The End Of Agency Commoditisation - A Conversation With Mikael Dia

Hey everyone, and welcome to this week's Agency Accelerator podcast. Now today, I'm really excited to be joined by Mikhail D. The founder and CEO of Funalytics. Now, in an era where so many agencies struggle to look different because they, quite frankly, look commoditized, Mikhail has been at the forefront of helping agencies differentiate themselves through strategic thinking and data driven decision making. His company, Funnelytics, which I'm sure many of you have heard of, provide powerful tools, tools for agencies to visualize, analyze and optimize their marketing funnels, enabling them to offer unique value to their clients and most importantly, stand out in a crowded market. So thanks so much for joining me, Mikael. How was my introduction?

That was really nice. Thank you for having me. It was very concise and perfectly on point, so I appreciate it. Thanks for having me.

Good stuff. We're really glad to join. You're joining us today. So in your experience, what are the key factors that lead to agencies being commoditized and how can they start to sort of break away from this trap?

Yeah, I mean, if you think about this, I can go right now on upwork or any kind of freelancer site and find any service provider for $5 an hour to $500 an hour. If I want somebody for SEO, I, I'm going to get somebody for SEO. If I want a Facebook ads person, I'll get a Facebook ads person. Right? And I can, I can kind of come up with that at any given time. And then similarly, learning these skills has also become very much open, open source. Basically, I can go on Udemy or YouTube and I can get a whole Facebook ads course on how to run Facebook ads for free. And now all of a sudden it creates this dynamic where somebody who doesn't really know how to run Facebook ads other than knows what buttons to push, can go on upwork, set up a profile, say they charge 30 bucks an hour, 50 bucks an hour, whatever it is. And now all of a sudden they're going to start to get work. And what happens is the businesses are the ones who are suffering because that person, unfortunately may know how to push buttons in a Facebook ad account. It certainly doesn't mean that they know how to make that click, become an actual customer. Right? And ultimately, as a business owner, that's all I care about. I care about making sure that I'm getting results and I'm getting customers. So how do we fix this? How do agencies differentiate themselves and kind of truly provide real results for a client? Well, number one is it has to start with Strategy first, meaning I've got to know how my strategy, not my tactic, which may be SEO or Facebook or you know, conversion optimization or whatever, that tactic is not the tactic, but the strategy, which is the combination of tactics in a sense leads to the result that my client cares about. Right. So the best way to do this is to visualize that strategy to kind of create a picture for your clients to show here's how all of these things, all of these components fit together to help you achieve this end outcome that you care about. And then the other thing that now matters as an agency is I should be able to deliver all of the things that are required to get that end result. So if I'm going to put on the strategy that we're going to create five blog posts and all of those blog posts are going to go to some sort of opt in where somebody's going to download a white paper on this particular topic and we're going to use SEO plus ads to drive people to those blog posts. And you know, after they put in their name and email, there's going to be email follow ups that's going to send people to a sales page. And so let's say that's the strategy to get, you know, sales or something like this. If I'm going to propose that strategy, because that strategy is what's going to get them the result as an agency, I should be able to deliver on all that, all of the aspects of that strategy and that's how I can no longer become commoditized. Because you're comparing somebody who does only SEO to an entire strategy that gives me the end result that I care about. Therefore I can charge higher, I, I can close easier because I'm selling the outcome that they care about and I'm not really seen and compared to somebody else because their proposal says we'll do SEO. My proposal says we're going to put together this entire thing that's going to get you the end outcome that you care about.

Yeah, that's so good. And there's a few things I wanted to unpick there. First of all, that commoditized tactical provider, that person that's found on Upwork or Fiverr or wherever they are, the result of, or the result of that type of agency means that there's a big turnover in work, right? Like clients stay with an agency for six months, they use their bag of tricks that they've got for SEO or PPC or whatever it is, they run out of that. And because they're not Seen as strategic, but very tactical and commoditized. The client just swaps them in for the next agency. And so I think, you know, for people listening, if you want to have a longer lifetime value of clients, then you need to make sure you lead with strategy, as Mikael says. The other thing I wanted to ask you is when a client pushes back on this because they say, hey, we just want you to run a PPC campaign or we just want you to optimize our website, what advice? And you're kind of trying to lead with strategy. What advice would you have for an agency who's finding themselves in that situation?

What advice would I have or what would I say? Because maybe those are two different things.

Well, what would you say if it had you and what advice would you have? What?

What I would say is, I would say to a client, that's fine, go and find somebody on upwork who can execute on that. Cost you maybe 10 to $15 an hour. Hopefully it converts and hopefully you've thought about all the other aspects to make sure that those Google Ads convert into customers. However, we don't only focus on the ads, we focus on the end result. And there's other pieces that are required in order to make sure that those Google Ads convert into actual customers. And we look at the entire strategy. So if you only want somebody to push buttons, no problem. You know, here's where you should go for that. If you want somebody who actually cares about the end result, that's where we come in.

Yeah, great, great answer. I guess I'd say the same thing. And I think my answer to someone who posed that question to me would be they're probably not your ideal target client. Because if they don't value that whole kind of stepping back and saying, what is it you're actually trying to achieve and is this the best way of achieving that, or are there some other things, then that's the kind of client you want because they're going to work with you strategically. When you mention about, you know, you'll provide, you should provide this whole offering. Are you suggesting that agencies should broaden their offering or are you suggesting they should partner with other agencies that have that specialism? If they don't have that specialism, I.

Think, I think what you need to really truly get to is what is everything required in order to get the result that the client cares about? And ultimately whether I outsource some of those components or I have the in house capabilities to deliver on those components, my responsibility as an agency is the outcome the result that the client cares about. And for example, if on page SEO is a requirement for the result and the strategy that I've put together, and I don't have somebody who can do on page SEO, but I have a supplier who can do it, then that's fine. Right. This is where as an agency you have the ability to think of freelancers and to think of the commoditized service as your work. Like as the people that do the work. Right. So instead of you thinking of your agency as I am the person doing the SEO service, start thinking of your agency as I'm the person who comes up with the whole strategy. And I just happen to know this person who does the SEO service and this person. And now all of a sudden you're this curator who says, okay, well I know that I can get these people to do these things and maybe I have some of them in house. Right. But now I can go to my client and ultimately deliver the result that they care about.

Yeah, and of course. Absolutely. Because the client doesn't really care about the bits and bytes of how you do something they care about the outcome of.

Absolutely.

You know, is the outcome delivering, you know, what they expected and they don't. Then they. In fact, I often say to people that it's dangerous when the clients start trying to tell you they're almost show that they're experts in what you do, because of course they're not. And that's why they've implied you. So you want to kind of keep that away from them. How do. Let's talk a little bit about Funnelytics. How does. I mean, for some people probably won't know the product, some people will, but how does the Funnelytics support you in this process of being more strategic for clients and visualizing the whole process?

Yeah, that's a good question. So we build funnel analytics off of this framework that every agency who's result oriented does. And basically we always go through the same cycle, which is plan, measure, optimize, maybe you throw in, build in between plan and measure. But basically what we do is we're going to come up with a strategy. Right? We're going to come up with a. We have a goal in mind. Generate more sales, generate more leads, generate more appointments, whatever it is. And we're going to come up with a strategy to make that happen. And in order to actually get that strategy in place, we need to plan it so we need to visualize it. We need to get everybody on the same page. We need to know what needs to be built, what needs to be done. So we need to plan that entire strategy. Then after we go and build it, after we go and write the copy, build the pages, set up the ads, write the creatives, all that stuff, we need to go and measure because ultimately, if we're a result driven agency, we don't have a choice. We've got to look at the results and see whether they're working or not. So we've got to measure, which means that we've got to gather all the data from the Facebook ads and from Google and maybe put together a little dashboard or a spreadsheet or some sort of table, Google Analytics, et cetera, and kind of report on this on a regular basis. But we all know that no strategy, when it's launched, is going to work right away, perfectly. We need to optimize. So that's the kind of, the next phase is you now we need to look at all of this data, make some decisions, say, okay, we're going to tweak our ads, we're going to tweak our page over here, we're going to run a split test over here, we're maybe going to add an email sequence over here, whatever, right? So we're going to optimize this and eventually we're going to go back through that loop of, okay, the next plan and so on, right? And we continue this cycle and the challenge that funnelly solves, and the problem that funnel solves is we sit right in the middle of that cycle because normally that cycle is very, you know, it's very siloed. Again, you look at your data in one way, you build these dashboards, you plan in another way using a whiteboarding tool. Then you have to dive into and get an analyst to kind of help you understand what's working, what's not, and give you some ideas as to what to do next. So funnellytics kind of sits in the middle. We have this whiteboarding tool that allows you to map out your entire customer journey, all the different touch points, visualize it. You can also forecast the results and, and simulate data to see, you know, would this actually work if, if we hit specific numbers? But then I can actually connect my data and, and overlay it on top of that strategy and I can very much see how are people moving through this with real data? Are they moving to the next page? Are they, what are the conversion rates? What does that look like? So we can visualize the results of that strategy and then we've got some really advanced, cool features that allow Us to analyze that, run filters, basically say, hey, let me only look at the people from Facebook, or let me what happens if I increase this conversion rate by 2%, how much more money do I make, etc. In order to kind of go through that optimization process? So Funnel X was just really designed as a platform that allows me to plan, measure and optimize all, all in one visual canvas.

Fantastic. And talk to us a bit about how someone might use that in that early prospecting stage with a client where they're trying to promote this. You know, we start with a strategy. How might they use Funnel analytics? And I'm asking that because I think we all know that a picture speaks a thousand words. So there's a good place for, you know, visualizing this whole process with prospects.

It's. Yeah. And I think that that's exactly how people use a tool like funneltics. Right. What you just said is really important, which is a picture speaks a thousand words and clients are visual. They sit there and they're like, okay, how does this actually work? Right. The minute you can visualize the strategy and show them a dollar sign at the very end or a lead or whatever it is, now all of a sudden they get it. So we've had so many people sign up to our tool just because they love the aspect of visualizing and then just having a conversation with their client around the picture because once they see the picture, the sale becomes easy. It's no longer about how many backlinks or how many posts. It's about the strategy. Right. The picture of the strategy. So that's how people use it for sales purposes.

Yeah. And I guess also it's a great way of taking what is fairly complex flow to explain to a prospect and actually making it nice and simple for them to look at.

Totally.

Yeah. And tell me the type of agency that's using funneltics.

Yeah, it's a good question. Most of the agencies that use funneltics, we kind of have three tiers of agencies that have used funnelix. So tier three is what I call kind of our freelancers. They're basically the people who are consultants. Freelancers. They're more of the strategists. Right. So they'll use funnellytics really to kind of have those conversations with clients around strategy. They may not implement your fractional CMOs, your strategist, your consultants, that kind of person. Right. So they'll use it for sales purposes. They'll use it to communicate high level what the strategy looks like, but they won't necessarily execute. So you know, there's that group of people, then there's what we call our funnels as a service agencies. So these agencies are the agencies who ultimately will work with smaller businesses and they'll launch a new customer acquisition strategy for them. So maybe they'll set up some webinars or they'll set up a lead magnet funnel or you know, a sales page with an upsell and down sell and then they'll send traffic to that. Right. So it's very, very specific. It's a very specific strategy. It's a very specific funnel map. And then our kind of third level agency is more of the agencies who work with existing established businesses. They are already, their clients are already kind of, you know, in the 3 to $30 million range. They're already, they already have traffic, they already are doing stuff in marketing. Now this agency has come in more so because they can help look at the entire picture, help them showcase what's working, what's not, suggest new strategies. They kind of look at a holistic strategy as opposed to a very specific funnel, let's say. So that's kind of the three levels of people that use or agencies that use funnel analytics.

Yeah. And I've certainly worked with the second tier that you just spoke about where someone's helped me put some funnels in place and they've used funnelytics to bring the whole thing to life. So that's kind of why I was excited to be talking to you today, because I've had, at least I've used funneltics a bit myself a long time ago and I've had two different people working with me that have used funnel analytics to bring my story to life.

Nice.

Do you think funnelytics and some of what you've been talking about works for all types of agency? And the reason I ask that is because my, my audience isn't just the digital agencies like the SEO and ppc. They're also more bricks and mortar agencies like PR agencies and graphic design agencies and web design agencies and so on. So can we apply this to those types of agencies as well?

So yes and no. From a kind of measuring and optimizing. Right. If we think about the three pillars, plan, measure, optimize from a measure and optimize standpoint. When you're doing more offline stuff, it's really hard to measure. Like if I have traditional TV ads or radio ads or regular kind of PR or more event based marketing as opposed to digital marketing. Right. So funnel from a measure and optimize standpoint was really Designed for digital marketing more so than for anything else. Now, from a planning standpoint, you know, a picture is a picture. So if I can, you know, showcase how I'm able to get people from the events and how they move. Yes, a lot of people kind of use it to just show workflows, show kind of just high level strategies that aren't necessarily trackable in a sense. But most like Funnel X was really designed for the digital marketing agency.

Yeah, I do feel like, though, I think in the way that was a loaded question because I work with quite a few PR agencies and I used to run a PR agency myself. So I'm just. The panacea of PR is finding a really good way of measuring which no one's ever really done. Same with. But on the other hand, it is just a great way of raising the discussion to more strategic levels. When the client says, we want to hire you to write five press releases a month or to help us launch this product and actually to go in and say, well, no, hang on a second. Look at your bigger business objectives and how the marketing objectives tie in with that. And then let's map this out. Because it's probably more than just doing that one discrete thing that you think. It's actually a whole bunch of other things that we all need to do to arrive at the outcome that you're looking for.

Yeah, my favorite thing to be able to do with a client is to look at their existing strategy and put it on a canvas. Once you're able to kind of show them this is what's happening currently, even if you don't put numbers behind it. But you're just like, okay, here's all the pages. Here's how you're currently driving traffic and just walking them through. That alone makes them kind of get to an aha moment of like, so now you've got this big picture of everything you're doing. Basically what you're saying is, let's just bolt on this PR piece over here to this bigger picture. But a lot of times the issue there is they're just throwing another tactic against the wall, hoping that it actually does something right. So it's like, let's just allocate a budget to throw more spaghetti at a wall and hopefully a piece of spaghetti will stick to the wall and it works. But when you can map it with them now, it opens up so many possibilities for you to make money as an agency because you can show them, yeah, we can bolt on this PR piece, but we also have to optimize this piece, we also have to consider what happens when somebody does come in and how we're going to make the website convert more and this and that. Now you can sell them on a much bigger retainer where. Okay, we're going to help you with this whole thing, right?

Yeah, I love that. And I just encourage everyone to look, listening to or watching to be brave and elevate the conversation to this high strategic level using tools like funnelytics. Even if the client is pushing you to be tactical. Let's move on to talk a bit about the future because I think I'd be remiss to not ask you about AI and the impact of AI on funneltics and the future, but also how you see the impact on AI on agencies and on the wider sort of marketing industry as well as on funnellytics.

So before we talk about AI, I do want to say one thing that's really interesting about tactical. So one thing that works very, very well if you're more of a tactical agency trying to switch over to be a strategic, you know, agency many times. So one of the best funnels that we've ever ran for our agency was what we call a vertical services funnel, which is you're using Google Ads and search intent and obviously nobody's searching for marketing strategy, right. Or marketing strategy consultants like there, very few people are searching for that, but lots of people are searching for HubSpot implementers or, you know, Google Ads specialist or something along those lines. Now there is a sea of them in there. However, it is a very simple and good entry level offer. So if, if you basically do it properly, you can get somebody to pay you for that entry level offer. You want five PR pieces? No problem. Five PR pieces. It's five grand a month or whatever it is. And we'll, we'll write you your five PR pieces but then just be very smart throughout that process of, hey, we've mapped this whole thing out. It's just a really good ascension opportunity while still getting that foot in the door using the tactics. But just remember that on the tactical side you will face a sea of, you know, people out there who are going to quote and do all that stuff. So.

Yeah, and actually throw that in there. Yeah. And I appreciate it. Thank you. And I think that sort of answers another question which is how do people start moving from tactical to strategic? So if you're very much embedded in that tactical place, just keep your eyes open and look for those opportunities and start having that broader, broader conversation. So I think that's good advice thank you. Yeah, let's. I'm a bit of an AI geek, so I watch that question. I don't know whether AI is impacting fun analytics yet or will do or what your view is about it on our industry and how agencies should be looking and embracing it.

Yeah, I mean Funnellytics, 100% we are looking at AI, we are looking at how we can implement AI in different ways. The one thing that we are very conscious of and careful with is right now I find that there's a lot of products who try to implement AI strictly because it's what you need to do and it's the flavor of the month. Now AI is not going anywhere. It's only going to get bigger and better. However, very few platforms actually have AI implemented where you actually use the AI, right. Like you're actually sitting here and using it regularly and consistently. So for us we want to make sure that it's valuable when we launch the AI side, that it actually is going to assist you and help you and it's going to be your co pilot versus versus just another shiny button that we can market in a sense. So we are looking at how for us, obviously it's on the data side, right? So how can you replace a data analyst? If somebody, if you have all of this data, you have these maps, you've basically got, you know, a visual representation of what's happening, you still need someone to go in there and make some decisions based off of this data, right? You still need somebody to analyze, ask a few questions and say, hey, you know what, we're going to focus our attention here, not here, right? Well, this is where something like AI becomes extremely powerful. Because now that can be a copilot, right? Somebody can go and say, hey, based on this whole map that you see, based on all of this data, based on these variables and these things, give me a couple scenarios and tell me, give me your recommendation as to where we should focus, what should we optimize, you know, all of these things. And that's kind of where we're heading for us at Funnel analytics. With AI, we're not quite there yet, but that's where we're moving in terms of direction as a whole though, when it comes to AI, you know, I think a lot of people talk about you need to be able to. The agencies that are going to win are the ones who adopt AI and use AI as opposed to the ones who, you know, who, who are going to, you know, in a sense be commoditized by AI. I have a Different view. I think AI is going to replace most things. I think we will. Any sort of freelancer jobs, any sort of like tactical things to me will be completely replaced by AI. Your marketing team. And as a marketing agency, the marketing team will be one person who knows how to use five AI tools really well.

Right.

And I think that that's the future of marketing agencies. Marketing agencies will basically be the strategist. And instead of having to outsource SEO and outsource the pay per click ads at for, you know, 10, $15 an hour, I'm going to have five tools that are AI driven that can go and do all of these things. I'm going to have my video editor, I'm going to have my image creator, I'm going to have my copywriter, I'm going to have my. So all of these things, I'm going to have my page builder, etc. And to me, those are going to be the future of marketing agencies. You're going to be this consultant who is strategy first. And I can work with a handful of clients, but I'm going to have this, you know, toolbox of AI tools that I can deploy across, across the board. And now businesses will have a choice. The choice is do I hire somebody in house and they go and leverage all these AI tools or do I hire this consultant who ultimately is leveraging these AI tools. Right. And that's, that's the main decision that will happen. So I think in five years from now, any repeatable, outsourceable task will be handled by AI.

Yeah. So interesting. I kind of agree with you. I feel like what AI is really going to do is elevate everybody's role. And it seems to me in the context of this conversation, you're well placed for that because what we're talking about is being more strategic and in the short term anyway, that AI probably isn't going to replace that piece of thinking, but it is certainly going to replace a lot of the tactical things. And I feel like I also want to agree with you and I'm not going to mention the product because it's not fair, but one of the products that I use predominantly to run my business has put an AI component into their software and it's just not very good. And it feels to me like they're doing it because they feel they should, because they want to be on that bandwagon. But I think the other piece that I'd add to the equation, from my personal experience, is that the industry, although everyone knows about AI, people haven't really worked out how to use it properly yet, or they haven't got it into their kind of mindset workflow of every day that I'll have my AI open next to me, you know, supporting me. They're probably using it because they go to ChatGPT and ask a question or something, but not any of these other tools. So I feel like it's very exciting and I feel like agencies should be looking at it. I've spoken to a few clients who were like, no, no, no, we're copywriters and I will never do it as well as us. And it's like, yeah, that's not the point, really. It's the. The point is that it's going to help you get to the end result much quicker.

Yeah, I think the reason people, here's the reality you mentioned. Sorry about that. You mentioned kind of that you don't think AI will replace and it'll enhance again. I kind of disagree. I think there's a lot of people who will go out of business and will not be able to do what they do because it will be faster, cheaper, simpler to do it with AI. Now, I think the biggest challenge for us is to learn how to interact and delegate to a machine. Right. Which is a weird foreign concept. Right. So I think most people don't intuitively know how to delegate to begin with, but even when they do, they're used to a human interpreting it and knowing what to do with it, or at least hoping that they can read between the lines. In a sense, in the case of AI, you've got to learn how to go back and forth. So it's almost like a lot of copywriters tell me that their copy, AI will never be able to replace copy. Like you said, I can get ChatGPT to write better copy than most, 99% of copywriters. And the reason is because I've figured out how to go back and forth and ask it to switch roles and okay, now read your copy, but put yourself in the position of the buyer, and this is the buyer. What are all of your objections? What are, what are the challenges? And then it's going to go and list those for me. Okay, now switch back to the copywriter role and rewrite the copy based on these objections. And, you know, doing that and understanding how to interact with it in this way all of a sudden spits out this incredible email that covers all the objections, has a little bit of energy, all of these things. Right. And. And once you people start to, the people who will survive in this world or in this AI world are the ones who learn how to interact with the AI in the right way.

Yeah, I guess it's why there's a whole industry of prompt engineering appearing because that there's a real skill there. It's interesting. I have, I've developed my own AI coach that I have as part of my program and I can see all the questions that people are putting in. And you know, there definitely is this kind of garbage in equals garbage out equation here. Right. If you ask a poor question in a way that you might ask a colleague and that colleague can infer the context and so on. Well, the AI can't necessarily do that. So, you know, we've got to get better at doing that anyway. Listen, I could talk about that for ages, but it is, it does tie back to the whole point that agencies need to look at becoming more strategic or more invaluable to their clients and, you know, everything else we've talked about today. But before we wrap things up to one last question and then we'll get some contact details from you, I always ask my guests this, and I can't remember if you read this beforehand, but if you go back in time and give your younger self a piece of advice when you're just starting out in business now, you're not that old, but what would that, what would that piece of advice be?

Patience, I think, is the biggest thing. Play the long game, not the short game and really think about the overall long term vision and don't rush that getting to that vision. Right. So continue to execute towards that, but play the long game. I think most businesses and most people think that, you know, especially in this day and age, especially when you're young, in this day and age, you see the Lamborghinis in, in on Instagram, you see the people making 10, $20,000 a month, you see that kind of laptop lifestyle and you get excited by that and you want it in the next six months so that you can not work after university in a sense. But there's a big difference between building a proper business and making a little bit of money. Right. And if you want to build something that is impactful and long lasting and that actually generates, you know, long term financial, you know, wealth, you, you have to play the longer game and you have to be patient.

And do you think your younger self would listen to that piece of advice?

No, I always ask that and the.

Answer is normally no, but yeah. Goodness, we get so much wiser and I wish we had that wisdom when we were younger and full of energy.

I know it's funny that you say that because you're right. My younger self would be like, yeah, I hear you, old man, but I'm 20 years old, I'm 18 years old. I want to make money today, so I'll deal with the future in the future, you know, And I think that that's the. But that's, that's the reality of getting older and wiser is that you, these are lessons that you learn. Sometimes people tell you something and you hear it, but it really requires. It's like somebody telling you, here's what it's going to be like when you have a child, right? And you have a kid and you're like, I hear you. And then you have an actual child. It's like, why didn't nobody tell me why it was like this? Well, somebody did tell you it was going to be like this. You have to experience it. Right. And that's just the reality of it.

Listen, we could carry on chatting for ages. So just to wrap things up, if people want to find out more about you and funnelytics, where would they go?

Yeah, come go to Funnel IO to learn more about Funnellytics. And if you want to connect with me, most of my content and stuff is posted on LinkedIn and I have some pretty cool articles and some cool stuff that we are adding to mikeldeo.com as well.

So great.

Those are best places.

I will make sure. Sorry, scribbling that down. Make sure we include all those links in the show notes. Just want to say a huge thank you for joining us this afternoon. I know that the listeners and the viewers will find this really valuable and hopefully there's a few takeaways that they can go and start thinking about immediately that will have an impact on their agency.

Awesome. Thank you for having me.