There are so many ways to start and run a marketing agency that I couldn’t begin to list half of them.
I’ve consulted with agencies that only help a single industry (a type of niching) and I’ve consulted with a lot of agencies that prefer to help as many different types of business as possible and let the niche pick itself.
Regardless of how you do it, you tend to see more lead gen or ecommerce clients, rarely an even split.
I’ve seen arguments about whether one is better than the other, but rarely examples of why people prefer their favorite type of account.
So I’ve listed some bullet points below with pros and cons to running lead gen or ecomm. You can choose to focus on one versus the other and you may see better results for it.
Lead Gen
Pros:
- Simpler setup
This really only applies to new accounts, but when you take over a new lead gen account, there are usually fewer things that can break and go wrong. - Wider variety
There are lots of different types of lead gen company. You’ve got B2B, B2C, Local, National, and so on. Struggling to get those quality leads at scale for the B2B company with no brand (lol)? Try swapping over to B2C for a completely different market and customer journey. - More potential clients
If you’re worried about finding enough prospects, look no further. There are way more lead gen businesses and they’re easier to find. Think about a service you’ve used before and you’ve got a decent starting place for lead gen. - Easier to hire help
I don’t want to downplay the significance of being a Google Ads expert, but it really doesn’t take as much experience to run ads for lead gen vs ecommerce. Understanding the buyer is a similar process, but the actual management of the account is very different. If you don’t understand Google Ads and don’t want to risk hiring someone who doesn’t know how to run them, lead gen is a safer bet.
Cons:
- Harder to manage conversion quality
A purchase is a purchase, but in lead gen you don’t really know how good a call or form submission is. Clients under pressure from their own leadership pass that along to you with complaints of poor lead quality, but in many cases you don’t have ways to verify that. If you are in B2B and they have a CRM you can upload late-stage deals as offline conversions with sale value, which gives Google much better data, but not every company will share that access with you and you may still struggle with debates about attribution.
- Harder to get more budget
Along with the attribution and conversion quality problems come a struggle to get more budget. You may have tons of conversions, but if they’re not closing calls and/or calling people who filled out a form, they won’t see the value in adding budget to drive even more conversions they don’t close. Even when they see the value, they may be locked in to their current budget for the year by leadership or a board. There’s definitely more red tape in lead gen.
- Harder to prove your overall impact on each client’s growth
As with the above, lead gen often relies on proof of attribution. Each department (in larger companies) are grappling for credit so they can keep their jobs and get more budget. If you can’t help them prove the revenue and profit you’ve influenced, you’ll have difficulty keeping them as clients because they’ll feel that their job is in danger.
- Local should have LSAs, which you can’t directly manage and which may eat into your numbers/attribution
If you’re targeting smaller lead gen accounts you’ll definitely want to make sure your local service-based clients have local service ads (LSAs). These can be cheaper and more effective than standard search ads in a lot of cases, but they will take away from your search ad clicks and conversions and there’s not much you can do to manage them beyond adjusting budget and disputing bad calls. Growth is growth, and you should do what’s best for the client, but LSAs can take away from your attributable revenue if your client is comparing the two.
Ecommerce
Pros:
- Easier to manage conversion quality
You may have some complicated funnel work to do, but in most cases with ecommerce, a conversion is a purchase. You don’t have to guess whether it was high quality or low quality, you just need to look at the value and cost and try to get more of them at your target ROAS. - Faster evaluation of test results
If you’re making changes in an ecommerce account, you can see the results much more quickly in most cases. Yes, occasionally with lower spend you will have to wait longer, but if you make a change and don’t see sales, you know it didn’t work. Lead gen is often more complicated. - Easier to get more budget
I’ve worked with some ecommerce stores that had fixed budgets, but most of them are happy to spend as much as possible as long as they’re profitable. The freedom here is wonderful and it’s more fun to be able to increase spend without asking, but you have to make sure the business knows their numbers (bonus points for creating a Profit On Ad Spend column) so they don’t end up going broke on what looked like a profitable ROAS. - Easier to prove your value
You may get complaints about low sales volume or certain products not selling as much (usually a market demand problem, not bad advertising), but you’ll never really get complaints about poor lead quality. That alone is a reason to go with ecomm over lead gen.
Cons:
- More complicated setup
With ecommerce, you have to worry about Merchant Center, data feed management, tax and shipping costs, and Shopify controlling whether you can track what happens during the checkout process (worst paywall ever). You don’t generally want to take on new accounts if you can avoid it (you have to start somewhere), but even existing accounts have lots of moving parts that may have been set up poorly. If you don’t have your processes dialed, you’ll learn very quickly how different ecommerce accounts are. - Harder to hire help
In line with the above con, you really need to have experienced help if you’re going to run ecomm accounts. You can’t just jump in and figure it out as easily as you can with lead gen (not to downplay the difficulty of some lead gen accounts or Google Ads in general). If you don’t know Google Ads well, you probably want to stick with lead gen unless you have help hiring your talent (I offer that help, btw). - More reliance on PMax
Performance Max campaigns have come a long way since they started, departing a little from the complete black box they were. They are still, however, way more volatile than Standard Shopping or the beloved Smart Shopping that they replaced. If you’re going to be in ecommerce accounts as your primary focus, you’re going to have to learn the scripts, tools, and hacks to get the most out of these campaign types. - More success factors out of your control
In lead gen, you can crush it with a great offer, great landing pages, and a couple of decent keywords. Ecommerce can bring a great offer and great product detail page (or landing page) to the table and the keywords won’t convert. You can then optimize the data feed and it still won’t convert. Then you optimize the cart and checkout experience and see a slight bump. Then you realize that you’re selling the same product on Amazon for less money and free 2-day shipping (vs the $16 shipping from your site that takes 5-6 days). There are a lot of success factors in ecommerce that you can advise on, but that can’t be changed for whatever reason. If it works, it’s great. If something isn’t working, it’s not always a simple matter to find the source.
“And Solutions”
If you decide not to choose between the two, you’ll want to make sure you have people with ecomm experience taking those accounts and cross-training the lead gen people if they’re able.
You’ll also want to make sure you have different reporting and processes for ecomm vs lead gen. It may seem obvious, but I’ve seen plenty of agencies that bring on their first ecomm client or two and don’t think to change how they serve them.
Ecomm clients want to see revenue, profit, aov, etc. All the money-metrics. You may need 3rd party attribution software like Triple Whale or Northbeam to help you determine how much of the reported revenue you actually drove and to inform your optimization choices.
Depending on the size of the client and the length of their sales cycle, you can’t usually report on revenue with lead gen clients. You can estimate revenue if they give you their close rates and deal values, but smaller clients in particular often overestimate their close rates and estimated revenue is way higher than the actual numbers.
Attribution is also a big deal in B2B lead gen, as marketing and sales departments live and die by their influenced pipeline. The larger the client’s business and in-house team, the more you’ll want to look into 3rd party attribution like Hyros or Segment.
If you’re only serving a few ecomm clients and a couple of larger B2B accounts, it may be wise to pass the cost of these attribution platforms along to them. Some clients will already be paying for these platforms, in which case you should try to get access so you can benefit from the more accurate (hopefully) data and go over the numbers on reporting calls.
Conclusion
At the end of the day, I recommend serving the clients for whom you can get the best results with the highest degree of consistency.
It will be better for them and better for you.
Sometimes you need to serve anyone you can, but as you grow, you should try to find a way to narrow your focus and serve clients based on fewer and more stringent criteria.
If you’re curious about how I work with agencies or if you’re frustrated with your agency’s profitability or retention of clients or employees, feel free to reach out to me and I’ll see how I can help. I never charge for the first consultation and if I can solve it in 30-minutes, there’s no reason to pay for my services and you walk away happy.
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