Digital marketing is becoming increasingly complex and time consuming, yet small businesses prefer to handle it themselves. The growth of digital channels, such as email, search, social media, and retargeting ads, has changed the way marketing is conducted. Just take a look at how many different tactics ReachLocal found local businesses are using in 2016:

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The complexity of the new marketing landscape can be frustrating for small businesses. They often lack the time, resources, knowledge, personnel, and expertise to run effective marketing and. They obviously need professional marketing help for it but surprisingly they often chose not to get it. Studies are finding that plumbers, technicians, hair stylists, fashion designers and other small business owners are choosing to perform their marketing in-house despite not having any relevant background. According to a BIA/Kelsey survey, 48.2% of small businesses would rather do their own digital advertising, compared to only 22.5% who would rather have a marketing firm do it for them. Those who would rather have a marketing firm do it for them are weary of poor results, complex services, and a lack of transparency from the marketing agencies either because of their own negative experience or they might have heard other business owners complaining. These problems are harming the reputation of marketing agencies and making it less likely that small businesses would take a decision of hiring a professional versus pursuing DIY approach.

It seems that marketing providers need to rethink their offerings if they want to sell to small businesses and achieve results.. Let’s take a deeper look at some of the reasons why small businesses are trending away from marketing agencies in order to understand what can be improved in the approach.

4 Reasons Small Businesses Aren’t Hiring an Outside Marketing Agency

1. Too Many Choices. Way Too Many Choices

A 2016 survey from Borrell found that 86% of local media companies offer digital services to improve websites, manage online reputation, produce videos, and improve search engine optimization. The problem is that these agencies owned by media companies often don’t offer these services together in a comprehensive, cost-effective package. As a result, small businesses would have to hire multiple agencies to manage multiple channels. If a rare case when they have budget for it this turns marketing into an effort of managing multiple firms, which is time-consuming, but more often their budget is limited so they would have to pick one or two firms specializing in either social media and content or SEO and AdWords or in PR and reputation management or in something else. Having to chose from too many options is already complicated enough. The additional problem in that case however is as the business owner’s expertise lies in some other domain, they just don’t really know which service exactly do they need. So they end up either picking something that later brings no results (and that’s how the reputation of all the marketing service providers is being harmed) or they just keep doing nothing.

2. Lack of Transparency. Or Poor Performance?

A lack of transparency is another major factor harming the perception of marketing agencies. Small businesses often feel as if they don’t know where their money is going. They want to feel confident that the strategies being used are actually effective.

According to a 2017 survey from Drip, less than 40% of small businesses were happy with their marketing ROI. Another 40% felt they had no insight into their ROI, and the remaining respondents felt their ROI was unacceptable. Small businesses don’t want to have to guess if their spike in conversions was due to SEO, Facebook, or Google Adwords. As we wrote in our blog before, they want to be able to instantly look at statistics that gives them an accurate read on how visitors are interacting with their business. Because of the landscape complexity and variety of channels what is really needed is an ability to see exactly what is going on and what is bringing results and often times they also need a professional to help them interpret the data.

3. Poor Performance. Or Lack of Transparency?

A 2015 study from Thrive Analytics found that 60% of marketing agencies’ local business churn was due to poor program results. Next up was poor customer service at 55%. Small businesses feel as if the marketing agencies they hire aren’t delivering, and they are providing poor customer service to boot.

Poor results come from marketing campaigns that are siloed off and not integrated. Small businesses, whether working with an agency or doing their marketing in-house, want a simplified marketing process. And, as already mentioned, better visibility of the efforts results. According to a 2016 LSA survey, 52% of small businesses would prefer to manage their online marketing through a smartphone app. This implies that are interested in greater simplicity and accessibility. Things can get complex quickly when running a Facebook campaign, a Twitter campaign, an SEO campaign, and so on. That inefficiency leads to poor results and high prices.

3. High Prices. Or Poor Performance? Or Lack of Transparency?

High prices are one of the top reasons small businesses choose to conduct their marketing in-house. Marketing agencies must justify their costs with results. Although in-house marketing might seem cheaper— especially in the short term— it is much more expensive than losing the opportunity to generate leads and conversions with an effective marketing agency. Take a look at this example from Fractl and Moz comparing the costs of in-house content marketing versus hiring an agency:


According to 2016 research from Fractl, working with an agency is often the more cost-efficient choice after factoring in costs of recruitment, benefits, employment taxes, and overhead that come with hiring in-house.

How Can Your Marketing Agency Improve Relationships With Small Businesses?

According to research from the Local Search Association, nearly 7 in 10 small businesses do not work with an outside marketing provider:

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Earlier, we referenced the BIA/Kelsey survey, which found that 48.2% of small businesses preferred to do their own digital advertising, with only 22.5% of respondents saying they’d rather have a marketing firm do it for them. Both surveys indicate that less than one third of respondents are working with an outside marketing provider or would even prefer that option. While this is indicative of how small businesses currently feel about marketing agencies, it also provides an opportunity. If most small businesses aren't working with outside marketers, the right strategy could make them your next client.

The key lies in differentiating your agency from the crowd. That could mean for example offering an integrated marketing suite that takes a comprehensive approach as Greg Sterling VP of strategy and Insights at the LSA suggests in his paper Instead of focusing solely on Facebook or on search, your approach can be to reach your SMB consumers wherever they travel online. You’ll need to do this while providing easy to understand analytics on what actually works and what the ROI is.

Featured image: on Unsplash