How Do You Evaluate Your Marketing Agency's Performance?

Do you know what your company spends on marketing each month? If you added up every agency retainer, consultant, software subscription, sponsorship, event, and ad budget, would the total match the number in your head?

For most of the owners I coach, it doesn't, because the spend is spread across a dozen line items and several budgets. Once someone adds it up, the next question comes fast: are we getting what we pay for?

I'm a coach at IMPACT, where we've helped 300+ companies take control of their sales and marketing with the Endless Customers System™. Below, I'll walk you through how to audit your total spend, the seven red flags I look for in an agency relationship, and how to decide whether to fix it, end it, or bring the work in-house.

Why is it so hard to know what you spend on marketing?

Marketing spend is hard to see because it rarely lives in one place. One agency runs paid search, a consultant handles your website, someone else manages social media, and software renews on a company card. Each item looks reasonable alone. Added together, the total is often far larger than the owner expected.

I call this sneaky marketing spend, and auditing it is the first step I give every client. Pull every cost that touches marketing into one list:

• Agency retainers and project fees
• Consultants and freelancers
• In-house marketing salaries
• Software and subscriptions
• Ad spend on every platform
• Events, trade shows, and sponsorships

If you're comfortable with it, export your financials into a secure AI tool like Claude or ChatGPT and ask it to find every marketing-related charge, or sit down with your CPA. Either way, you'll know what each partner has to justify.

The same questions are showing up in survey data. In an April 2025 inTandem by vcita survey of 500 U.S. small business owners, 52% said they outsource at least some of their marketing, down from 70% in 2023.

AI has made it easier to bring work in-house, and I see a common cycle behind the rest: an agency makes big promises, the numbers climb for a few months, then they level off, and the owner goes looking for the next agency making the same promises.

Which red flags show up in how an agency works with you?

Four red flags show up in the relationship itself: you absorb the agency's turnover, you have to chase them for meetings, they never push back, and they only care about their own slice of your business.

You can check for all four this week, whether you're three months in or about to renew.

1. You absorb the cost of their turnover

People leave agencies for ordinary reasons, like a new baby or a move across the country. Your business shouldn't have to start over every time, re-explaining your buyers and your offer to someone new. A good agency talks about this before you sign and has a backup who already knows your account.

2. You're the one scheduling the meetings

You shouldn't have to track your agency down to get on a call. A good partner keeps a regular meeting cadence on the calendar and comes to you with what's working, what isn't, and what they plan to do about it. If you only hear from them when an invoice goes out, that's a red flag.

3. They agree with everything you say

An agency that answers every idea with “sounds great” is protecting next month's retainer. You want a partner who hears you out, then tells you when they'd go a different direction and why. In The Five Dysfunctions of a Team, Patrick Lencioni writes about mining for conflict, digging under the polite nods in a meeting to find the disagreement people are holding back. Your agency should do that with you, without swinging to the other extreme and dismissing every idea you bring.

4. They only care about their slice

A specialist agency should stay focused on its specialty, whether that's AEO (getting your business found and recommended in AI tools like ChatGPT), paid search, or social media. It should still be curious about how you sell, how you treat customers, and where buyers get stuck, because growth in marketing that sales can't absorb won't grow the business.

The best agencies ask what nobody inside your company thinks to ask anymore, like why you sell through distributors or why the sales team is structured the way it is. An outsider who keeps asking “wait, why?” often finds the most useful answer.

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Which red flags show up in the work and the reports?

The last three red flags show up in what the agency delivers: reports built around the wrong metrics, work you could have made yourself with AI, and an agency that keeps your data and know-how to itself. These take a closer look, and they tell you the most about what you're paying for.

5. They report on the wrong numbers

Traffic, followers, and even form fills can all go up while sales stay flat, and a stack of poor-fit inquiries costs your sales team time. Reports can also be built around the one number that went up while everything else went down.

If you don't understand a number in a report, ask about it. Is that good? Is it up or down for our industry? How does this help us close business? If you'd rather not ask your agency first, ask Claude or ChatGPT, so you walk into the meeting with a baseline.

6. You could have made it yourself with AI

If the work feels generic, sounds nothing like your company, or looks like a stock template, treat that as a red flag. Any owner can open Claude or ChatGPT and get decent writing, design, and strategy in an afternoon. That makes good work the minimum. You're paying an agency to get you to great.

Good is table stakes... the difference between good and great is getting wider and wider and wider.

Great marketing comes from what AI can't pull out of everything already published: your opinions, your experience, and the things your competitors won't say out loud. An agency has to work to get that out of you, and if they skip that step, the work will miss.

When something falls short, tell the agency specifically what doesn't meet your standard, then give them a chance to explain their choices.

7. They won't teach your team

An agency that keeps the logins, pulls every report for you, and charges extra when you go over a threshold is building your dependence on it. One company we work with only saw its website analytics once a quarter, because the agency pulled the numbers and nobody on staff knew how. 

A colleague of mine at IMPACT saw the worst version of this before she joined us. Her previous company hired an agency to implement HubSpot, and the agency held every login and never showed anyone how to use it. After about 18 months with no results, the company fired the agency and found that nobody on staff could log into HubSpot.

A good agency still helps you understand what the numbers mean, and it shows you how to pull them yourself. If you don't have access to your own website, email platform, or CRM, that's the biggest red flag of all.

What should you measure your agency against?

Measure your agency against the business number that matters most to you, whether that's booked appointments, closed revenue, profit margin, or labor efficiency ratio. Some work, like brand-building, won't map neatly to a monthly number, and that's fair. Your agency should still be able to explain how its work moves the number you care about.

Remember that your agency works for you. You can say, “The number I care about most is this one. I know some of what you do is brand-building, but I need to see how what I pay you each month connects to it.” The right agency welcomes that conversation. One that's scared to lose your business will tell you whatever keeps you happy.

An honest partner also won't pretend every month goes up and to the right. When numbers dip, a good agency explains why and comes back with a plan. Ask what they're seeing at other clients, too. If you have a product launch six months out, ask what they've learned from companies in the same position.

Should you fix the relationship, end it, or bring marketing in-house?

Start by trying to fix it. If an agency has expertise you can't build yourself and understands your business, it's worth paying for. Raise the specific red flags you've seen, tie the conversation to the number you care about, and give them time to respond. If nothing changes after that conversation, it's time to move on.

I'm not arguing for getting rid of agencies. Most of the companies I coach still work with at least one outside partner for web development, paid media, or social media, and those relationships can be healthy.

Many companies can still handle far more of their marketing in-house than they think, with the right hire, the right technology, and the right training. That's how we coach with the Endless Customers System: we build the expertise inside your business, and we don't plan to stay forever. In-house work gives you more control, more insight, and more output, usually for less money, and it sounds like you. A content manager is often the first hire.

What if the problem isn't your marketing?

Sometimes the problem sits outside marketing entirely. If buyers who reach you get a slow follow-up, a confusing sales process, or a poor experience after they buy, more marketing spend just sends more people into a broken process. Before you blame your agency, make sure your product, people, and processes are worth promoting.

Here's the exercise I give owners. Go through your own sales process as a buyer. Create a test email address, or ask a friend to fill out your contact form. Then watch how quickly someone reaches out, where the conversation stalls, and where it goes dead. Most owners are shocked by what they find, and none of it has anything to do with their agency.

If you only have so much budget and attention, put a good share of it into the business itself. A great business with happy customers is far easier to market.

Frequently asked questions

When should you review your agency relationship?

Review it at three months, six months, one year, and the month before renewal. The honeymoon period usually ends somewhere in that window, and that's when these red flags tend to show up.

What should you ask an agency before you sign?

Ask who will work on your account day to day and what happens if that person leaves. Ask how often you'll meet and who schedules it. Ask which metrics they'll report and how those connect to revenue, and whether they'll teach your team to access your own data.

How much should a business spend on marketing?

It depends on your revenue, your growth goals, and how much of the work you do in-house. Start with the spend audit above so you know your real total, then compare it against benchmarks.

Know what your marketing spend is buying you

To evaluate your marketing agency, you need the full picture of what you spend and a clear view of what each partner delivers for it.

Add up every marketing cost, check each agency against the seven red flags, and hold them to the number your business cares about most. Try to repair a drifting relationship before you end it, and walk through your own sales process before you blame anyone else.

At IMPACT, I help owners and their teams work through these decisions every week.

If you'd like a second set of eyes on your marketing spend, schedule a free coaching session with one of our coaches.