Your Digital Marketing Coach with Neal Schaffer

The Truth About Marketing Agencies: Why a Fractional CMO is Your Best Investment

• Neal Schaffer • Episode 398

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Marketing is essential to growing your business, but hiring the right support can be confusing. Should you work with a marketing agency, bring in a consultant, or hire a Fractional CMO? Each option has its pros and cons, and making the wrong choice could mean wasted budget and minimal results.

In this episode, I break down the differences between agencies, consultants, and fractional CMOS—so you can decide which is best for your business. I’ll share real insights from my experience in all three roles and explain why a fractional CMO offers the best mix of strategy, execution, and ROI. If you want to get smarter about your marketing spend and grow your business with real results, this is the episode for you!

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Speaker 1:

Hey, as a business owner or someone that spends money on marketing, do you feel like you're spending that money but not seeing real results? You're not alone. Many businesses turn to marketing agencies or consultants. But what if there's a better way? In this episode, I'm going to break down the key differences between agencies, consultants and fractional CMOs, and why a fractional CMO might just be the smartest investment for your business. So stay tuned for all the deets in the next episode of the your Digital Marketing Coach podcast.

Speaker 2:

Digital social media content, influencer marketing, blogging, podcasting, vlogging, tiktoking, linkedin, twitter, facebook, instagram, youtube, seo, sem, ppc, email marketing there's a lot to cover. Whether you're a marketing professional, entrepreneur or business owner, you need someone you can rely on for expert advice. Good thing you've got Neil on your side, because Neil Schaefer is your digital marketing coach, helping you grow your business with digital first marketing, one episode at a time. This is your digital marketing coach and this is Neal Schaefer.

Speaker 1:

Hey friends, we are up to episode number 398 of the your Digital Marketing Coach podcast, and this is Neil Schafer reporting to you on, well, what inspires me, what I see, things, I read, things, I hear, interactions I have with companies or with people just like you that inspire me to provide an educational message so that every single episode you listen to of the your Digital Marketing Coach podcast delivers some sort of ROI for the time that you invest. For those of you that have been listening for a while, you know that the way I roll is I do 50% solo episodes, like today, and 50% guest expert interviews. So today I want to start with a disclaimer. I am a fractional CMO, but in no way am I trying to make this episode a glorified sales pitch. Let's just start that way.

Speaker 1:

But, time in and time again, it just crushes me when I hear about small businesses that waste so much of their precious marketing budget for inefficient services that are provided with very little ROI. So obviously, because you're listening to this podcast, you know that marketing is a critical function for any business, and I understand that often you will hire support based on recommendations from people in your network, people in your friends. Maybe you were at a business before company before. That's the way you did things, so hiring the right support can be confusing. The beautiful thing is there's more options than ever, especially post-COVID, with remote work and what have you. I know my fractional CMO business really took off during COVID, and the options, including freelancers, like I talk about in digital threads, are really endless. So, of the options, though, I believe the three mainstream options, the three best options would be working with an agency, working with a consultant or bringing on a fractional CMO. But what's the best approach? Now you're going to have to make the final decision as to what the best approach is, but today I'm going to at least demystify these options, share the pros and cons of each and help you make the best decision for your business. By the end, I think you're going to understand why a fractional CMO offers the best mix of strategy execution and long-term ROI and how they and I can help you grow your business smarter. So I am able to talk about this because I've actually been involved in all three. Right Before I was a fractional CMO. And my fractional CMO came about because before I was a marketing consultant and it was really a suggestion from a client a marketing consulting client, where I helped develop their strategy to come into their office a half day a week, report to the CEO, help flesh out the strategy, help train the marketing team and then implement the strategy Right. So that is what became my fractional CMO service, which is solely what I do today.

Speaker 1:

But let's take a step back. I've also worked with marketing agencies. Marketing agencies, especially in the early days of social media marketing, had a hard time selling social media marketing. They knew that in order to sell, they needed to create a social media marketing strategy. So they often brought me in to help, with their clients, develop a social media marketing strategy. So then the agency can make recurring monthly revenues after they deliver the one-off strategy right, because at that time most businesses really didn't know what they were doing with social media.

Speaker 1:

It was still the very, very early days, but the way that marketing agencies work is they work on a scaled operation, right. They work on offering services which you subscribe to on a monthly operation, right. They work on offering services which you subscribe to on a monthly retainer basis or monthly basis that often require long-term contracts. These are things like pay-per-click ads or social media ads. They could be SEO, they could be content creation, they could even be influencer marketing or influencer outreach. There's a lot of different things they do, but often the whole concept is, if you look at it from an agency owner perspective, I want to sell as many of these services that I can because I know over time things like pay-per-click or social media ads. Once you get it locked in, you might not have to do a lot of extra work yet you can still deliver ROI right or SEO. Yes, there's an initial technical SEO audit and implementation that you need to do for a new client, but after that, the monthly needs of an SEO service outside of content creation maybe some backlinks may not justify what you may be paying. At least, this has been from my experience.

Speaker 1:

So marketing agencies, like I said, typically offer these bundled services requiring long-term contracts, and really they're going. And reputable agencies do not do this. So I'm going to take a step back and say that. But the goal of most agencies is to sell more services, even if they're not always necessary. Now, I have always thought that when a business hands over their marketing strategy to an agency, it is a conflict of interest. I don't even know if people in the United States even understand what that is, because I see so many conflicts of interest in today's government. But that aside, this is not a political podcast. Sometimes they will recommend things because they can make money but it might not be necessary for you, or they will create a strategy because it helps them best develop the services that they've always provided you when it might not be necessary.

Speaker 1:

So I began my career as a marketing consultant really focusing on the strategy piece, right, my motto is educate and empower. Educate and empower through training and, at the early days, social media marketing strategy creation, right? So, hey, if you're going to work with an agency, own the strategy, make sure that what the agency does is dictated in your strategy, and I think, right alone there. If you are going to work with an agency, that would be my recommendation. But, as I was saying, the real work behind services like SEO and ad management specifically, often declines over time while fees stay the same. I'd that agency what are they doing on a monthly basis to justify the money that you're paying them? Because probably in a negotiation you ask that question but maybe after a few months, after a few years, after you know seeing a automatically generated report which a lot of agencies use to show their ROI, you may not understand really what real work is going on on a day-to-day basis compared to the amount of money that you're paying. So some agencies do great work right, don't get me wrong but too many overcharge and under deliver and at a minimum, this is a service that I offer as well. I would really bring in a fractional CMO, even if it is just solely for. I mean, if you're spending six figures with agencies or even tens of thousands of dollars, it's worth your time to spend a few thousand dollars on a limited fractional CMO engagement to see how you might be able to get better ROI out of that engagement right With the agency. So that, I believe, is the world of marketing agencies, both from my own experience and what I've heard with clients, and yes, I mean, I wrote digital threads to educate and empower and a lot of companies will hire fractional CMOs because either they don't want to work with agencies, they want to minimize their work with agencies, but overall they want to develop more in-house expertise and I think this is really the way that the industry is going. If you read the reports I don't have the data on hand but a year in and year out, it seems like more and more brands are doing more and more marketing in-house.

Speaker 1:

Okay, let's now go over to marketing consultants. Marketing consultants are usually hired for one-off projects like rebranding, a website audit, social media marketing strategy creation and all that. The pricing is often a black box. It is well, we estimate it's going to take this many hours and therefore this is how much it's going to cost, but it's really hard to gauge the value upfront. But the other thing that you know, reflecting upon my experience as a social media marketing strategy consultant, is that consultants often work at an arm's length right, because they already have a project to find and an amount to find. They don't want to spend too much time answering your questions, visiting you, having conversations, because it's going to take away from the profit. In all honesty, when I sign contracts as a consultant, I would specify the number of meetings and the number of hours for each of those meetings that we would have up front, because time is money if you're a consultant, right? So consultants work at this arm's length, meaning that you only receive often the final deliverable, not their ongoing expertise, and they don't typically integrate into your team or help execute strategies long term. It is a one-off, you know, wham bam. Thank you, ma'am, for lack of a better word. And that's it, and it is. You know.

Speaker 1:

I often ask Neil, can you give examples of your social media marketing strategy, consulting clients and how the strategy is performed over time? And I can't, because I was the consultant in, you know, in charge of the project. Once the project is done, I'm not part of the execution team. I have no idea if they were successful or not, if they veered off the strategy or revised it or what have you Right? And that is sort of the world of marketing consultants. So I understand, for something very, very niche, you want to bring in someone with niche expertise, I get it Right. But I also think that having a broader perspective agencies definitely bring broader perspectives, as do truly seasoned fractional CMOs who have the experience in what you want to do, assuming you ask in advance hey, do you have experience working in this sort of niche, right? Obviously you want to make sure you have that, or make sure that the fractional CMO is comfortable working in that niche.

Speaker 1:

So, compared to these, right, I mentioned to you that first fractional CMO client I had. It was based on time. The time was spent in their office. I was reporting to the CEO, I was in charge of their strategy and I was in charge of training their junior marketing staff and really raising them to the next level. That is what a CMO would do, right?

Speaker 1:

So a fractional CMO just means it is fractional. You're not going to pay a full-time salary. The fractional CMO does not expect a full-time salary. The fractional CMO will negotiate for a salary, like I do, based on the number of hours per week or month that you need their service and how long the contract is going to be. And the fractional part is that the fractional CMO will work with multiple companies at the same time, and I believe this is a plus for your business because they are getting expertise from a variety of companies, a variety of industries. Obviously, this is all confidential, but you are able to stand on the shoulders of giants, leveraging all the experience the various experiences that the fractional CMO brings to the table. So the fractional CMO, as I've mapped out, becomes a strategic partner, embedded in your business, acting as an executive team member, should you allow them to do so.

Speaker 1:

I have been a fractional CMO for companies where they wanted me to work more behind the scenes or the CEO didn't want me to report to him. The CEO wanted me to report to a marketing director, which is fine. I think it doesn't really expose the CEO to the greatest value. Yet every company's needs are different, right, but the fractional CMO, as you can imagine, is very flexible because, at the end of the day, the CEO calls the shots as to what you want the fractional CMO to do. In this way, the fractional CMO works transparently, ensuring that all strategies, playbooks and execution become your company's IP.

Speaker 1:

In other words, the marketing agency might be running Google Ads or running social media ads and creating creative contents. I mean, they might be doing it in your dashboard, which I hope they do, or in your ad manager, but when a fractional CMO does it together with your employees, you can then own that work and then you realize you know what. It doesn't have to take a lot of time, it doesn't have to take as big of a budget to do it in-house as we had to do with an agency. Now, an agency obviously don't get me wrong are really really experienced at doing these niche services. But on the other hand, I also understand there are a variety of automated and AI automated tools out there that agencies often use, and sometimes they will use no more than the automations in that AI tool, right? So working with a fractional CMO can help bring that in-house. Now, maybe the first month or two it may not be as efficient if you're starting from scratch, but over time you can learn and, most importantly, it becomes your IP. So, unlike agencies or consultants, a fractional CMO truly aligns directly with your business goals, not just selling a service.

Speaker 1:

When I go into businesses, I'm trying to serve. I'm not there to sell, right? I'm not going to tell them what they need. Unless they want to hire me as a fractional CMO, then together let's discuss what they might need, right? So I'm not trying to push a service. I'm not trying to say, oh my gosh, you got to be doing paid ads, right? Maybe, maybe not, I don't know, but that's not part of my business model. That's not part of, well, every client that I engage with. I got to sell them ad management because it's going to be a nice recurring revenue for me. Stability, right, and a fraction of CMOs, should you hire them to stay on long enough. I have companies that I've worked with for several years. They provide long-term growth strategies that evolve as your business scales.

Speaker 1:

So, with all this in hand, let's look at the key differences in ROI. I believe my personal opinion working with agencies, the ROI often diminishes over time due to recurring services that don't require continuous effort, and I believe the ROI, on the other hand, for agencies, increases over time. With consultants, the ROI is limited to the scope of the project, with no ongoing impact. With fractional CMOs, the ROI is truly maximized because they build internal marketing capabilities and transfer knowledge directly to your team. So I believe, if you're a small business, if you're a startup especially, but even if you're a larger business, I believe a fractional CMO whether it's me or some of the other qualified fractional CMOs that are out there is the best choice, and I'll tell you why Because a fractional CMO acts as your in-house CMO without the full-time cost.

Speaker 1:

No need to pay any benefits. No need to worry if you need to restructure or pivot right benefits no need to worry if you need to restructure or pivot right. There's no contractual liabilities or commitments outside of that time span that you commit to when working with your fractional CMO. Fractional CMOs bring the strategic expertise of a seasoned executive assuming you're working with someone who is experienced while helping execute and train your team. Therefore, every dollar spent goes towards real business impact, not just services or projects that keep agencies or consultants profitable. You get agility, transparency and long-term marketing success without wasting budget.

Speaker 1:

So I began this podcast recording talking about spending on marketing without clear results. If that's you and you're tired of doing that, it's time to rethink your approach. A fractional CMO gives you the best of both worlds agency level execution with an executive's strategic insight. So if you're serious about maximizing your marketing ROI, I encourage you to reach out to a fractional CMO. If you want to reach out to me, just go to neilschafercom slash CMO. You can fill in the contact form. I'll then be sending you a cat on the invite and we can have an open discussion. So reach out. I would love to help you scale smarter and grow your business with marketing that actually works.

Speaker 1:

I hope you enjoyed this episode of your Digital Marketing Coach Podcast. As always, I want to remind you if you got any value out of this or other episodes. I would so much appreciate going to your favorite podcast app, wherever you're listening to this, giving it a five-star rating and, where possible, write a quick one or two-sentence review and send me a screenshot, because I would love to thank you. And well, those that know me know that I have various ways of thanking those that support me, because you know what, without your support, I'm nothing. Without your downloads, I'm nothing. Without you sharing these episodes on social media, I can't grow, and if I can't grow, I can't serve you in helping you grow. So it all comes around right. So I'll leave you with those final thoughts. This is your digital marketing coach, neal Schaefer, signing off.

Speaker 2:

You've been listening to your digital marketing coach. Questions, comments, requests, links go to podcastneilschafercom. Get the show notes to this and 200 plus podcast episodes at neilschafercom to tap into the 400 plus blog posts that Neil has published to support your business. While you're there, check out Neil's digital first group coaching membership community if you or your business needs a little helping hand. See you next time on your Digital Marketing Coach.