry as a whole, and identify what SERVICES INDUSTRY
service offerings and business processes were being
leveraged by the most successful agencies. We also
probed respondents around their biggest pain points,
aiming to understand what financial, service and
operational challenges were most prevalent. The
following report contains data and charts derived from
these questions, as well as interpretations of that data
by HubSpot.
5. Agency Breakdown: Organizational Structure
Question: Does your agency have Question: Which specific business functions
professionals dedicated to specific does your agency dedicate resources towards?
functions (e.g. sales, copy writing,
etc.) vs. multi-disciplinary?
Account Managers 21%
Designers/Creative 16%
No
Technology 16%
33%
Sales Professionals
Yes (For New Business)
12%
67%
Copywriters/Bloggers 11%
Internal Marketing 9%
Other 15%
Note: percentages are based on the number of employees
dedicated to a function out of all employees dedicated to
specific functions (sums to 100%)
5
6. Agency Breakdown: Top Service Offerings
Question: What are your agencies top 3 service offerings?
Web Design 15%
Brand Marketing 14%
Social Media 12%
Search Engine Optimization (SEO) 11%
Full-Service Marketing Outsourcing 11%
Content Creation (e.g. ebooks, white papers) 6%
Email Marketing 5%
Public Relations (PR) 5%
Pay per Click (PPC) 3%
Blogging 3%
Direct Mail 2%
Marketing Automation 2% 3 of the top
Video Production 2% 5 services
Application Development⊠2% offered are
Media Buying â Non-Digital 2% web-related.
Media Buying (Digital) 1%
Promotional Products 1%
Trade shows 1%
Affiliate Marketing 1%
Appointment Setting 1%
6
7. Agency Breakdown: Top Service Offerings
Question: What services do you currently offer?
What services do you plan to add in the future?
Social Media 83% 7%
Brand Marketing 81% 3%
Email Marketing 81% 6%
Web Design 81% 4%
Search Engine Optimization (SEO) 75% 9%
Content Creation (e.g. ebooks) 67% 11%
Blogging 67% 11%
Pay per Click (PPC) 53% 12%
Full-Service Marketing Outsourcing 50% 7%
Direct Mail 47% 5%
Public Relations 45% 12%
Video Production 44% 15%
Media Buying â Digital 36% 14%
Trade shows 32% 7%
Promotional Products 30% 6%
Application Development (e.g. mobile) 29% 25%
Media Buying â Non-Digital 28% 8%
Marketing Automation 27% 13% Currently Offer Service
Affiliate Marketing 17% 14% Additional Agencies that Plan to
Appointment Setting 12% 7% Offer the Service in the Future
7
8. Agency Breakdown: Technology Used by Service
Question: Do you recommend or resell software in any
of the following categories?
Email 58%
CMS 52%
Web Analytics 51%
Social Media 46%
Blogging 39%
82% of
SEO 36% agencies
CRM System 30% recommend
or resell
Marketing automation 23%
software.
Pay per Click (PPC) 22%
Media Buying â Digital 18%
Other 7%
Media Buying (Non-Digital) 5%
8
10. Agency Challenges: Biggest Pain Points
Question: On a scale of 1 to 5 (with 5 being the most painful), how painful
are the following challenges?
Cash Flow is Too
3.64
Variable
Not Generating Enough
3.44
Leads
Difficulty Signing Up
3.39
New Clients
Retainers are Too Low 3.23
Client Contracts are
2.87
Too Short
Difficulty Staying Up to
2.63
Date with Technology
Difficulty Keeping Up
2.62
with Client Requests
Difficulty Hiring and
2.53
Retaining EmployeesâŠ
10
11. A Solution: Grow your Firmâs Retainer Base
The most acute agency pain points (from the previous
page, 3% and higher) are, at their core, functions of
sales and/or marketing deficiencies. HubSpot believes
that shifting from project-based revenue and adopting
processes that position your firm to earn retainer
business is the optimal way to overcome these
challenges.
Retainers are a client's commitment to employ their
agency for a defined period of time, for a fixed fee per
month. Most agencies will define the scope of services
they'll provide as part of their retainer, as well as an
estimation of the frequency of those services and/or time
required to deliver those services.
Our most successful Agency Partners have adopted this model and continue to experience
significant growth. We used data from a series of survey questions to test this hypothesis. The
following slides segment respondents into four quartiles, according to what percentage of their
business is retainer-based. We then compare these cohorts to see how agencies with small amounts
of retainer-based clients compare to those with large amounts of retainer-based clients.
12. Retainer Revenue: Percentage by Quartile
Question: What percentage of your agencyâs revenue
is from retainers (split into quartiles)?
1st Quartile 70% - 100%
2nd Quartile 40% - 70%
3rd Quartile 20% - 40%
4th Quartile 0% â 20%
12
13. Biggest Challenge: Challenges by Quartile
Question: On a scale of 1 to 5, how painful are the
following challenges (broken down by retainer quartile)?
Cash Flow is Too Variable 3.85
3.18 Agencies who
sell more
Not Generating Enough 3.69 retainers are
Leads 3.36 less affected by
the industryâs
Difficulty Signing Up New 3.71
3.33 biggest
Clients
challenges.
Retainers are Too Low 3.30
3.11
Client Contracts are Too 3.19
Short 2.29
Difficulty Staying Up to Date 2.82
with Technology 2.64
Difficulty Keeping Up with 2.53
Client Requests 2.60
4th Quartile
Difficulty Hiring and 2.40 1st Quartile
Retaining Employees⊠2.57
13
14. Retainer Comparison: Length, Value & 3-Year Growth
Higher
Longer Larger
Revenue
Retainers Retainers
Growth
14.63 66%
$4,090
9.14
38%
$2,065
Avg. Retainer Length (months) Avg. Retainer Size ($) % of Agencies w/greater than
10% Growth Over Last 3 Years
4th Quartile 1st Quartile 4th Quartile 1st Quartile 4th Quartile 1st Quartile
16. Services Offered: Top Services by Quartile
Question: What are your 3 main service offerings (1st quartile)?
Social Media⊠13%
Brand Marketing⊠12%
Search Engine Optimization 12%
Full-Service Marketing⊠11%
Web Design 10%
Content Creation (e.g.⊠7%
Public Relations (PR) 6%
Pay per Click (PPC) Mgm't 6%
Email Marketing 6%
Blogging 5%
Marketing Automation 2%
Video Production 2%
Media Buying â Non-Digital 2%
Direct Mail 2%
App. Development (e.g.⊠2%
Media Buying â Digital 1%
Appointment Setting 1%
Affiliate Marketing 1%
Trade shows 0%
Promotional Products 0% 16
17. Services Offered: Top Services by Quartile
What is the Delta between the 1st and 4th quartileâs main service offerings?
4th Quartile Agencies 1st Quartile Agencies Focus
Focus More on These More on These Services
Services
Social Media (Twitter, Facebook, LinkedIn) 2%
Brand Marketing (messaging, etc.) -3%
Search Engine Optimization (SEO) 2%
Full-Service Marketing Outsourcing
Web Design -9%
Content Creation (e.g. ebooks, white papers) 3%
Public Relations (PR) 2%
Pay per Click (PPC) Mgm't 4%
Email Marketing 2%
Blogging 2%
Marketing Automation 1%
Video Production -1% Top agencies
Media Buying â Non-Digital donât just focus on
Direct Mail -3% common services
App. Development (e.g. mobile) like web design -
Media Buying â Digital they offer
Appointment Setting differentiating
Affiliate Marketing services.
Trade shows -1%
Promotional Products -1%
17
18. Agency Processes: Robust Sales Processes
What percentage of firms (by quartile) use a Agencies that
number of sales process activities? have robust
sales processes
are 2x as likely
to be in the top
quartile.
4th Quartile 1st Quartile 39%
35% 36%
30% 29%
25% Sample Sales Processes
23%
20% 21%
18% 17% 1. Use a documented sales
14% process
2. Completed sales training
3. Have a standardized set
of questions to qualify
prospects as
0 1 2 3 4 5 opportunities
4. Use a CRM to track
Number of Sales Processes Agency Undertakes sales activities and
(out of 5 processes on right) forecast revenue
5. Have a process to help
Example: 39% of firms that perform all 5 sales processes are in the top quartile prospects establish sales
and marketing goals 18
19. Agency Processes: Robust Delivery Processes
What percentage of firms (by quartile) use a
Agencies that
number of different business process tools? utilize business
process tools
4th Quartile 1st Quartile are more likely
36% to be in the top
33% quartile
31% 30% 31%
25% 27%
23% 24%
21% 20%
19% Sample Business Process
14% Tools
8% 1. Content Management
System (CMS)
2. Customer Resource
Management (CRM)
3. Project Management
0 1 2 3 4 5 6
4. Time Tracking
Number of Business Process Tools Used by Agencies 5. Internal Social Network
(out of list on the right) (e.g. Yammer)
6. Wiki
7. Other
Example: 33% of firms that use 6 business process tools are in the top quartile
19
20. About the Authors: Peter Caputa IV & Patrick Shea
Peter Caputa IV is HubSpotâs Channel Sales & Marketing Director. Pete has
helped hundreds of online marketing agencies scale and grow their businesses
by adopting inbound marketing.
Follow him on Twitter: @pc4media
Patrick Shea is the Marketing Manager for HubSpotâs Value-Added Reseller
Channel. Patrick has written and presented extensively on agency growth
strategies, and runs a weekly webinar on agency-specific topics.
Follow him on Twitter: @mpatrickshea
Takeaways: despite a high number of respondents being on the smaller size, agencies who are larger in size see the value in havving people specialize. Account managers is the highest, meaning folks are focused on deliverables and client relationships.Also, large percentages of our respondents have folks specialize in design, tech and copywriting. Weâll see in a later slide that these are areas smaller agencies outsource for â showing the perceived value of these functions to a growing agency. Do the second chart by larger agency, ? Like 6 to 10 or greater, do they have this function?
Takeaways: this chart is dominated by the obvious. Everyone is asking for social media (whether or not they need it) so everyone says they offer it (whether or not they implement in a way that will drive ROI & leads). Also, its one of the simpler aspects of online marketing â so easy to build into proposals.Brand marketing â a generalist discipline in my opinion. Brand needs to be taken into consideration when doing anything online (colors are important for design, company personality is important when drafting copy, etc). If youâre doing anything with a client you need to know their brand as a marketing company. Easy for folks to align themselves with that one.Email marketing â interesting one here. Offering email marketing indicates an agency has a software provider of choice and is well-versed in CAN-SPAM, opt-opts, managing suppression lists, etc. But it is one of the oldest, most proven online tactics so not surprising so many folks seem to have this capability in house. Other side of the coin â lets look at which services have the largest orange barsContent creation/blogging â content drives everything. If you donât have a content creation resource youâre not driving traffic or new leads.Video â very powerful medium and not lots of folks (I would guess) have either a singular video resource or the time in their day to edit videos. App dev â likely driven by the mobile push and agencies desire to have a service offering when it comes to this.
This chart has the same shape as the previous slides, and very similar descending order. To us, shows that folks are looking to prove their specialties to clients and prospects by showing allegiance to a software platform.
Lets start from the bottom up â hiring, retention, client requests, technologyâŠthe internal function at an agency responsible for these things are all over the place. But the top ones, the most accute pain points, seem to speak to a fundamental problem. Sales and marketing are persistent problems for agencies. Ironically, the agencies who took this survey are hired to provide marketing and some sales services for their clients, but have a hard time doing this for themselves.
People over-deliver on projects so that they can earn retainers. But does it always work out?
We asked survey respondents what percentage of the annual revenue came from retainers.
Web based, recurring efforts, point out ones that mesh with inbound methodology7 out of 10 most significant answers mesh with inbound marketing
Top quartile is focusing more on - Web design is project related