Latest / Scalability School / Uncovering Agency Trends From The Foxwell Founders 2026 Agency Report with Andrew Faris

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Uncovering Agency Trends From The Foxwell Founders 2026 Agency Report with Andrew Faris · Scalability School

0:00
Hey everyone, have a really awesome
0:02
episode here for you today. I actually
0:03
sat down with Andrew
0:04
Ferris, who is an awesome media buyer and
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really great online
0:07
marketer, someone who I trust, and
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he went through and we talked about our
0:11
survey that we did with
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hundreds of advertisers and
0:14
agencies around what they are seeing in
0:18
their agency, what they're
0:19
seeing work, what it looks
0:20
like. We talk about everything in this
0:21
episode of talking about margins and
0:23
agencies to lead flow to
0:25
so much more. If you're an agency or even
0:29
if you're a brand and you're thinking
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about or have hired an
0:31
agency, this episode is definitely going
0:33
to be interesting to you.
0:34
So go ahead and check it out.
0:35
I appreciate you being here. And as
0:37
always, if you want to give feedback,
0:39
feel free to email me at
0:40
andrew at foxwelldigital.com.
0:53
Hello, Andrew. Hello, Andrew. Welcome to
0:56
this joint podcast. I
0:58
think many years ago,
0:59
you tweeted something that we needed to
1:01
start a podcast together
1:02
called Ferris and the Fox.
1:05
It's already a hit. I know. And I always
1:07
thought that it stuck with
1:08
me. It was a simple tweet a
1:09
long time ago, a friendly gesture and
1:11
outreach. And I remember it because I
1:13
thought, that's got a
1:14
nice ring. Ferris and the Fox could be
1:16
good. Listen, you ditch Brad,
1:18
I'll ditch Patrick, and we'll
1:19
just go start our own Ferris and the Fox,
1:21
you know. No, I'm kidding.
1:22
Perfect. Yeah, exactly. Let's go.
1:24
Co-released episode with Scalability
1:27
School, Andrew Ferris Podcast together.
1:29
Look at us doing marketing while we're
1:31
talking about marketing. Unbelievable.
1:34
Yeah. Good job.
1:35
Okay. I called this meeting.
1:38
Yes, you did.
1:39
Because I loved your tweet thread about
1:42
your state of agencies
1:43
report and then your state of
1:45
agencies report information in general.
1:47
And I thought it was
1:48
relevant to people way beyond
1:49
the agency space. This is my theory. I
1:52
said, can we please talk
1:53
about this on a podcast? Because
1:54
I was thinking like, what agencies are
1:56
doing matters a lot for
1:57
what brands are doing. It
1:58
matters a whole lot for them because it's
2:00
just changes how money
2:02
gets made and how money gets
2:03
spent and all that kind of stuff. So how
2:07
should we, do we need to intro this
2:08
anymore? Do people need
2:09
to, I think people know who you are and
2:11
who I am probably in our
2:11
audiences. Do you want to say
2:12
how you, why don't you tell people who
2:14
don't need to do an intro?
2:15
Okay, great. I'm a marketer. I grow
2:17
businesses. You are a
2:19
founder, you run founder, a founder
2:21
community and that's how you got an
2:23
agency report, right?
2:24
That's it. Yeah. And so we have the, we
2:26
have a lot of folks in
2:27
our group. It's about 600
2:28
people. And in the group, about 65% of
2:32
our folks are people that
2:34
run agencies or are in-house
2:35
at agencies. And so we took and we had
2:39
hundreds of people take this
2:40
survey. And then I collaborated
2:43
as well to get a motion to give a little
2:45
bit of a, send it to their
2:47
list as well. And predominantly,
2:49
this is like 80%, well, 90% really are
2:53
data. And it's great. I
2:56
mean, it's, it's crazy really.
2:58
The stuff that's come out of this, if you
3:00
haven't seen it, this is
3:02
the Foxwell digital motion
3:03
state of agencies report 2026. And we'll
3:07
include it in the show
3:08
notes, of course, for you to grab
3:10
if you, if you haven't grabbed it, but
3:11
you know, a lot of really
3:13
interesting data in here
3:14
and some that you, I really didn't expect
3:15
to be totally honest with you. So yeah.
3:18
What did you not expect? What did you not
3:20
expect? Should we start
3:21
there? That's interesting.
3:22
That's a good hook. Sure. Totally. I
3:24
mean, what I didn't expect
3:25
out of the gates was one,
3:28
I was really surprised at how many people
3:30
sort of saw AI as the
3:33
opportunity, but also the threat.
3:35
I think I would really, I hear more about
3:37
it as an opportunity
3:38
because we're all sort of building
3:39
in this phase of building stuff now. And
3:41
I know that it's a threat, but the
3:43
percentage of people
3:44
to which it's like, I haven't told anyone
3:46
this, but I'm really worried
3:47
about this is, is big. I hear
3:49
it in private coaching that I do, but
3:50
that's one thing I'd say. Another one
3:52
that I, that I thought was
3:53
really interesting was, you know, just
3:55
the percentage of, of, of labor costs and
3:58
really how slim a lot of
3:59
margins are for folks in their agencies.
4:01
A lot of folks are not
4:02
paying themselves enough. And the
4:04
biggest one I would say that I found
4:08
interesting is how many founders are
4:10
still involved in the day-to-day
4:11
delivery. You know, how many people are
4:13
still in the trenches, which I'm not
4:15
saying that's necessarily
4:16
bad. And I think that's a good thing to a
4:18
degree, but it also can hinder
4:19
growth for a lot of agencies.
4:22
If that person is, is in there and, and
4:24
really involved in the
4:26
day-to-day of pulling the levers.
4:28
And so that's an interesting one that I,
4:30
that I found. So, I mean,
4:31
there's a ton of other things
4:32
we talked about, but those are some good
4:33
starters. Andrew, you
4:34
said three things there
4:35
that were interesting to you. I think we
4:39
should go through each of
4:39
them because I will tell you
4:41
my experience of every single one of
4:42
them, uh, was to relate to the
4:46
finding of them. So I too feel
4:49
that AI is an opportunity and a threat.
4:51
Uh, I too am involved in the
4:54
day-to-day of delivering work,
4:55
though act very actively pursuing, not
4:57
doing that anymore. And you're
4:58
absolutely right that it is a,
4:59
is a hindrance to our growth. Actually.
5:02
And critically, I think
5:03
it is not the best way for
5:04
me to serve clients. I think my clients
5:05
will be much better served
5:06
by me working on the machine
5:08
because of what an agency is. Um, so it's
5:10
just a matter of getting
5:11
to the financial place where
5:11
that works. And then labor costs, I think
5:13
was the other one. Uh,
5:15
labor, labor costs is, is the,
5:17
is the second one. Yeah. Yeah. I mean,
5:19
also a concern for us and for our agency,
5:22
because probably partly because it's a
5:24
concern for other agencies.
5:25
What I mean is like that drives
5:27
them. If that's true across agencies, it
5:28
means it's driving the
5:29
market, the market price for
5:31
services down relative to the labor
5:33
costs, right? Like if the labor costs are
5:34
high relative to the
5:35
service pricing everywhere, then it means
5:38
that when I go out to pitch
5:38
a client that the client is
5:41
comparing my costs to others. And so
5:44
yeah, it's a sort of like,
5:45
you know, if it's true that your
5:47
margin is my opportunity, then if my
5:50
labor costs were very low
5:51
relative to my service cost, then
5:52
I would just get computed away. So my, so
5:56
you have to, you can't
5:57
have your margins be that,
5:58
that, that fat. So let's do them all one
6:00
by one. So let's talk about
6:01
the AI. Let's give me this,
6:02
give me the stats. So this is not just
6:03
like your reflections. Give
6:05
me the, I'll play interviewer
6:06
here a little bit. Tell me what, what,
6:07
what people said about AI
6:08
and its place in agency work.
6:10
Absolutely. AI is simultaneously number
6:12
one risk and number one growth
6:13
opportunity. People said
6:14
the duality is the story. Almost 26% say
6:18
AI powered services is their
6:19
biggest growth opportunity.
6:21
The single top answer beating out
6:22
creative differentiation and owning
6:24
strategy and vertical
6:25
specialization. Only 6.3% are not yet
6:30
using AI for research and
6:31
ideation. Everyone else is,
6:35
which is interesting. So a lot of people
6:37
are using it and a lot of folks are doing
6:38
it for generating ad
6:40
messaging and angles, analyzing customer
6:42
reviews for insights. These are all 67%
6:44
64% respectively and competitive
6:47
analysis, 50%. So agencies are shifting
6:51
hiring philosophy away
6:53
from volume toward upskilling teams. And
6:55
then some ad creative, 46% say that the
7:00
number one challenge
7:01
in AI at an ad creative right now is
7:04
maximizing speed, efficiency
7:06
and quality in ad production.
7:09
So it's interesting. So anyway, there's a
7:11
bunch of to say there, I guess the
7:12
overarching piece is,
7:14
we're all sort of figuring it out. People
7:15
are using it a ton for ad
7:17
creative right now. That's
7:19
predominantly where it's been used, which
7:21
is obvious. It's the
7:21
biggest lever. I think from my
7:24
standpoint and talking to other founders,
7:26
the big one that has
7:27
seemingly come out even since we did
7:29
this data, which was literally in January
7:31
and February, now it's in
7:32
March of 26, is that now people
7:35
are utilizing it for optimization on
7:38
agency processes and
7:39
standardizations on SOPs and agency
7:42
organizational frameworks and things like
7:45
that. So it's started to shift from, we
7:47
have this, you know,
7:48
process established and now it's over
7:49
here. I think one thing
7:50
I'll say on the threat side
7:52
is that it's become so exponentially
7:55
powerful that we just don't know what's
7:57
going to happen with it
7:58
next. Like, you know, there's sort of the
8:01
manis out there. There's these other
8:02
pieces out there that
8:03
we just don't know what they look like.
8:05
We don't know how
8:06
they're going to manifest.
8:07
And that is what brings fear because it's
8:10
obviously just fear of the
8:11
unknown of what it looks like.
8:13
And we can talk about what you can do
8:14
about that as an agency owner or brand
8:16
owner, but that's kind
8:18
of where that stands. Have you got any
8:19
subjective feedback about sort of what
8:23
people are trying to,
8:24
how they're handling the threat? Like,
8:26
what are they thinking
8:26
about it? And, or even from the,
8:29
or from the brand side, I'm curious,
8:30
like, you know, I'm just
8:31
curious for the sort of different
8:32
perspectives that you're getting in terms
8:34
of what agencies are
8:35
doing about it. You mentioned
8:36
one thing, which is they're building more
8:37
standardization of
8:39
process, which is absolutely
8:40
what the last couple months of our agency
8:43
efforts have been with AI.
8:46
Yeah. So I would say on the,
8:47
you know, on the threat side, you know,
8:49
what are people doing about
8:50
it? What can they do about it?
8:51
You know, I think it's never been a
8:54
greater time to understand what your true
8:56
differentiators are as
8:57
an agency of understanding, you know, is
8:59
it the service? Is it
9:00
that you're going to do
9:01
a different selection of services? Is it
9:04
that you're going to help
9:06
your clients integrate AI
9:07
and what they're doing? Is it, you know,
9:10
is it, is it a whole bunch
9:12
of those different pieces,
9:13
right? I think that we've gone from this
9:14
phase of being agency where
9:16
you're running the ads and
9:18
that you're pulling the levers to now,
9:20
you know, in the last couple of years,
9:21
you become the creative
9:22
arm and the creative strategy arm that's
9:24
pushing things forward.
9:25
And you're helping people on that, then
9:28
it's, you know, also simultaneously
9:29
become a true business
9:32
partner. You're looking at the numbers,
9:33
you're looking at their financials,
9:36
you're understanding
9:37
what the contribution margins are, what
9:38
the net new customer percentages are,
9:40
right? You're really
9:41
involved in that. And I think now it's
9:44
the next phase of this. So everybody's
9:46
thinking about AI and
9:47
are you going to be an agency that helps
9:49
them do that? And I think that's, and
9:51
that could mean a lot of
9:53
different pieces. So that's one, are you
9:55
going to add different
9:56
services and what's the value
9:58
proposition that you're bringing to them?
10:00
And, and, and, you know,
10:02
not just pulling levers.
10:04
Sometimes that, that value proposition
10:06
can just be that you're
10:07
freeing up a lot more of their time,
10:08
which is great. And that's something
10:10
they're willing to
10:11
pay for, but it's also,
10:12
you know, what else are you going to
10:15
offer them that's
10:16
different and unique that could be,
10:18
that could be an extension onto creative
10:20
services that could be competitor,
10:22
competitor analysis,
10:23
that could be deeper reporting that
10:26
you're able to provide them than you were
10:28
able to provide them
10:29
before that you're building them
10:31
dashboards and bots and things like that,
10:33
that they can talk to,
10:34
you know, there's a lot of pieces in this
10:36
where it's like, what am I
10:37
really good at with these
10:38
folks? And how can I offer it as an
10:39
agency that makes it sticky to your
10:42
second question around
10:43
what are operators seeing? Yeah, I would
10:46
say it's, it's a mixture. I would say
10:47
that people have said,
10:50
I feel that my agency is definitely
10:52
producing a lot more and that's awesome.
10:54
And we're able to do
10:55
that a lot with that. I've also heard the
10:58
reaction to that, which is, you know,
11:00
it's a mess. We're testing
11:02
200 creatives and there's no system. I
11:04
don't feel like there's a system. So I
11:06
think when you start to
11:07
ramp up AI efforts, it's really important
11:09
that you build systems into
11:11
it. You understand what the
11:12
frameworks are and how you're measuring
11:14
it with the client. So that as you start
11:17
to increase creative
11:18
production, you know, to help this person
11:20
grow, that they, that there's a why
11:23
behind it. I think you also
11:24
agencies don't do a great job in large
11:27
part. I think I try to
11:28
really push this in the founders
11:29
community, but those that are outside of
11:32
it that haven't heard me say this, you
11:33
know, I think it's really a
11:34
matter of how well are you listening to
11:36
the client in terms of what they, what
11:38
their concerns are and
11:40
what you can do to make them successful.
11:42
So whether that's their stakeholder is
11:44
themselves or whether
11:45
that's their spouse or whether that's
11:46
their boss, if they're the, the in-house
11:48
marketing person, it's
11:49
like, what are they nervous about? I was
11:51
asked, tell people to have a
11:52
conversation. What are you
11:53
nervous about that? You're going to need
11:56
to get answers on, um, you know, that
11:59
keep you up at night
12:00
and how can I help solve those things?
12:01
Because that's ultimately
12:02
what's going to make it really
12:03
sticky. I've also heard from, from other
12:05
brand owners that they're
12:06
like, I can do a lot of this
12:08
stuff myself now. And, um, I mean, let's
12:11
just talk about CRO. I'm
12:12
building, you know, with Claude
12:13
Code, I'm building my, my stuff. I talked
12:15
to a guy yesterday that was
12:16
doing this, building all my own
12:17
landers and launching them. They're
12:19
crushing and my ad people are running and
12:21
it's doing great. Um, and I'm
12:23
just making sure that these two things
12:25
match. I just look at the top creatives
12:26
are running. We have our
12:27
persona maps and we're just making sure
12:29
that they map to the
12:30
creatives that I'm building. So I was
12:32
able to fire my CRO agency. So
12:33
unfortunately there, I mean, there is
12:35
like some cutting that happens.
12:37
I think it depends on how technically
12:39
enabled that operator is
12:41
right. And the way that they're
12:42
thinking about it, but I, but there
12:44
certainly is a bullish feeling
12:45
from those that are, you know,
12:48
really leaning forward. Like you think
12:49
about somebody on X, like Ron Ecom, who's
12:52
technically enabled,
12:53
very smart, young, scrappy can, can get
12:56
it done. I talked to a
12:57
brand owner in the group,
12:59
um, who is, let's see, I think she's 45.
13:02
Um, and she loves that her agency is
13:05
moving a lot faster.
13:06
She's not, has no intention of hiring her
13:08
agency. She's going to keep
13:09
them around, but she loves that
13:11
there's like a lot more happening and
13:13
there's systems and frameworks and
13:15
they're doing AEO and
13:16
GEO. The agency is now as well. Right.
13:18
And they're like pushing that
13:20
with LLMs and she feels more
13:21
confident than that. And so the activity
13:23
is a function of making
13:24
her feel more safe in that
13:25
relationship. So there's a whole bunch of
13:27
stuff. Everybody's kind of
13:29
interpreting it different and
13:29
she doesn't have the time, nor does she
13:32
want to make the time to
13:33
become the marketing person.
13:35
And so I think, you know, you kind of
13:36
always have to look at it through that
13:37
lens, but those operators
13:39
that are listening to this podcast, you
13:41
know, that are listening, I mean,
13:42
probably they're going to,
13:43
you're going to be the people that are
13:44
building stuff on your
13:45
own. And if that's the case,
13:46
then I would just encourage you to, to,
13:48
to work with your agency as
13:50
it stands now to let them know
13:52
what you're building and how and why,
13:54
because you want to try to keep that
13:56
stuff close to the vest
13:57
sometimes. But I think if you have a true
13:59
growth partner, the more that
14:00
you tell them, it can become
14:02
that yes and standup type of
14:04
relationship. I mean, where they're just
14:06
building on what you're building
14:07
and it becomes an incredibly powerful
14:10
growth engine. Probably
14:11
part of the reason that the
14:13
technically enabled founder is building
14:16
themselves because they're
14:17
the kind of founder who started
14:18
their business, like, like me launching a
14:20
brand or something like that,
14:21
where it's like somebody who
14:23
is like coming from a digital ads
14:25
background. There's different, this is
14:25
definitely a, an archetype
14:27
of founders. It's like, it's a digital
14:29
marketer who sees an
14:30
opportunity to build a brand.
14:32
And so that's their core skills that they
14:33
come in with. And that, that founder
14:35
probably ought to hold
14:36
that skillset close to them. Because if
14:38
that's the thing you're really good at, I
14:38
mean, I've gone through this
14:39
where I've sort of like come into running
14:41
brands as a digital
14:42
marketer and then was asked to move
14:43
into other parts of the business where I
14:45
was actually much less
14:45
equipped to do it. It's not
14:46
really the reason I got there. And, and,
14:49
you know, by the, by the investors and
14:51
all that kind of stuff.
14:52
And it was a mistake. Like I should have
14:53
just spent my time in, in that and not
14:56
used agencies and other
14:57
people in that instead, like hired smart
15:00
people who were enabled with the best
15:02
tools to do the other
15:03
parts of the business and report to me on
15:05
those things. So there's a
15:06
certain kind of founder who's
15:07
that person who's like the digitally like
15:11
savvy performance marketer
15:12
founder. Um, those founders
15:14
very often have a really hard time
15:17
scaling past some threshold or another,
15:21
because as good as they
15:21
are like that, unless they are truly
15:23
elite tier. And I think most people are
15:25
not, they're going to run
15:26
into a cap. And that cap is represented
15:29
by things like product development,
15:32
marketing calendar, brand,
15:33
all of that kind of stuff. So they're
15:35
going to get to 15
15:35
million or something like that.
15:37
You know, and it's a good business. It's
15:39
nothing to sneeze at at all. They're
15:40
going to be spending
15:41
a few hundred thousand dollars a month,
15:42
but they're going to hit some spot where
15:43
given all the AI tools
15:44
and everything, it's not going to, it
15:45
doesn't matter. Like they,
15:46
they can't get through that,
15:48
that next thing because they haven't been
15:50
able to do the rest of
15:51
what is required from a brand,
15:52
engineer their cashflow, think
15:54
financially about their business, think
15:55
about their supply chain,
15:56
all that kind of stuff. And so on the
15:58
other hand, I think there's, there's a
15:59
group of founders who are
16:00
going to benefit from this whole thing
16:01
who are exactly the kind
16:03
of person that you described
16:04
second, that 45 year old woman who is
16:05
like, and speaking as a 42
16:07
year old man, who's not like,
16:08
it's like been a stretch for me to
16:09
generate, they get better
16:10
with AI and stuff. Right. Like
16:11
I would say she actually might be some of
16:14
one of the best suited people
16:16
to, to, to, to win from this
16:19
whole thing, because, um, she's, if she
16:22
can actually, if her agency is good and
16:24
it sounds like they are,
16:25
right. She's happy with them. Then they
16:27
are going to generate a
16:28
bunch of benefits from this,
16:29
that they're going to actually get
16:31
leveraged from across all
16:32
of their views, right? Like
16:33
nobody has more incentive to, to have
16:36
their COO spend two months
16:37
building out an operating system
16:38
that collects all of the client's assets
16:40
and data and build a
16:42
lander launching machine and
16:43
create a machine and all that kind of
16:44
stuff than an agency, which is exactly
16:45
what my COO Patrick just
16:47
did. Right. Like, uh, because we have to
16:50
deploy that against a bunch
16:51
of different brands and that's
16:52
the only way we exist. Right. So we're
16:54
gonna spend all of our time
16:55
on that. That founder you're
16:56
describing needs to go to China at some
16:59
point and talk to her, uh, her
17:01
manufacturer, you know,
17:02
and if she wants, whatever. So the point
17:05
is, I think there's a way in which
17:06
there's a sneaky way
17:07
in which I think in some ways the
17:09
services that the AI win for
17:11
that person is going to be the
17:13
increased productivity of really talented
17:15
people who are part of your
17:16
organization, who are not you,
17:18
where you do the thing you're great at.
17:19
Uh, and in that respect,
17:20
it's no different than a
17:21
traditional agency relationship. A good
17:22
agency would have been
17:24
providing that kind of value all
17:26
along the way while you provide unique
17:27
value in your brand in
17:28
different ways. Now, I think,
17:29
I think getting that right is super
17:32
important, uh, because I
17:34
think, I think it's a pathway to,
17:35
to being successful on
17:36
both sides of the fence there.
17:37
I completely agree with you. I, you know,
17:39
one of the pieces that
17:40
becomes abundantly clear
17:42
when people hit a growth ceiling, and
17:44
this could be in an agency relationship
17:46
or, or in an agency or
17:47
a business, uh, like a econ business is
17:51
when the founder starts to uniquely
17:53
understand and operate
17:55
on the why and operate from that point of
17:58
like, this is really
17:59
what I know I can do well.
18:01
And, you know, I think AI makes it so
18:04
accessible. So it's very difficult to,
18:07
you know, like if you
18:08
lived on, on the beach and you thought
18:09
you were going to surf every day, and
18:11
then you just assumed by
18:11
living on the beach, you were a surfer.
18:13
Like this doesn't work
18:14
like that. Like it takes time,
18:15
it takes attention and it takes energy.
18:18
And if you're giving it,
18:19
you know, you're going to surf
18:20
every two weeks, you're not going to
18:21
build up the understanding
18:23
of what to do, the timing,
18:24
the muscle memory. And so I think I've
18:27
seen that happen a lot
18:28
where people are hurt, hurting
18:29
themselves in that growth. And so the
18:30
more that you can push forward on that
18:33
and say, look, this is
18:35
what I'm going to do. Operation supply
18:37
chain, you know, this is really where I
18:38
shine, um, the better
18:40
off you're going to be, because I think
18:42
you're the one that had the
18:43
unique ideas, the founder,
18:44
you know, I mean, in an agency
18:45
relationship, it's like going with the
18:47
vision, trying to push it
18:48
forward. And I think so many people are
18:50
bogged down in the day to day that they
18:52
don't give themselves
18:52
that time. And it feels selfish. I mean,
18:55
when I do, I do, you know, a lot of
18:57
coaching, like I said,
18:58
and I always have people list out zero to
19:02
10. I learned this from,
19:03
from my coach many years ago,
19:05
zero to 10, what are the things that you
19:07
love to do? And you
19:08
feel like you're great at,
19:09
and you list them out. And then anything
19:10
under a seven out of 10, you just start
19:12
to try to eliminate.
19:14
Because the goal with that person is to
19:16
try to free up what they
19:17
are uniquely adding to the
19:19
business while you're giving other people
19:20
who are great at what
19:21
they do, the operational
19:22
independence to say like, go and run with
19:24
this and make it great. So
19:25
yeah, but I mean, obviously
19:26
there's financial constraints and all
19:28
that too. But I think it's
19:29
one of those that feels like a,
19:32
it feels like, I don't know, that feels
19:33
too much. I can't do
19:34
that yet. But actually,
19:35
it might be one of the most powerful
19:36
things that you can do.
19:37
All right, friends, this episode is
19:39
brought to you by Northbeam,
19:40
the marketing attribution solution we
19:42
love over here at the
19:43
pod. And you know, Zach,
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good news, Northbeam is launching
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We have, we've gotten a little bit of
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access to it. And so
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far, so good. Max is stoked.
19:55
He's my CMO. He's digging it. Yeah, I
19:57
mean, out of the gate, we're super happy.
19:59
Yeah, I mean, Northbeam incrementality
20:01
gives you easy, automated self-service
20:03
incrementality tests
20:04
right there in the platform. And it gives
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you sort of like
20:09
actionable data and allows you to
20:11
operationalize a lot of these. I think
20:13
that's a big difference between
20:14
Northbeam's incrementality
20:16
tool and what we have other places in the
20:18
market. It can, you know,
20:19
run, basically it runs end to end
20:21
with lift testing with your MTA and your
20:24
MMM. So you can scale what
20:26
works and cut what doesn't,
20:28
which, you know, I know for you guys,
20:30
your companies are, is huge, right?
20:32
Yeah. I mean, the fact that we use
20:33
Northbeam as our North star for all of
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the dollars that we spend
20:37
to have this functionality built in right
20:40
into the MTA is just
20:41
like not only a time saver,
20:42
but it's just makes the workflow much
20:44
easier. So big fans.
20:46
Yeah. And it's something that you trust,
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which I think is huge. So
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they're giving right now
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really good deals, pretty cool, uh, 50%
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Lots of awesome features
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forward to hearing how it goes for you.
21:14
While we're on the AI
21:14
subject, let's talk about one
21:15
thing in particular that came up in your
21:16
report that I think is really
21:18
interesting. You said on AI
21:20
generated ads, only 11% of agencies say
21:23
they've produced clear top performing
21:24
winners. 35% say results
21:26
are mixed or inconsistent. 21% aren't
21:29
using AI generated ads at
21:30
all yet. Uh, now I think
21:32
there's a question about what does AI
21:33
generated ads actually mean? Like, uh,
21:35
does that mean fully
21:36
done creative? Does that mean copy? Like
21:38
what, you know, it's a
21:39
little tricky, but, but that top
21:40
number, 11% say they've produced clear
21:42
top performing winners. One of my, one of
21:44
my concerns in AI right
21:46
now, I had somebody email me this after
21:47
an episode that Patrick and I put out
21:49
about, about sort of our
21:50
investment in AI and basically his email
21:53
said in so many words, convince me,
21:55
convince me that this
21:58
is actually benefiting your clients. Um,
22:00
and the idea was like, it
22:01
looks really cool that what you
22:04
guys are doing. And I see that, but are
22:07
you sure this is actually
22:08
benefiting the kind of work that
22:10
you're doing? Now, I, I have a lot of
22:12
thoughts about that, but specifically
22:13
with AI generated ads,
22:15
I'm really curious about this. Like I, I
22:19
have a little theory right
22:20
now that, um, that AI voiceover
22:23
is like, is materially less like, uh,
22:27
like performs materially
22:28
worse than a human voiceover.
22:31
Uh, and I have a theory that that will
22:33
only get worse, uh, over the
22:34
next bunch of years, because
22:36
even if AI VO gets better, if it's
22:39
detectable at all, uh, customers will
22:42
take that as a sign of
22:42
inauthenticity. Uh, this is an
22:44
interesting factor in the AI thing. I
22:45
heard this stat recently from,
22:47
uh, the AI daily brief, great, great
22:49
podcast about this kind of stuff that I
22:51
don't listen to every
22:51
day, but it has some really helpful
22:53
episodes. He, the host of that show was
22:54
saying that it's like
22:56
60 to 70% of Americans have negative
22:59
feelings about AI. And so if they are
23:01
predisposed negatively
23:03
against AI, and particularly my guess is
23:06
generative AI, uh, visually generative
23:08
AI, it seems to me that
23:10
there's a real possibility here. Like AI
23:12
stills, I think will
23:13
probably work as well as stills can
23:14
work because they will just be good
23:16
enough and they'll just
23:16
look like any other still.
23:17
And particularly AI video. I'm really
23:20
curious. I mean, it's getting really
23:22
good. I know, but like,
23:23
I'm really curious if there's going to be
23:25
like a thing here where it
23:27
turns out that you actually
23:28
really have to pick up a camera and shoot
23:29
still. And like, you know what I mean?
23:30
Um, so I don't know,
23:31
reflect on that however you want. That
23:33
was a little bit rambling,
23:34
but like that, that stat is
23:35
interesting to me. 11% say they've
23:37
produced clear top performing winners.
23:38
That's a low number.
23:39
Totally. I think some of it is timing. I
23:41
think some of it is that
23:42
this report was done in January
23:43
and February of 26. And that's a little
23:45
bit different than
23:46
March. We're mid-March of 26,
23:48
where we are now. I think that's one. I
23:51
think the second one is a lot
23:53
of what was happening with AI
23:54
in the early part is just what, what
23:57
happens when you get excited
23:58
about this type of generation,
23:59
which is, oh shit, I can do this. I want
24:02
to make a bunch of
24:02
this. And you just, and you,
24:05
you replace, you sort of volume is the
24:07
goal over quality because you're like,
24:09
can it do all this? I'm curious. And you
24:11
launch them into accounts and you know,
24:14
it's not working. And you know, generally
24:17
you're like, Hmm, that's
24:18
interesting. It didn't work for
24:19
me. And I think I've heard from a lot of
24:21
people in the founders
24:23
community that look, I tried it,
24:26
it didn't work. All right. And okay,
24:28
that's fine. And I think that's a
24:30
function of maybe that you
24:32
tried it a while ago. It could be a
24:34
function of the inputs, obviously that
24:35
were given to it. So it's
24:37
like, they're not necessarily the format
24:41
that's converting. They're
24:42
not the type of ad that they,
24:44
you know, you didn't, you weren't able to
24:45
give it, Hey, these are
24:47
winning ads, make more things
24:49
similar to this. Like you are able to
24:51
with more sophistication
24:52
now, even a few months, a month
24:54
later or a few weeks later. And so, you
24:58
know, I think that's part of it. I do
25:00
think that AI creative
25:01
will start to be more, you know, top, top
25:06
performing and you'll
25:07
see that happen on your
25:09
theory about AI video and, or about AI
25:12
voiceover specifically, I
25:14
completely agree with you. And
25:15
this is totally detectable. And I think
25:18
one of the things that will keep, you
25:21
know, those of us that
25:22
are doing creative stuff or, you know,
25:24
people like in our hive
25:24
house community for creators,
25:26
that's definitely a question we get a
25:28
lot. And I think Meta is
25:29
going to detect that. And Meta is,
25:31
is, is able to see that. What you're
25:33
going to have to do is
25:34
declare it. You're going to have to
25:35
declare that this is AI generated in some
25:38
way. Legally, I think
25:39
you already have to.
25:40
Yeah. Right. And, but they're going to
25:42
keep doing that. And, and the thing is
25:43
the enforcement's not
25:44
going to happen at the federal level or
25:46
whatever it is. Like
25:46
there'll probably be some big,
25:48
big high profile cases that do this just
25:50
to like sort of send the
25:51
scares out. But there's no way that
25:52
like, you know, just like the FDA doesn't
25:54
actually crack down on all
25:55
the supplement brands right
25:56
now, even though they probably should
25:57
like the, for making all
25:59
kinds of crazy claims about, you
26:00
know, what their supplements can do, but,
26:02
but they'll do it
26:03
sometimes. And they do that enough
26:04
to scare people where I think the actual
26:06
onus is going to be is on
26:07
the social networks. And that,
26:10
and that sort of people will just demand
26:11
this of them, that, that,
26:12
that they are the ones who
26:13
are going to have to say, yes, you must
26:15
declare that this is, this
26:17
is the case. And the social
26:18
networks are going to want to get ahead
26:19
of that to some degree. I
26:20
think, I think that look,
26:21
what I don't have a crystal ball, but
26:22
that's my theory about what will happen,
26:24
what will happen next? Because I think,
26:26
yeah. Anyway, so you're
26:27
right. And, and, and they're
26:29
also going to be able to detect it. Like
26:30
you said, and they're,
26:31
they're going to do whatever
26:31
their users respond to positively. If it
26:33
creates a bunch of really negative
26:34
sentiment from custom,
26:36
from their users, they're, they're going
26:37
to penalize it in the algorithm.
26:39
Yeah. I would say that, you know, where
26:41
AI sits now, obviously
26:42
in the creative workflow,
26:44
being the most powerful arm for those,
26:45
you know, for those of us
26:46
in growth, like the biggest,
26:49
it's helpful, you know, the biggest place
26:51
where it moves a lot, the, you know,
26:53
pulls the lever is on research. I mean,
26:55
you know, you're able to
26:56
discover different pieces
26:57
you weren't able to discover before
26:58
you're able to discover new
26:59
avatars to go our personas to go
27:01
after, you know, you're able to look at
27:03
competitive research more efficient,
27:06
effectively and efficiently.
27:08
You're able to come up with maybe some
27:10
new language you didn't
27:11
necessarily think about
27:12
through frameworks, you know, you had
27:14
wanted to do. And so it gives that part
27:17
of it in terms of the
27:17
briefing, in terms of the creation and in
27:19
terms of, you know, the effectiveness and
27:22
efficacy of that is,
27:23
is, is going up and is getting better,
27:26
which is good. And that
27:27
makes our lives easier. And that
27:28
does save time. And I think that side's
27:30
great. I think the idea
27:31
of it going from, you know,
27:34
here's what it is to all the way to
27:36
creating a banger ad
27:37
that's going to really win.
27:38
You know, I think we're getting there,
27:39
but I don't know that it's necessarily
27:41
there at this point in
27:42
time. And I don't know that it'll ever be
27:43
there because I think
27:44
there's going to be,
27:45
you're going to have to disclose it, like
27:46
you said, and, you know,
27:47
meta will know. And so will
27:49
Google for that matter. Like, you know,
27:51
I'm not saying essentially
27:52
going to be frowned upon. I
27:53
think that they're going to want the core
27:55
input though, to be human
27:57
created, especially if it's
27:58
video and a person talking about it. And
28:01
that's going to be an
28:02
important weight on the creative.
28:05
And obviously they're going to screw with
28:07
it as it goes on and, you
28:08
know, put the headline on your
28:09
forehead and whatever, but like the input
28:12
core is going to be something that's
28:13
human related. And I
28:14
think that will continue to be weighted
28:16
and maintained that way
28:17
because if meta doesn't
28:18
do that, they know that's going to be a
28:20
problem moving forward, you
28:21
know, that it's going to be
28:23
overrun with all this people saying
28:24
stuff, even if there's
28:26
disclosures that aren't necessarily
28:27
true or aren't necessarily real. And
28:29
people want to see, you know,
28:30
real things from real people.
28:31
And that's ultimately going to keep
28:33
people on the platform. And they know
28:34
that they don't want to
28:35
hurt DAUs in that way.
28:37
One of my little theories is that the
28:38
reason that some AI
28:40
creative does work so well when
28:42
it does work, even if it's not as, not as
28:43
much as people might
28:44
think, it's just that a lot of
28:45
creative is really bad to begin with.
28:47
And, and so the reason that
28:49
there will be a place for winning
28:50
creative along the way, it's just that
28:51
it's really hard. It's really, really,
28:54
really hard to produce
28:55
consistently, really good quality
28:57
creative that actually sells product.
28:59
It's, it's very difficult.
28:59
Oh, it's incredible. And so a machine
29:04
that can just do it at
29:04
volume, probably it's going to get
29:06
some things right. And, and it's going to
29:08
beat the, beat the average. And it does
29:10
still reinforce to me
29:11
that the real magic and a lot of this
29:13
stuff is in, is in the
29:14
context, basically it's, it's in,
29:16
it's in your ability as an agency to have
29:19
real point of view, have
29:20
real, real, uh, point of view
29:23
that is right about what makes good
29:24
creative and to, to actually be able to,
29:26
to use AI to, to amplify that.
29:29
That's, that's where I think it's going
29:30
to win. The thing that's
29:31
easy to forget is AI amplifies
29:32
slop just as well as it amplifies really
29:35
good things. Right.
29:36
So, uh, so, so, and they,
29:38
they often present actually kind of
29:39
similarly. It's, it's hard to tell the
29:40
difference at times.
29:41
And so, uh, so it'll amplify anything
29:43
that you want to amplify. And,
29:44
uh, and so you better get good
29:47
ideas, you know, let's go to another
29:48
thing that you brought up, uh, in this,
29:50
which is, uh, labor costs
29:52
and margins. And I, I want to talk about
29:54
this because I kind of think that like,
29:57
this is an interesting
29:58
topic for operators to think a little bit
30:01
about actually, uh, agencies
30:03
certainly, but for operators
30:04
as well. Think about this question of
30:07
what kind of margins is my
30:08
agency agency making and why?
30:11
Let me tell you my perspective on this.
30:13
And then I'd be curious what
30:14
the data actually says here.
30:16
Okay. My perspective on this is, is
30:18
partly informed by things I've talked
30:19
about with other founders
30:20
over time, but just that like standard
30:22
agency gross margin, by which
30:23
I mean the people and software
30:25
directly connected to doing the actual
30:26
work itself is between 40 and 60%. And
30:29
that that's kind of the
30:30
range that it ought to be at basically,
30:33
uh, gross margin, uh, on the
30:35
work itself as before any sort
30:36
of layer of OPEX on top of that, which is
30:38
a real thing in agencies.
30:39
Uh, and that in the end,
30:41
the net margin of agencies can get up to
30:44
like 30%, uh, maybe even
30:45
35% at the very, very best.
30:47
But really, uh, if you push either of
30:49
those numbers much above
30:50
that, the net or gross margins,
30:51
uh, you just create your risk for
30:53
yourself as an agency. And so
30:54
it actually isn't, you actually
30:55
don't want to go any higher than that.
30:57
It's better to actually apply more
30:59
services that create costs
31:01
rather than maintain the super high
31:03
margins, especially in the
31:04
AI world. Cause people will
31:05
just come for those margins. Again, your
31:06
margin is my opportunity. So if that's
31:08
true, that that's the
31:09
case, there's another factor though,
31:11
which is that it's very hard to scale
31:13
revenue fast. Like it is
31:15
in an econ business, right? Like agencies
31:16
don't go to $10 million in year two and
31:19
revenue. They just can't.
31:20
Uh, and so agencies must operate at a
31:22
higher percentage margin
31:23
on a lower revenue number.
31:24
Whereas an econ business might look and
31:26
go like, Oh, 20% margins for
31:28
an agency or something like
31:29
that. That's pretty good. Even 15%,
31:30
right? That's better than
31:31
a lot of brands are doing,
31:32
except it's of a, of a much smaller pie.
31:34
Uh, and so like the reason an econ
31:36
business can exist at 10
31:37
to 15% margins while being extremely cash
31:40
intensive is because scale is the way you
31:42
win in a lot of ways.
31:43
And you need to get the revenue number
31:44
out, but that's where you create OPEX
31:45
leverage and some of that.
31:46
And so, uh, so yeah, so there's, there's
31:49
like, it's just a very
31:49
different kind of model.
31:51
And my take here is that brands actually
31:53
ought to be okay with their agencies
31:54
making a higher margin
31:56
on a lower revenue amount. And then what
31:57
they should expect them to
31:58
do is expect them to make
32:00
pretty good margin on the services, but
32:02
apply really, really good quality
32:03
services. And that's
32:04
basically the way they ought to measure
32:05
things that trying to sort
32:07
of re in-house that work or go
32:09
shop for just cheaper. It's actually the
32:10
wrong way to do it. The agencies are,
32:12
are, uh, controlling
32:13
often your largest single line item in
32:15
your business. You want to
32:16
give them a strong incentive
32:17
to do a great job on that. Um, and yeah.
32:20
And so that's, that's like my
32:21
approach to thinking through
32:23
agency for us versus our, versus our
32:24
brand partners, et cetera. It's like,
32:25
yep, I'm going to exist at a
32:26
higher percentage margin than you, uh,
32:28
which we're not at the numbers I just
32:29
quoted by the way. Um,
32:30
so we're, we're working towards it, but
32:32
we're not there yet. And
32:33
so that's the case for us,
32:34
right? Is that we, we want to be there.
32:36
Um, but we're going to grow
32:37
slower than, than the brand.
32:38
Our top line is not going to push up
32:39
nearly as fast. And we're
32:40
going to do that in part,
32:42
because that's all, if we try to push
32:43
that top line up too
32:44
fast, that's the fastest way
32:45
for us to do really bad work is because
32:48
we tried to grow too fast, et
32:49
cetera. Um, and so you should
32:50
actually want us to make, if we start
32:52
trying to go do that, because you're
32:53
going to squeeze my margin.
32:54
If you're, if you're a partner, all
32:56
you're going to do is just make it,
32:57
you're just going to give me
32:57
a really strong incentive to do crappy
32:58
work for you. So that's the way I
33:00
approach it. What is it actually,
33:01
what is actually happening in the agency
33:03
world? We in the founders
33:04
community, a lot of our folks,
33:06
um, you know, we certainly have a
33:07
percentage of people that are
33:09
in the solo practitioner world.
33:11
Um, and they might have a couple of
33:13
contractors. Um, I would
33:15
say, you know, that's probably,
33:16
you know, we, we represent as well, 30
33:18
countries. We have members in 30
33:20
countries. Um, and so
33:21
this is mostly in the Western world. So,
33:25
you know, I think that's
33:25
caveat to put that in there, but
33:27
a lot of folks are, have seen, seen the
33:31
other colleagues of theirs
33:33
grow, um, and try to grow
33:35
too quickly. And they have said, I want
33:37
to stay small and keep it
33:38
small and their margins are high
33:39
and it's small pie, like you said. And I
33:41
think that works really well. Um, you
33:43
know, I think where we
33:44
see people that have really high margins,
33:47
um, is the, their entire team is
33:50
outsourced, um, or offshore.
33:52
Uh, and I don't, you know, think there's
33:54
necessarily anything wrong
33:56
with that if you do it the right
33:57
way. Um, and if you take care of those
33:59
people the right way and, you know, pay
34:01
them livable wage and
34:02
things like that, I think where, you
34:05
know, I, I guess I would jump back and
34:07
say the margin thing
34:09
is interesting just because I believe
34:12
people think, and you would, if you were
34:14
on X as an operator,
34:16
you would look at this and be like, look
34:17
at these fricking agency people are
34:19
buying cars. They're always
34:20
making a lot of money, you know, and I
34:22
think it's less than you
34:23
think it is one. Um, and I think
34:25
most people are having a really hard
34:27
time. And I think those that
34:29
are having in terms of growth,
34:30
and I think those that are having the
34:32
hardest time that have the
34:33
smallest amount of margin
34:34
are those that are in this phase of
34:36
trying to grow their agency. And there's
34:40
a lot of unintentional
34:42
agency growth that takes place because
34:45
they're just growing because
34:46
they want to get bigger and want
34:48
to be seen by their colleagues as a
34:49
bigger agency. That's a
34:51
very, that's a more common
34:53
thing when I get on calls with members
34:56
than I, than I would have
34:57
ever imagined I would hear.
34:58
I want to be at the big kids table is
35:00
always, I want David
35:01
Herman to know who I am.
35:03
That's what I hear.
35:03
Never underestimate the human desire to-
35:07
To be part of something.
35:08
To be part of something and to look more
35:10
successful than you are.
35:12
Totally. Yeah.
35:12
It is a fundamental motivating factor,
35:15
particularly when there is algorithmic
35:17
and financial incentive
35:19
to doing that.
35:20
Yeah, totally.
35:21
You're just taking that desire for humans
35:23
and algorithmically
35:24
shoving it right back in their
35:25
face.
35:26
Yeah. So that's really interesting. So I
35:28
think if you're, depending
35:29
on where you are in this,
35:30
you know, you're an agency.
35:31
Wait, actually, I want to go back and
35:32
clarify something. I'm
35:33
sorry to interrupt you.
35:35
You said you got on calls and are you
35:37
saying that on those calls, what you're
35:38
discovering when you
35:39
talk to people is they're actually not
35:40
making very much money
35:41
and they're struggling?
35:42
So there are a certain group of people
35:45
that join the founders community and
35:47
their why to join the
35:48
founders community is because they need a
35:50
place for support and
35:51
they're sort of feel like I'm doing
35:53
all this work. We're not making any more
35:54
money and I don't know what
35:56
I'm doing wrong. And we do,
35:58
you know, intro calls with every new
36:00
member and in those conversations and in
36:02
getting to know these
36:03
people, a lot of it is that they're, they
36:06
are like, man, I'm really
36:07
struggling. I'm trying to grow
36:09
so yes, there, there's a lot of that
36:12
internal struggle that
36:13
takes place and it's, you know,
36:15
it's, it's led by, like we talked about,
36:17
it's led by imposter
36:18
syndrome, wanting to be cool.
36:20
I'm wanting to appear a different way.
36:21
It's wanting, you know,
36:22
when I ask people, why do you
36:23
want to grow? You know, they have one or
36:26
two answers. One is, it's
36:27
like an ego one or one is
36:28
that I want to aim for a sale. Okay.
36:30
Well, that's a different, that's
36:32
completely different
36:33
type of a thing. I want to grow it so
36:35
that I can get above a
36:36
certain number so that my multiple
36:37
when I sell is higher. Okay. Totally
36:40
legitimate. I understand that. And so
36:42
how, what you, by pushing
36:45
on the, I'm going to hire, I'm going to
36:47
go out and, you know, find more clients.
36:49
I'm going to crank up a
36:50
pipeline, you know, this type of stuff by
36:53
pushing on that without first
36:55
establishing the why of what
36:59
you're doing this for is like the
37:01
craziest thing because
37:02
it's sort of like going in,
37:04
if you do therapy and you're like trying
37:06
to do therapy because all
37:07
this stuff in your family
37:08
bothers you, but you yourself haven't
37:10
done that work to understand what you
37:11
need, you know, like
37:13
this, this is the same thing. Like you
37:15
have to fix yourself and put your own
37:17
mask on first before
37:18
the, before you assist others. And that's
37:21
really what this comes down
37:22
to. I think a lot of people,
37:23
they just, they grow for the sake of
37:25
growing and look as an entrepreneur, I
37:27
get it. I am a hundred
37:28
percent in this and have done this where
37:30
I love, I love selling. I
37:32
love pulling on it. And then I'm
37:33
like, the more I focus actually on making
37:35
pure money, the less money
37:37
I make. And the more that I
37:38
go back to the, why am I building this
37:40
founders community or why am I coaching
37:42
these people is because
37:43
I care and I want to help people to be
37:45
successful. And, you know, it's cool,
37:46
much of other stuff around that, that
37:48
personally motivates me. And that's a
37:49
very different thing.
37:50
And so I think the more that you do that
37:52
work, the better off it
37:53
goes. And I think generally when
37:55
you get on, yes, margins are a lot
37:57
smaller. And there's a lot of
37:59
different things that you can
38:00
think about with that, but it's
38:01
interesting and surprising to see
38:03
certainly because it outwardly,
38:06
it looks a lot different. I mean, it's
38:07
interesting because what you're
38:08
describing is some individual
38:09
experiences that in some ways are a
38:11
little bit different than the data said
38:12
42% of agencies are running
38:14
margins above 30%. And of agencies of six
38:17
to 15 employees, 36% are at
38:19
40 to 50%. 16 to 30 employees
38:22
is the same 40, 50% on gross margins,
38:24
gross margins. That's not that. So net
38:26
margins, 41, 42% above 30%.
38:28
And then of the six to 30 group, the
38:31
gross margins of 40 to 50, that fits very
38:33
well with basically what
38:33
I just laid out, right? Which is like
38:35
that kind of thing. But then you're
38:36
saying at the same time,
38:37
there's people who are really struggling.
38:38
I'm going to just like put
38:39
in a different bucket. That's,
38:40
that's a freelancer, not an agency. And
38:41
it's a really different
38:42
job. And I don't, I did it for
38:44
a while. Like I, it's, I don't, I'm not
38:45
saying that on any kind of
38:46
a contest anyway. It's just,
38:47
and I understand, like, it's actually,
38:49
it's so hard to build an agency. It's,
38:51
it's, it's enough so
38:53
that I think, yeah, you can just make a
38:55
lot of money being a solo
38:56
founder and save yourself the
38:57
headache of trying to build old,
38:58
whatever. But it's like, yeah. Anyway,
39:01
it's interesting though,
39:01
that there's those, there's the mix
39:03
between what you're
39:04
hearing subjectively on calls,
39:05
and then what the subjective data is
39:07
showing. Totally. I mean,
39:09
the data, the reason I say that
39:10
is because I think the data does show
39:12
that there's a group of people that are
39:13
in the founders community
39:14
that we have assisted and helped, you
39:16
know, it'll be five years
39:17
that we've had this thing in June
39:19
that like, obviously we didn't, we played
39:21
a small role in their
39:22
success, but like that are people
39:23
that are running higher margins because
39:25
we've worked on this together
39:26
in terms of like, how do we run
39:27
organizations? And then there's the new
39:29
thing. So the reason I say this is
39:30
because if you're listening to
39:31
this and you're getting advice, I think
39:34
people listen to the
39:34
scalability school podcast are,
39:36
tend to be on the smaller end of a
39:38
founder and they're growing
39:39
and they're figuring it out.
39:40
And so if you're one of those people, I
39:41
just want to validate
39:41
for you always that like,
39:43
you're not alone in that, right? Like
39:44
there's not, I think, and that's
39:46
important to point out,
39:47
but yes, it does. Some of the data does
39:48
go contrary to what I
39:49
was saying previously.
39:50
Yeah. Yeah. Yeah. But it's interesting.
39:51
Cause I mean, I think both are real.
39:53
Did you want to talk about churn? We
39:54
didn't, I didn't bring that one up.
39:55
Uh, yeah, let's do,
39:56
let's do talk about churn.
39:57
In housing, in housing, in housing. Yeah.
39:59
Number one reason agencies lose clients.
40:02
Um, did you get anything subjective about
40:04
that or do you have anything?
40:05
30% number one in housing, 30%.
40:08
Well, I think it's the, I think it's the
40:10
worst move that many brands make.
40:12
I think it's like, it sounds so good.
40:15
And I guess maybe what I would say is
40:16
that a lot of in
40:17
housing, in fact, is, is like,
40:20
you know, you have 17% of churn happens
40:22
from perceived lack of performance.
40:24
30, 30% is in housing.
40:27
I would say those are actually kind of
40:29
the same thing that like that.
40:31
The reason somebody in houses is not
40:33
really because they just want to save on
40:35
the cost of their agency or they just
40:37
want to bring something in house.
40:37
It's because they feel like their agency
40:39
can't get them to the next stage.
40:41
And my theory about this is that actually
40:44
it's not really the solution.
40:46
It's not about more hours or being closer
40:48
or something like that.
40:49
It's, it's about the fact that it's
40:51
really hard to get past certain
40:52
thresholds of revenue and it requires a
40:54
different set of muscles.
40:55
And it's not really about your agency.
40:57
It's about you spending your time on
40:58
other things, you know?
40:59
So that's, that's all.
41:01
It's so, it's such a good idea to people.
41:04
I mean, well, I also don't have a problem
41:05
with in housing a priori.
41:07
Like, I think there's often a good reason
41:09
to do it, which is that you find
41:10
incredible talent that
41:10
you can bring in house.
41:11
If that's the case, do it.
41:13
Great.
41:13
You know, like you should get the best
41:14
talent you can working on your business.
41:15
But it's sort of a, the approach, the
41:17
idea that in housing is going to solve
41:19
your problems, I think
41:20
is often ill-conceived.
41:21
That's the point.
41:22
I think a lot of it within housing is,
41:24
you know, there's a lack of
41:25
resourcing people properly.
41:28
One of the main things that is a value
41:29
prop for an agency is that they're seeing
41:31
a lot of different things on a daily
41:33
basis and are able to
41:34
react generally quicker.
41:37
Because they've seen it and have been
41:39
there with another thing.
41:41
And, oh yeah, I'm going
41:41
to try that over here.
41:42
As it relates to in-house folks, many of
41:45
them just aren't resourced
41:46
as well as they could be.
41:48
And they're sort of brought in, I think,
41:52
a little bit sometimes as an ego move for
41:54
that particular person.
41:55
And that person then goes and says, what
41:57
I says goes, or what I say goes.
42:00
And it becomes like, no, I'm the expert.
42:03
I was the one that got
42:04
brought in as the head of growth.
42:06
And the learning sort of
42:07
shuts the door at that point.
42:08
And it's rare to find somebody that's a
42:11
true in-house growth director or whatever
42:14
you want to call this person.
42:16
You know, that comes into it and says,
42:18
you know, I know that I don't know and
42:19
I'm going to keep learning.
42:20
And that's part of this position.
42:22
Usually they come in and say, well, look,
42:23
I've done all this stuff.
42:24
I've grown all this.
42:25
And the person hires
42:26
them because of that ego.
42:29
You know, I do recruiting as well.
42:31
And I hired, I think last year, it was
42:33
like seven or eight heads of growth.
42:35
And that's a big
42:36
conversation we have with our clients.
42:38
I know I just had a guy that we're hiring
42:40
for a head of growth
42:40
for their company now.
42:42
And they're doing really well.
42:43
And he said, you know,
42:44
look, I want to kill her.
42:45
I want somebody to come in.
42:46
And I'm like, I understand.
42:48
But you also want somebody that's curious
42:50
and is really hungry to be like
42:51
continuing to make
42:52
sure that they understand.
42:53
Because, you know, even for me, I mean,
42:55
it's crazy the amount of tactical, as
42:58
much as stuff is even automated, the
43:00
amount of tactical media
43:01
buying stuff that changes.
43:03
I mean, you know, min value or min ROAS
43:07
with value bidding, like one
43:08
week, you're like, oh, yeah.
43:10
It's like that stuff changes so fast, you
43:12
know, that you want to be able to have
43:13
somebody that's hungry to bring that in.
43:15
So I think that's
43:15
always really important.
43:17
And in the in-housing thing, it's
43:19
generally, I agree with you, born from a
43:22
place without the right framework in
43:25
terms of what it looks like to be
43:26
successful in that role.
43:28
Yeah.
43:29
I think people ask me sometimes, like, is
43:31
AI going to take away
43:32
your media buying job?
43:34
And I just can't see it yet.
43:35
And there's a lot of reasons for that.
43:37
But it's to your point.
43:39
There's things are changing so fast all
43:41
the time on these platforms.
43:42
And at the same time, what is partly
43:45
required to win is
43:47
point of view on what works.
43:48
Like, it just it just actually matters.
43:50
Like, I don't know.
43:51
There's like a debate, I think, out there
43:53
of like, is there a playbook versus
43:54
there's like the playbook
43:55
versus no playbook people?
43:56
Like, there's the there's
43:58
the run the playbook team.
44:00
And then there's like
44:00
every brand is different team.
44:02
I'm definitely on team playbook.
44:05
And I I and I think that the playbook,
44:09
the problem is that it is like it first
44:11
of all matters that you master it.
44:13
And secondly, the reason the reason
44:14
people think there's no playbook is
44:16
because somebody did a bad job delivering
44:17
something they called a playbook or
44:19
because they had the wrong playbook or
44:20
something like that.
44:20
But it's not actually
44:21
because their brand is different.
44:22
It's because it was delivered poorly.
44:23
But then secondly, I think it's, you
44:26
know, there's this thing where where
44:27
people people are disconnected from
44:31
knowledge as it comes in all the time.
44:33
And so exactly to the point that you're
44:34
making, it's much harder as an in-house
44:36
person to stay current on those things
44:38
because you just don't see as many reps.
44:40
You just and it's not anybody's fault.
44:42
It's just you just don't.
44:43
And so you just sort of get stuck in your
44:45
lane and it's really
44:46
hard to do things well.
44:46
Now, I've seen this work out very well
44:48
for some brands where actually they sort
44:50
of people who willingly say, I'm going to
44:53
ignore all that noise because a lot of
44:55
that stuff is actually shiny objects.
44:56
I'm just going to do the
44:57
thing that I know works.
44:58
And I don't really care if it's not fully
44:59
optimized because I know it will I know
45:01
it will accomplish the big goal.
45:02
And I actually have seen
45:03
that work decently as well.
45:04
In that person, in that case, the person
45:07
that may be actually admitting that they
45:08
know that like it's not the most
45:09
optimized way to do it, but they don't
45:11
care because they're able to deliver the
45:13
thing that they want over a long, you
45:14
know, and I think there's
45:15
actually some wisdom there.
45:16
But yeah, it's it is interesting to see.
45:19
I just think I think the real the real
45:21
shiny object of in-housing is this idea
45:23
that I'm going to save money and have a
45:25
fully dedicated team myself.
45:26
But I just think that
45:28
that's kind of not true.
45:29
Like, it's just you're going to lose
45:30
money, but it's in different places or
45:32
you're going to end up paying that person
45:34
so much money that who's who's really
45:36
good that it's going to be more expensive
45:38
than you think or
45:38
something like that, you know.
45:39
So, well, let me say this.
45:41
The places I've seen it be the most
45:43
successful are where the founder has an
45:46
understanding of of growth marketing in
45:50
terms of that playbook and
45:51
understands this is what we do.
45:55
This is hey, you know, I can see this
45:57
over here that you're doing and we need
46:00
to adjust that that that flow or that
46:02
lander or, you know, whatever.
46:04
And and that person, the growth person
46:06
says totally let's do
46:08
that and revamps it.
46:09
That's where I've seen it where it
46:11
becomes a real issue is when the founder
46:13
hires the expert in-house before they've
46:16
hired an agency sometimes and they don't
46:18
have that in-house knowledge and they
46:20
look at this person and
46:20
say, why isn't it growing?
46:22
Why isn't it growing?
46:22
Why isn't it growing?
46:23
And that growth director sits there and
46:25
feels that they're under pressure all the
46:26
time and then, you know,
46:28
that their boss doesn't get it.
46:30
And that just becomes this area where,
46:32
you know, the average tenure of a growth
46:33
director, I haven't done a
46:35
study on this, but I should.
46:37
I mean, it's got to be
46:37
like a year and a half.
46:38
Like it's not long because there usually
46:41
is just so much miscommunication between
46:44
those two in terms of
46:45
not miscommunication.
46:46
There's general miscommunication, but
46:48
then there's also a general
46:50
misunderstanding of each other's
46:52
motivations, desires and and like what
46:55
you're what it takes to get there.
46:57
And I think that has to be there needs to
46:59
be a lot more time spent there to make
47:01
sure that they truly
47:02
understand one another.
47:03
You should get this data
47:04
first for a future thing.
47:05
Like, yeah, I will.
47:07
Get a bunch of operators and find out.
47:08
I'm doing an ounce like a sort of a
47:10
general employment one now with we're
47:13
working on with Leandro from Propel,
47:16
which you probably know Leandro Cabrini.
47:18
So we're working on that now.
47:19
It's a little bit kind of in there, but
47:20
nothing on this that particular topic.
47:23
But we could we could we
47:24
could maybe weave that in.
47:25
It's a really interesting thought because
47:26
I think I think what it reflects is a
47:28
sort of short termism in general in D2C.
47:31
And I think part of that is because like
47:32
sometimes that path from zero to 10 can
47:34
be really fast for brands.
47:36
So then they sort of expect
47:37
everything to work that way.
47:39
And those are the brands, I think, that
47:40
are the ones set up for you're going to
47:42
bring in a director of growth and expect
47:43
them to like make
47:44
everything like the good old days.
47:46
And it just doesn't go as
47:47
fast as you want, you know.
47:48
So, yeah.
47:49
All right, man.
47:49
Did we leave anything out?
47:50
What?
47:50
Tell me.
47:51
I'm sure we're going to have to go check
47:52
out the whole thing.
47:53
But read the report.
47:54
All right.
47:55
Yeah.
47:55
Yeah.
47:55
Yeah.
47:56
I think it is interesting.
47:57
It's a really good conversation.
47:59
I'm enjoying how much when I'm talking to
48:02
you about this, how much I hear all of
48:06
the conversations you're having with
48:07
founders in your answers.
48:08
You know, you're able like it's obvious
48:09
that you're seeing and hearing real
48:11
things in the space
48:11
that are really insightful.
48:13
So it's it's really good.
48:14
Yeah.
48:15
I mean, you know, that's really what my
48:16
job is now and what I live to do.
48:18
And I wake up every day.
48:19
I have like 30 to 40 direct messages from
48:21
people around the world that are bringing
48:23
me questions that are everything from
48:24
personnel to margins to everything media
48:27
buying related diagnosing issues.
48:30
And and I love that work.
48:31
I mean, it's it's like totally I'm in the
48:33
EK guy of my life doing this.
48:35
So it's fun and it's interesting.
48:37
And I think it's not just my opinion.
48:40
You know, it's it's like, yeah, this is
48:42
generally what we see.
48:43
And this is kind of
48:43
where people struggle.
48:44
And hopefully this
48:46
report as well can illuminate.
48:47
I've heard from a lot of people, oh, that
48:49
makes me feel less alone
48:50
or makes me feel better.
48:52
And that's like
48:52
totally why we put it out.
48:54
Honestly, it's kind of put it
48:56
out there to see benchmarks.
48:57
And we're going to try to do a lot more
48:58
benchmarking work because I think we all
49:00
kind of there's this we just
49:01
wonder about different pieces.
49:03
Do you see that? What
49:04
does that look like?
49:05
And so that's always really important to
49:06
go on to tell people understand what they
49:08
can do to improve and
49:09
what other people are seeing.
49:11
What should people do if they want to
49:12
join Foxwell Founders?
49:13
Yeah, Foxwell Founders.
49:14
Just check it out.
49:15
Foxwellfounders.com.
49:16
And you apply and we
49:18
read all the applications.
49:21
And we yeah, I'd love to
49:22
see see your application.
49:24
Otherwise, you know, you can always check
49:26
out the Foxwell Digital blog.
49:27
We've really cranked up
49:28
our content this year.
49:29
We're really trying to put
49:30
out a lot of great content.
49:31
So check some of that out, trying to keep
49:33
it really relevant and really out there
49:35
with good stuff that can be really useful
49:37
to you in your day to day.
49:38
So, yeah, I look
49:40
forward to hearing from you.
49:41
And anybody can always email me, andrew
49:42
at foxwelldigital.com.
49:43
I'm happy to hear from you.
49:44
Links for all of that in
49:46
the show notes, of course.
49:48
And if you want to work with AJF Growth
49:50
for your agency, you can go to
49:50
ajfgrowth.com and fill
49:53
out the little intake form.
49:54
It's on the website there so that I can
49:56
learn a little bit about your business.
49:58
We've got just a little bit of client
49:59
space right now as we are growing, like I
50:02
said, not too fast because I
50:04
want to keep the work high.
50:04
So tell me a little bit
50:06
about your brand there.
50:08
I'll get back to you.
50:09
That email goes straight to me, and then
50:10
we'll talk about if I can be any help.
50:12
Even if I can't be any help, I might know
50:14
somebody like Andrew who knows somebody
50:16
who can be some help, or I know somebody
50:18
directly who can be some help.
50:19
So reach out when that happens.
50:22
This was very fun.
50:23
Thanks for doing this
50:23
joint episode, Andrew.
50:25
Thank you.
50:25
Appreciate it, man.
50:30
This episode is brought to you by the
50:33
Foxwell Founders membership that Andrew
50:35
and his wife, Gracie, run.
50:36
It has been absolutely pivotal for not
50:39
just the Homestead team, but
50:40
the Easy Street Brands team.
50:42
We've had, I don't even know how many
50:43
members are currently in there that are
50:44
part of our ecosystem.
50:46
But when it comes to anything from
50:47
learning ads to understanding what's
50:49
going on to building an
50:50
agency to knowing retention,
50:52
it's been absolutely useful for our team
50:55
when they get stuck or they need help to
50:56
just go there and
50:57
resource all the other experts.
50:58
So definitely would recommend it for
51:00
anybody that's looking to take it a step
51:02
deeper, try to get a little bit more
51:04
knowledge on growth
51:05
marketing and all the world D2C is.
51:07
I think one of the most incredible things
51:09
about it is you can just like open up the
51:10
Slack group every single day.
51:12
You can pin your favorite channels for
51:13
the topics you care most about.
51:15
And like every day there's going to be
51:16
somebody who just like, because they want
51:18
to contribute something valuable to the
51:20
group, you can go learn
51:21
something every single day.
51:22
And it's going to be extremely useful.
51:24
There's some ballers in there that you
51:26
just get like the benefit of learning
51:27
from that, like for the cost, like you
51:30
couldn't pay them that for their time.
51:32
But through the membership, like you get
51:33
access to some incredible
51:34
people and tons of resources.
51:36
Yeah.
51:36
I mean, I think the biggest resource to
51:38
me too is like the events that, you know,
51:40
Foxville Founders does.
51:41
They've been able to do some, even in
51:42
Wisconsin, even in the boring state of
51:44
Wisconsin, which is pretty awesome.
51:46
Getting people together in person and
51:48
able to have really just like honest
51:49
conversations of what's going on, what's
51:51
working for them now, you know, where
51:53
they're at in their business and knowing
51:54
that there's going to be, like Brad said,
51:56
some real killers in the space in this
51:58
membership that can help and are willing
52:00
to take the time and help.
52:01
So that's been a huge part of why a lot
52:04
of our team have
52:04
really enjoyed it as well.
52:05
And the applications are now open if
52:07
you're looking to join.
52:08
So Foxville Founders.
52:10
Yeah.
52:10
FoxvilleFounders.com.
52:12
Go check it out.
52:12
Go apply.
52:18
Yeah.
52:19
Please go check us out on YouTube.
52:20
Rack up those views for us.
52:21
We'd love to see it.
52:22
And then subscribe.
52:23
Make sure to
52:24
subscribe on YouTube as well.
52:25
And I relentlessly refresh the YouTube
52:26
comments because it dictates
52:28
my mental health for the day.
52:29
So please say
52:29
something nice about all of us.
52:32
Thank you, everyone.
52:33
Thanks for listening.
52:34
Honestly.