Although we started web advertising, the expected results have not come out. Alternatively, there are too many advertising agencies, and it’s unclear which one to trust. Many company representatives have such concerns.

This article does not merely list the pros and cons of web advertising agencies. It will thoroughly explain the "5 criteria" you should know to determine whether to work with an agency or manage it in-house.

By understanding these 5 points, you will be able to grasp the true meaning of fees, the most common pitfalls when choosing an agency, and long-term risks, thus revealing a specific path to establish the best partnership for your company.

1. The True Meaning of "20% Commission": It's an investment in the "time" and "expertise" of a professional team, not just a flat fee

When requesting web advertising operations, the most common fee structure is the "commission rate type", calculated as a percentage of the advertising cost. The market rate is considered to be about 20% of the advertising cost.

Looking at just this 20% figure, you might feel that the costs are high. However, this fee is not just the agency's profit (margin). It is a payment for essential ongoing and advanced specialized work necessary to maximize the results of web advertising.

Specifically, this fee includes the following expert tasks.

• Daily Management and Optimization: Daily account management tasks such as bid adjustments, keyword selection, and target setting reviews to maximize results.

• Data Analysis and Reporting: Not only reporting figures such as impressions and clicks, but also analyzing why those results occurred and creating clear reports that include areas for improvement.

• Rapid Response to the Latest Information: Changes in advertising platform algorithms and additions of new features occur frequently. As experts, they continuously track these latest trends and immediately reflect them in strategies.

• Executing Rapid PDCA Cycles: Creating multiple patterns of creatives such as banners and landing pages (LPs) that impact advertising results, and repeatedly conducting A/B tests to improve effectiveness.

Running web advertising is not just about buying media placements like mass advertising, but requires daily adjustments and optimizations. This 20% margin is the payment necessary to invest personnel in these ongoing and advanced specialized tasks.

In conclusion, the 20% commission should be viewed as an "investment in time and expertise" to delegate these specialized tasks to external professionals, allowing your company to focus on its core business.

2. The Most Common Mistake: Mismatch Between Your Company's Goals and the Type of Agency

Thinking of "advertising agencies" as a single category is one of the most common mistakes in agency selection. In fact, there are various types of agencies, each with entirely different areas of expertise and strengths. If you choose an agency without clearly defining your company’s objectives, you won't achieve the expected results.

It is important to assess which type of agency is optimal based on your company’s goals.

[Professional Insight] Before starting to look for an agency, first define your goals. If your top priority is to improve brand recognition, you should consider a full-service agency. If maximizing acquisition efficiency for your e-commerce site is the supreme goal, focus on web advertising specialized agencies.

By clarifying your objectives, you can efficiently narrow down potential partners that really match your company out of the many agencies.

3. The Logo of “Official Partner” is Not Just for Show: It is a tangible proof of reliability and information access

Logos such as “Google Premier Partner” and “LINE Yahoo Sales Partner” are often seen on agency websites. Do you think of these as mere decorations or badges for authority? In fact, these certifications are very practical indicators to objectively assess the agency’s capabilities and reduce risks for those who rely on them.

Choosing certified partners, particularly those in top ranks, has the following specific benefits.

• Objective Proof of Performance: For example, "Google Premier Partner" is the highest status that is only awarded to the top 3% of agencies participating in the Google Partners program. This is an objective proof that the agency has passed strict standards such as advertising expenditure, client growth rates, and number of certified qualification holders, demonstrating that it possesses high operational skills and achievements.

• Priority Support from Platforms: Certified partners can access dedicated technical support and resources from platform operating companies like Google and LINE Yahoo on a priority basis. This helps minimize the risk of opportunity loss during incidents such as ads not being approved or issues occurring in accounts. This serves as an invaluable insurance to minimize opportunity loss during campaigns, difficult to quantify in monetary terms.

• Early Access to the Latest Information: Partner agencies may receive important information about new features (beta versions) or algorithm changes before they are publicly disclosed. This "information advantage" allows for the introduction of new methods ahead of competitors, thereby enhancing campaign effectiveness.

These official partner certifications guarantee that the agency has dependable performance and can access crucial information networks. Make sure to verify this as an important risk management tool in agency selection.

4. The Biggest Hidden Cost of Using Agencies: The Long-Term Risk of “Lack of In-House Accumulation of Know-How”

The most overlooked cost of using agencies is not the monthly fees. It is a serious risk that narrows down business options in 5 or 10 years. This long-term business risk arises because advertising operations have been entirely entrusted to agencies, leading to the lack of in-house accumulation of know-how.

While short-term efficiency may be gained, this "know-how hollowing" could lead to serious issues in the future as follows.

1. Over-dependence on the agency: Due to the lack of internal expertise, you may not be able to properly evaluate or judge the proposals and reports from the agency. As a result, you may become controlled by the agency's demands, losing the ability to build a constructive partnership.

2. Difficulty in future in-housing: If the business grows and the decision is made to conduct advertising operations in-house (in-housing) in the future, you will be forced to start from scratch. Recruiting and training operable personnel requires substantial time and costs.

3. Gap in business understanding: Agencies are advertising professionals, but it is difficult for them to understand the subtle nuances of your business, products, and customers better than your employees. If the "hands-off" state continues for an extended period, the agency's proposals may begin to diverge from real-world sensibilities, resulting in stagnating results.

[Common Pitfalls and Measures] The key to avoiding this risk is to redefine the relationship with the agency from being a "vendor" to a "partner." Instead of fully outsourcing, be consciously aware of the following actions.

• Actively participate in regular meetings: Don’t just listen to the report results, but deeply question the "why" behind the measures.

• Share your company information proactively: By actively sharing the latest business information such as new product information, feedback from customers, and market trends, the agency can develop more accurate strategies.

Such proactive engagement transforms the relationship with the agency from mere outsourcing to a "learning opportunity", allowing for valuable know-how accumulation within the company.

5. Practical Checklist for Choosing an Agency Without Failing: Important Items to Decide Beyond Just Fees

Considering the four truths explained up to this point, we finally arrive at the practical steps for choosing an agency. Rather than judging solely by the low commission, comprehensively check the following five items to discern the most suitable partner for your company.

• Track Record: Are there successful case studies in the same industry as yours? If possible, ask about the concrete figures such as how much CPA or ROAS has improved.

• The Account Manager: Is communication smooth, and do they explain in a clear manner without relying too much on jargon? It’s important to talk not only to the sales representative before the contract but also to the person who actually manages your account to see if they show genuine interest in your business.

• Reporting: Request to see a sample report. Is it merely a data dump with a list of figures? Or does it include clear analysis of results and specific improvement proposals for the next steps?

• Contract Terms: Are there any minimum contract periods or minimum spending amounts? Thoroughly review the contract for unexpected penalties or conditions.

• Fee Transparency: In the estimate, are advertising costs and management fees clearly distinguished? If there are production costs or initial fees for things like banners, check if they are listed as separate items.

The ideal partner should be evaluated based on a weighted score that combines these qualitative and strategic items rather than a single metric like fees. Choosing an agency that aims for long-term business growth together is the key to success.

Conclusion

To succeed in working with a web advertising agency, it is essential to understand the five truths we have examined so far. Know the true value of the 20% fee, choose the "type" of agency that matches your company's objectives, and leverage the objective trust represented by an official partner. Also, manage the risk of not accumulating know-how in-house and assess partners from a comprehensive perspective beyond just fees.

All of these are crucial perspectives for building a "strategic partnership" that promotes business growth, not merely treating the agency as an outsourcing vendor.

For companies that wish to implement these strategic partnerships at an even higher level and accelerate data-driven decision-making, the AI-powered marketing and advertising optimization platform Cascade will help maximize ROI for your campaigns. You can accumulate know-how in-house at a price that is overwhelmingly cheaper than agencies. If you are interested, please check for more details.