Yes … and no. The question of how much digital marketing agencies should charge is a central debate in the industry. It’s true, we are getting more done with fewer people, thanks to artificial intelligence (AI). But marketing costs aren’t always that straightforward. AI has set the traditional billing models on their collective ears.
So, how do you determine your ROI for your marketing spend, and how do you assess whether you should be paying more or less?
Let’s break down the aspects to consider and give you a plan.
Currently, at Power Marketing, we use nine different AI tools to varying degrees. But finding these products, researching, testing, and training on the platforms takes time. Most of these products are sold on a monthly subscription basis, but more and more are being sold as tokens. These subscription rates can increase, and token costs based on usage can vary widely from month to month. So, there is a human capital expense to AI, as well as a hard expense.
When the AI race exploded in 2023, Power Marketing used tools such as Jasper, HubSpot, Perplexity, and DALL-E. Although HubSpot wasn’t AI in 2023, it was developing AI systems. In the process, the software became extremely complicated, while most clients needed only a few functions. So the Power team limited our recommendations to a limited number of clients.
Perplexity and Jasper didn’t disappear; they simply became less effective as the major large language models (LLMs) released newer versions. And DALL-E just shut down.
AI tools are highly volatile, so digital marketing agencies spend money sifting through them to weed out “the next big fad” and find platforms with genuine staying power. Fortunately, most AI pricing is fairly low because it’s still a new technology, and the competition is fierce. However, prices for the most popular/most used tools are likely to increase.
For example, the ChatGPT Plus Plan, its most popular plan, costs $20 per month. Much like streaming services (I’m looking at you, Hulu), that price will balloon if ChatGPT becomes the dominant AI platform.
With AI, fewer people can do the same amount of work. So labor costs go down, especially for the behind-the-scenes work involved in web development, SEO, and design.
But you aren’t paying a digital marketing agency for an AI output. AI can’t review and present a high-level strategy without oversight. It can’t create an intricate home page design without a professional to revise it for the best user experience. Most of the content it generates is generic at best, and AI hallucinates. This is why you need professional writers and web developers to rewrite, edit, and oversee all AI output.
Any time saved by AI should now be used to produce better-quality work. Initial processes (first-draft web pages and blogs) are now faster, so marketers can spend more time on strategy and on optimizing website content and performance to drive consumer action.
And don’t forget about one-on-one time. The more you use AI, the more your team’s human interaction should increase. If you were having quarterly review sessions, more time should be available for possibly monthly meetings.
This includes response times for issues such as broken web pages, email malfunctions, and invoice/payment issues. There’s nothing worse than finding out your website is down and having to email a generic address like [email protected]. The time saved by AI should be partially dedicated to improving the customer experience.
Ask for a review of your services. Is your agency evaluating the best plan of attack for your digital marketing each month with monthly audits? In most cases, the approach (and spend) will vary based on the most important elements for that month, such as conversions.
How much time does the agency spend on content creation (blogs), email/ad campaigns, and website technical updates? Look at your initial agreement. These services often make up the bulk of your digital marketing expenses in terms of labor.
Keep in mind that most agencies no longer base pricing on an hourly rate. The charge is based on output (e.g., two blogs = $900). But, in reality, agencies still log their time on every project. So less time used should leave time for more output.
And let’s not forget the human element. In my opinion, the key to a successful digital marketing agency (as well as any business) is optimizing output while maintaining the “human loop” in interactions. It takes person-to-person meetings for monthly reporting, strategy, and brainstorming to drive marketing results.
Ask your agency: Has the level of human interaction at the agency increased, decreased, or stayed the same over the last couple of years?
One thing hasn’t changed since AI: Profitability is the obvious goal of any digital marketing agency relationship. Whether it’s return on ad spend (ROAS), cost per acquisition (CPA), cost per lead (CPL), or just revenue growth, the bottom line is, “Is my cost efficiency better?”
AI has completely changed the landscape of digital marketing. So, if you’ve been paying the same amount or more over the last two years, it may be time to sit down with your agency and go through the questions above to assess your marketing spend and ROI.
Got more questions about marketing and AI? Power Marketing can leverage AI and the new online marketing environment to create profitable opportunities for your business. Contact us today to learn how our AI-integrated services can help make your brand not only searchable, but also recommended, cited, and visible in AI responses.