Most red-flag lists we found are written by agencies, and the one we quote below ends with an invitation to book a call1. We are an agency too, so read this one with the same care. Every point here applies to us as well.
An agency's own list is still a fair starting point. ATTN Agency, a DTC agency, publishes one that includes guaranteed ROAS, "proprietary" bidding, no access to your accounts and vanity metrics1. That is a seller's view, so read it as one. We add what to listen for and how to check.
For the full decision, start with how to choose an ecommerce marketing agency.
Why is a guaranteed ROAS a red flag?
ATTN's list puts ROAS guarantees first1. When an agency warns you about a promise other agencies make, that is worth noting.
What you may hear: "We guarantee a minimum ROAS or we work for free."
What it can mean: The metric is easy to move without making you any richer. Narrow the campaign to people who were going to buy anyway and ROAS looks great. Sales may not change at all. That is the question behind incrementality: the extra sales caused by the activity, over and above what would have happened without it.
How to check: Ask what the guarantee measures, who measures it, and what it means for your contribution margin. Contribution margin is revenue minus the variable costs that grow with every order, such as cost of goods, shipping, payment fees, returns and discounts. Then ask for the number that is not self-reported: incremental ROAS (iROAS), meaning revenue caused by the ads, divided by ad spend.
For ZFD: We do not guarantee a ROAS or revenue figure, because a guarantee on a self-reported number would not tell you whether the ads paid.
A guaranteed ROAS is a guarantee about a number the agency reports itself, and that number is easy to move.
Who owns your ad accounts and data?
You should. The ad account, the pixel, the analytics property and the data behind them should sit under your ownership, with the agency as a user. ATTN's list names refusing to give you admin access to your own accounts among its red flags1.
What you may hear: "We run everything on our own accounts. It is simpler."
What it can mean: If you leave, the history stays behind. Even if nothing bad is intended, you cannot check anything without asking.
How to check: Ask who is the account owner and who is only a user. Ask whether you get admin access today. Ask what you take with you when the contract ends. A related flag on the same list is unwillingness to work with the client's attribution tools1. If an agency only accepts its own numbers, nobody else can check them.
Reports full of vanity metrics: what's missing?
Vanity metrics are numbers that look like progress and do not connect to money: impressions, clicks, platform ROAS on its own. ATTN's list includes an obsession with vanity metrics such as click-through rate and reach1. A list of client frustrations from Adbeat, a vendor of ad research tools, starts with reports that do not arrive regularly and also names promises that are not kept2.
What you may hear: "Traffic is up and click-through rate has improved."
What is missing: Spend against shop revenue. Contribution margin. New customers rather than repeat ones. What was measured and what was assumed. A recommendation.
How to check: Put last month's report next to your shop's revenue for the same month. If the two cannot be reconciled, or the report has no line about margin, that is the flag.
Fees as a percentage of spend: where is the conflict?
This is a question about incentives, not honesty. Agencies that charge this way can do good work. The issue is built into the model: if the fee rises with spend, the agency earns more when you spend more, whether or not the extra spend pays.
JudeLuxe, a UK agency that sells a fixed monthly retainer, calls percentage-of-spend pricing a structural conflict of interest: the agency earns more when you spend more, not when you profit more3. It sells the alternative, so weigh it accordingly. The argument is not new. In a 2010 Hacker News thread, the most prominent reply called it a misalignment of incentives, and the person asking, a former agency employee, disagreed4. A forum thread is not evidence of how agencies behave. It shows the question has been asked for years.
What you may hear: "Our fee scales with your success."
What it can mean: It scales with your spend. Success is a different thing.
How to check: Read what the fee is based on in the contract, and work out what happens to it if you cut spend. A revenue share fee is a different model. The agency receives a percentage of the brand's revenue, either total or incremental, often on top of a base fee. The revenue source and the baseline have to be agreed. That is a different set of questions, not a free pass.
For ZFD: We do not publish fee terms on this page. Ask any agency, us included, how its fee moves when your spend grows.
'Proprietary' methods nobody can explain
Some methods are genuinely proprietary. That is fine. A method you cannot describe in plain words, though, is a method you cannot check. "Proprietary bidding" appears among the red flags on ATTN's list1.
What you may hear: "That is our secret sauce."
What it can mean: The method may be ordinary, or it may simply be hard to check. Neither is a reason to trust it more.
How to check: Ask for the method, the limits and the failure mode. A straight answer has all three. You do not need the code. You need to know what it does, what would make it wrong and how you would notice.
Watch for one more word. "We will scale this" is usually shorthand for "increase budget or scope". It is a plan, not a result.
How do you check an agency without hiring a consultant?
You do not need an expert. Most of the checks are things you can do yourself in an afternoon.
- Log in. Open the ad accounts, pixel and analytics property yourself. Check whose business owns them and whether you are an admin.
- Reconcile one month. Put the agency's reported revenue next to your shop's revenue for the same month. Note the gap.
- Read the fee clause. Work out what happens to the fee if you halve spend.
- Sort the proof. On the agency's website, mark which results were measured by someone other than the agency. Self-measured results are not worthless, but you should know which ones they are.
- Write down every "proprietary". Each one is a method you will need explained before you can check it.
The same checks apply to us. For the questions to ask in the meeting, with straight and evasive answers side by side, see questions to ask a paid media agency.