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How to Negotiate A Digital Marketing Contract

How to Negotiate A Digital Marketing Contract

Trying to negotiate a digital marketing contract isn’t easy. This post is for the many businesses, marketing executives, traditional media agencies, and business owners who attempt to negotiate digital marketing contracts without the help of a digital marketing agency, here are some things to consider. Even businesses who buy digital marketing products and services often may not be doing it right. While some of the faults fall on the business’s shoulder regarding preparation and over-confidence, digital marketing as an industry is still evolving. Thus, there is a demand for the latest-and-greatest in hopes of achieving a competitive edge. Unfortunately, this mindset has led to the fall of many businesses whom where promised something they never actually received. This blog post is dedicated to helping you make better digital marketing decisions when the time comes.

Digital Marketing Goals and Shiny Objects…

When the latest and greatest shiny digital marketing object crosses the desk of business owners and marketing executives, many fail to consider their goals. Every digital marketing channel (tactic) fits into your goal funnel. For instance, if you want to increase inbound calls, you should be looking at channels which can reach consumers in their intent phase within the funnel. If a consumer needs a service or product they are most likely going to look for it online and thus solutions like SEM and SEO are the most common tactics. The calls come in, and everyone is happy.

However, you get “that” phone call and it goes something like this: “Our company owns a piece of proprietary technology that can specifically target your customer online and increase your sales by 1,000%, and we are only going to work with one company in X vertical, when can you meet?” Next thing you know there is a large digital marketing contract on your desk for targeted display advertising on a popular programmatic network. The promise of increasing your business by 1,000% has become your new goal, and you become eager to buy. STOP!

 

Google Customer Journey

 

Take a minute and reference the chart provided by Google above. Targeted display advertising is display advertising, and it doesn’t necessarily capture consumer intent no matter how much some says it does (Push vs. Pull). Display advertising is building awareness and plays more of an assist interaction versus the last interaction. Therefore, all things being said it would be very difficult to measurably increase your business by 1,000%. Furthermore, buying display ads via CPM is outdated. CPM doesn’t guarantee your ad will even be seen. Smart buyers buy on viewable CPM (vCPM) or cost per click (CPC).

What is Your Digital Marketing Management Fee?

Many businesses forget to ask this question they are so blinded by the opportunity at hand, “what is your management fee?” It doesn’t matter if you are buying CPM, vCPM, CPC, every digital marketing company (especially the big media companies) have a management fee, and they bury them in the not so viewable CPM or CPC. Is that a 100%-200% markup? Most of the time its more than 100% because most media companies resell products, and therefore, there are two markups in the campaign. Note, the media company will only negotiate on their markup. Most of the time you can get very aggressive in your negotiations and don’t worry if it the deal doesn’t work out. In the end, your digital marketing campaign is only going to be good as the person running it and a 30% to +100% markup is not worth it. If display advertising is the product, ensure viability by requesting a vCPM or CPC and avoid CPM.

Long-term Digital Marketing Contracts

Many proposals include long-term contracts, which can be labeled optimization periods and these are often unnecessary. There is nothing wrong with asking for a month-to-month agreement with a 30-day cancellation clause. The last thing you want to do is try a new product at $10,000 per month with a 90-Day contract to realize within 15-days, the product does not work for your business. Better yet, if the media company is so confident about their product and services, what do they have to lose if the contract was month-to-month? Nothing! If it works, you’ll keep buying.

Don’t Bother Asking for Referrals and/or Case Studies Unless…

I’ve heard it a million times, “Can you send us some referrals or case studies please?” If you are using this line with the intention of actually getting something useful to help you make a decision. Stop! They are only going to provide you with their “best” case study or connect you with their “best” client. The truth is, your business and budgets are different than even your nearest competitors’, as well as your definition of a conversion. However, if you are using this phrase to buy more time in a high-pressure sales negotiation, well played.
Conclusion

Better Prepared to Negotiate A Digital Marketing Contract

By understanding the following areas above, you will become a better and smarter digital marketing contract negotiator. Remember this, a wrong decision might not kill your company and/or career, but it can hurt it. Always take some time and prepare for the negotiation. Ask good questions, about conversions and controls, at the foundation of their promises and examples. Lastly, do not feel pressured to buy on the spot. It is very important to hire the right company to help you with your digital marketing and advertising. One this is for sure, they should be your partner, not just another vendor. You may reach out to our digital marketing agency if you have any questions.

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