Repeat after me: Don't. Do. It.
Advertising agencies are good at many things, but like trying to drive the Autobahn with a learner's permit, hiring an agency as an early-stage startup does little more than set you up for disaster. That's not to say that advertising agencies are all bad (disclaimer: I own an advertising agency and have worked in the industry for nearly 15 years, so admittedly I may be a bit biased), but spending what monies you have in the bank on agency retainer fees and advertising media is about as far from smart as you can get.
Here are five reasons your early-stage startup should run, not walk, from advertising agencies.
1. You have no bloody idea who your customers are.
Great advertising agencies are experts at generating customer demand. But until you validate the attributes of the kind of person who will give you their hard-earned money for whatever it is you've built, trying to scale demand simply won't work. Instead, talk to customers to work out the kinks. Once you're sure you know who your buyer is, then turn to an agency to help you generate more conversations and manage the lead funnel.
2. Branding is meaningless without paying customers.
Young companies take on the persona of their founders. As you grow, that will change. But in the near-term, your brand is all you.
Yes, you need to have a consistent brand presence for your business. No, it does not make sense to invest in brand awareness campaigns as an early-stage company. You monies are best spent on learning and selling. Creating warm fuzzies around your brand are best saved for later.
3. Most agencies aren't built to move as quickly as you can.
In my experience, early-stage companies win when they quickly learn from their mistakes, make proactive shifts in strategy and check their ego at the door. Now I admit I'm generalizing here, but by contrast most advertising agencies: 1) research, 2) strategize, 3) plan, 4) get their ego wrapped up in their work, 5) execute and 6) measure. Nothing in this list is about pivoting or moving quickly.
Early-stage startups simply can not afford to be weighed down by even a hint of ego or bureaucracy. Fight to stay nimble and you'll have a much better chance to win.
4. Good advertising agencies are expensive, and the cheap ones aren't worth your money.
As the saying goes, "you get what you pay for." Good advertising agencies have expertise and talent. They do what is required to generate revenue and minimize wasted budget. All of this take time and in the professional services world time equates to increased cost.
Be very wary of agencies that promise incredible results at exceeding low costs. There's no magic bullet to demand generation. Rather there's just the fundamentals that take time and expertise to implement effectively.
5. Even if you wanted to, you probably can't effectively manage an advertising agency relationship anyway.
More often than not, the biggest hurdle to startups working with an advertising agency is that you have no idea how to effectively manage the agency relationship. Working with an agency takes... well... work. You have to provide strategic input, respond with feedback, have a clear view of what you want and be able to articulate what "good" looks like. You have to help an agency succeed just like you would help your employees achieve their goals.
Too often startups look to advertising agencies as a way to outsource their marketing department. That simply doesn't work. Until you're ready to play an active role with advertising agencies, avoid them like the plague.