Future of Agencies with AI with 7-Figure Agency Community Members

All right, so we have a little treat for you. So this is a coaching call from the Agency Owners Association. This is a group that Neil and I have for agency owners to help you grow faster. So if you're in the agency space, you are a services business, this is applicable to you. It's a little preview of a call. It's probably 10, 15 minutes or so, and you'll get a sense for what it looks like to be in the group. If you wanna learn more about the group, you can go to marketingschool.io/agency. Again, it's marketingschool.io/agency. Hope you enjoy the episode. I can just start off with kind of high-level stuff, and then we can talk about strategy I think in this group we can talk about strategy. You guys can share things with each other. I think there's a lot of things you guys probably know that I've never heard of before too. But largely what Neil has his attention on right now and what I have my— turning my attention towards right now is acquisitions. We're not in a good economy. I don't believe we're in a good economy and maybe it gets worse, right? But if it gets worse, then that means people become fearful and then that's your chance to get greedy, right? So Warren Buffett over here.

Yeah.

He's a guy over here, right? Little statue. So that's Warren Buffett. So, you know, I— there's interesting ways you can structure these deals too, right? You can, you can put 20% down, you can seller finance, you can get an SBA loan for $5 million, right? Just need to make sure you're profitable, you're in good standing. You can build a platform if you want, you know, go to private equity and you can build a platform to go acquire other agencies. So there's a lot of ways you can play the game. You can, you can, you can do like a leveraged buyout and just buy them out using their own cash flows, right? And so I think there's going to be room for consolidation. And the problem that I'm wrestling with that I just spoke to my coach about, we had like a 1.5-hour session, is I wrote this entire thesis on M&A about where, you know, we're planning to go. But also, like, I wrote a counterthesis to that around AI, right? I do believe a lot of people are going to lose their jobs, but I think the agency of the future is maybe if you have— I think everyone here has high standards, right? You have super high standards with their people. You're only hiring the top 5% of people that think strategically. strategically, that are super innovative, super creative, and then they're running, you know, 50, 100, thousands of these AI agents per client. And you're building campaigns that way, right? So I might be a little optimistic with this, but I think that's like the next 5 to 10 years. And so that's why, like, you know, internally we're building product right now and then we're trying to figure out how we want to play this. Because if we play it too soon, then all of a sudden we're going to have to cut all these people, right? And I don't want to deal with that. And I don't think you guys want to deal with that either. So I, I'll— that's my little thought that I'll just throw out there into the ether. And then, you know, let's just talk through challenges and whatever. Just give me an open conversation.

The one thing I'll just say is that Alt— we're— I don't know who's familiar with what we do over here at All Terrain, but we're like a real-world marketing agency, experiential guerrilla, all that stuff. So it doesn't affect me as much as, as someone who's you know, doing, you know, SEO and all these other things, digital, let's just say. So, because it's very hard for AI to replicate the real world, although, you know, I'm taking notes from your podcast, from all these calls of like, how can I apply it to be more efficient or be aligned with my customers and things like that? But I just wanted to throw it out there. I'm kind of not a part of it.

Did you see what Sam Altman said this week?

No.

So he believes that in-person experiences are going to become way more valuable in the next 5, 10 years, right? Because a lot of stuff is becoming AI. So stuff that you're doing is going to become more valuable. And everyone, just if you're looking to do experiential stuff, Adam actually just works with agencies. Then you just go to him and he builds out all these things. So I think, Brendan, this seems interesting because you seem to do a lot of in-person things as well. So going to someone like an Adam, there might be an angle there. I don't know.

Was that on the All In podcast interview or someplace else?

No, he said it on someplace else. I haven't watched the thing yet, but I'm gonna— I think it's interesting because, um, at the end of the day, I think what we realized in the last 4 years is like, it's all about people, right? Um, your family, your friends, and then even your, even your coworkers, like you want to see them in person. Um, so yeah.

Well, I'm gonna find it and I'm gonna do a post around that. Thank you. Yep.

Eric, that—

what'd you say, Brendan?

I'm saying milk that for your benefit while you can. Go for it, Adam.

Yeah, yeah, yeah. Drive ads towards that thing.

I'm in chat, like a group with a couple of agency owners that are like, you know, just scraping a million dollars, the other people in the group. And on the SEO side, a couple of them have like their SEO businesses are falling apart. We are not having that experience right now. At all, at all. Like our SEO business is up from $178,000. Sorry, no, that's the wrong— I have a new model that I just got built by our new fractional CFO and I have no idea how to use this damn thing. It's up like 70% year over year though.

Right.

And I'm just curious if anybody's got like headwind experience with SEO right now, because I'm not worried about advertising, but with all the stuff that's going on in the SEO side, I want to know what y'all are seeing.

David, you're going to say something. David's in the content SEO space. So David, I don't know if you want to add in, perhaps Mario too, but go ahead, David.

We're also feeling tailwinds. Like we have record number of leads coming through, like legit enterprise logo leads. And all of them seem to be, they do want help. It's like, they're just figuring out like better agencies to work with. And I think it's, I mean, it's kind of mean to say, but I think it's the lower quality agencies that are that are missing out right now.

Yeah, I think it's David's point. That's what we're seeing too. It's quality. I think you, you guys get on these discovery calls or you listen to these discovery calls. It's like, if you just know what you're talking about slightly more than all these other agencies, then you're, you're, you're good to go. It's hard to find SEO agencies that do good work.

Yeah. I mean, I'll ask the basic question, like, tell me about your ICP and your personas. And they're like, you're the first person to ask that question. I'm like, are you serious? Like, what are other people asking you about then?

Now I have a quick question. The reason for it is, is it because people are freaking out because of AI and the Google algorithm or they see opportunity? Like which, what's driving it?

Yeah, I think that's it. AI and search and people are like, Google's dying and they've lost 1/10 of a percent of market share over the last year. Like, of their 91% market share. Do you like—

I can, I can also add a couple more points. So in addition to AI, which is definitely the culprit here, we see that B2B SaaS is down dramatically due to the withdrawing funding, meaning that teams are getting leaner, fewer BDRs calling phones, response rates are 50% down, CPCs are getting audited for the first time ever since the big boom. So over the past 5 years, And customer acquisition costs in some cases are up to, I think the latest report by Chris Walker I saw was something like $41,000 customer acquisition cost with CPC, with, you know, with paid ads in addition to, you know, follow-ups and demos and everything else on top of that. So most SaaS cannot, like their CAC payback time is 5 or 6 or 7 years. And yeah, most customers simply don't—

Enterprise SaaS.

Sit around. Yeah, pretty much. So yeah, all of those things combined are leading to that. And on our end, we also saw a rapid bump in SEO contracts over the past year. However, with the latest changes by both OpenAI and Gemini's announcement and SGE rolling out everywhere, it's kind of hard to tell how this is going to play out in the next 5 to 6 months.

Yeah, I mean, I think to Brendan's point, it's like, yes, Google will probably lose market share in the next 5, 10 years, but it's not gonna be like a— it's not gonna happen overnight. The AI It's, it's, I don't know. I don't know how much you guys have tested it, but it's like, it seems that they're pulling from like LinkedIn Pulse answers, right? A lot of Reddit answers and Quora answers. So the SEO game's always changing, right? So as long as like, it seems like everyone here is ahead of the game, then people will trust you. And then like good work never goes away.

It's still very index driven. It's not driven by like, it's, it's an LLM underlying, I mean, that drives it, but you really, it's, it's surfacing search results and citing search results. So. It's really over-indexing on the index that exists, which is the SEO practice as a whole, right?

So yeah.

Like credible sources, would you say like that's where they're—

Credible.

I don't know about credible.

Yeah.

I mean, LinkedIn. Yeah. Yeah. Credit, maybe not.

I asked Perplexity who the best digital marketing agencies are and it cited us first.

Oh, so yeah, it's complete bullshit then.

Yeah, it's bullshit. So yeah. So not saying we suck, but I'm just saying I don't think we're the necessarily like top, top number one, you know what I mean? So, all right everyone, quick message from the Agency Owners Association. So this is the peer group for agency owners that Neil and I both put together. This is for people that are doing 6 figures, 7 figures, 8 figures, even 9 figures as well. And we're all here to help you grow your agency faster. In this group, we share leads, we share learnings with each other. It's a community where people can ask questions, their most burning questions personally, professionally. We'll share templates, reports, things like that. We're constantly adding more value to the group. I will tell you that the price is continuing to increase. The good news is that there's no long-term commitment. So you can just learn more by going to marketingschool.io/agency. Once again, that's marketingschool.io/agency to learn more. And we hope to see you inside.

I kind of want to add to that. So yes, it's over-indexing on indexing. That's a fact, but it's working in pretty mysterious ways. Like normally with the standard Google Brain or any of the latest major Google algorithms, they're relying quite a lot on backlinks, which is completely normal. So PageRank and everything that followed afterwards, domain authority, domain rating and stuff. And right now what we're seeing with both, you know, GPT-4o and Gemini and Claude and Grok, they're picking 1 or 2 resources and relying on them 100%.

Yeah.

So what we see actually, and to your point, Eric, I looked up the best WordPress agencies in the world and like several similar searches yielded completely different results. 2 of them ranked Syed's Copy Beginner Pro Sites, and it launched 30 days ago.

I got to tell them that.

Brand new. Yeah, it's literally brand new. I posted it on Twitter like the other day. It's literally brand new. So OpenGPT-4o just picked a press release from somewhere and said, okay, this is the number one source. They're not linked elsewhere, right? So what I'm saying is it's kind of a hit or miss. There may be directories like Quatch or other listicles, the top 50 agencies and stuff. So normally, if you're listed in 30 of the 40 listicles, you're always going to be on top. In this case, it's a hit or miss. So it really depends on which one specific article does the LLM pick to yield back to you, which is super weird.

Yep, it's weird. We'll see how it goes. David, you had something to say or a question? You might have forgotten it. I don't know.

I was going to, I was going to ask about your decision to build product again, because I know you did that in the past and you kind of decided to sunset it. And like, and the question's coming from a place of we're trying to build some internal tooling, not going to, not plan on making it external, but we have like a pretty healthy balance sheet and trying to figure out where to invest capital right now.

Yeah, I did a spot check with my coach because he's seen when I worked on too many things that were unrelated. So just a little background here. The software that we're working on a couple of years ago, it was even though it was generating Like half, like I think $600K in ARR, it was losing $100K a month. Right. And would we have made it work? Probably. But I wanted to focus on Single Grain instead. We probably had to, I was spending a lot of my balance sheets, right? Personal balance sheet to fund the thing. Right. And so now the way we have it going is we are building, we're first focusing on a product that will, that will set auto optimizations from a CRO standpoint. So we're going to focus on CRO first and see how that goes, right? And I've talked to a couple of other people that are interested in it. And then, David, one question that we're asking, like, if I appear on like a really big like prospect call, I'll just ask like, hey, like, if you had unlimited resources and you had unlimited money, what's the one solution you'd like to have to solve your customer acquisition problems, right? And one guy said yesterday, I'd like to have like a customer agent or like a chat agent that takes the customer from, you know, filling out a form to closing, right? So he basically wants an AI agent at the end of the day. So I'm going to continue to ask these questions and I'll continue to help us shape product. And then we'll just run these pilots with people because, David, even I think looking at you, you probably won't have problems getting these initial phone calls with people and doing these customer development calls, right? You want to like make sure that it's working on your own stuff first, ideally before you start rolling it out to other people and trying to get on these calls because I wasted a lot of that. relationship capital, um, working on the first software. So going, I, the, the, the way I'm justifying it now is like, okay, you know, if we want to buy other companies, um, the conundrum right now is like, okay, if AI is going to eliminate a lot of jobs, maybe we shouldn't jump the gun on, on buying other companies because we might have to cut a lot of people. Right. And so right now we're like, okay, the, the in-between is let's build product and let's see how well it works for ourselves. And, and we're shipping very quickly on it internally right now. Um, if it works really well, we'll start to roll it out to a couple other people. And then we'll move into, into other areas, right, where we can automate, because a lot of the things we do can be automated at the end of the day. And we just want to see if we can have like an entire customer acquisition platform that can do it. And that's very optimistic. But, you know, we'll see how it goes. I want to take a second to tell you about my podcast co-host's agency. So NP Digital. So Neil Patel Digital. What they do is they do a whole host of marketing services and they are global. They're worldwide. They have SMB services as well. They have mid-market to enterprise services as well. They cover the entire gamut. So you could just go to mpdigital.com to learn more about it. And now back to the episode.

Yeah, I've had a pressing issue come up or question that I wanted to pose to the group, if that's okay, Eric.

All right, cool.

The question is, how do you know Before you take on your client, how do you know that they're a good fit for your company? Because throughout this whole process, like, I mean, you want these customers, but sometimes they have things going on at their company. They're disorganized or they're not as well funded, or who knows what's going on there. There could be a toxic environment. That was what happened with me. I realized after I took on this client. There's a lot of infighting between departments. And my question to you is, are there like secret questions or insights that I could apply when I'm trying to figure out if they're a good fit for, for All Terrain? So we just want to throw that out to the group to see if you— how you guys tackle that, if at all.

What I can say is we are trying We are trying to drill into the core of the problem, like who are we speaking to? Is it a new CMO who was just hired 3 months ago, or is it someone more senior? What is the previous backstory? What does their team look like? And normally you see a lot of flaws in that process, right? If it's— if there's a lot of churn of marketing managers or so, big red flag, probably not a good fit. If they had a, you know, massive layoffs of the marketing team, probably, you know, short resources or maybe not paying on time and stuff. So it's more about— What does the team look like? What happened with the project previously? What was the, you know, marketing prospects over the past 1 year? And you normally see a lot of flaws in that. Sometimes it's lack of competence. So, you know, they're calling you because they need help, but in most cases, it's, you know, something hidden under the rug that you can probably uncover.

I just asked them what's a home run in the first 90 days. I mean, that's one of them, right? It's because then it shows you what their expectations are. And it should like, it also like, it shows you how smart they are too, because sometimes they'll give you a dumb response. Like, we want to increase our traffic by like a million in 90 days. And so I think that goes a long way. And then you ask, then you, there's some threads you can pull on because they're going to tell you a story there and you can be like, okay, well, why do you want to hit this goal? Well, okay, what resources have you used so far to get there? Right. You know, and then so you can, I think you go just the 5 whys, like why, why, why, why, why. The home run question works really well for us personally.

I love it. Thank you.

All right, that's all the struggles for everyone, right?

Everybody. There's literally nothing else going on.

What do you think the summer is going to look like?

No news this week. Huh, Mario?

What do you think the summer is going to look like?

Summer?

Yeah, in terms of lead flow, pipeline, contracts and stuff. It's normally slower, but last year we were swamped and now after COVID, all the seasonality, so much of that, I'm having a hard time predicting anything.

What industry? What are you in? B2B?

Yeah.

Is it specific part of B2B that you're in?

Funded startups, health tech, fintech. We also do publishers and some others, but yeah, this is the—

I could just speak to our lead flow. Our lead flows look pretty good. We're getting a lot more MQLs than we usually would get, at least right now. Summer hasn't started yet, right? But I think just May so far, I don't know, like 20, 25 MQLs. So it's pretty good. And MQLs are pretty close to SQLs for us. So same thing.

Yeah.

But you never know with the economy. You never know with this whole, like, unstable world right now.