Episode 398

podcast photo thumbnail
1x
-15
+60

00:00

00:00

Marketing today is not absolute. It’s experimental, iterative, and ever-changing. And with that comes many challenges that we have to overcome and adapt to as agency leaders. One of those challenges is offering data analytics services to our clients.

Many of us got into the industry, hoping to avoid doing math. And yet, here we are again, going over another way tech and mathematics are imperative in our industry. While it might be exhausting or frustrating, a subject matter expert is joining us to help make it a little less confusing for everyone.

This week, I’m interviewing Jim Sterne, a data analytics expert who knows so much about the industry. Jim started the Data Analytics Association and wrote 12 books on the topic.

In this episode, he’ll share the importance of offering data analytics expertise to better serve clients, how to hire either in-house or third-party data analysts, and tons of resources on where to look for advice and find other experts to help get you started.

Those who adapt survive. Don’t wait on this one, and don’t try to be a hero. The more we can help our clients reach their goals, the better off we are as an industry. Get help, look to the experts, and start offering your clients data analytics services as soon as possible.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev, or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here.

data analytics

What You Will Learn in This Episode:

  • Why data analytics is more about the questions you ask rather than the answers you get
  • The biggest hurdles agencies face when presenting data to clients
  • Should you go third-party or stay in-house?
  • What to look for when hiring a third-party data analytics expert
  • How to make data useful to the client
  • Data reports vs. data alerts, which is better?
  • How to become a data storyteller
  • Helping clients embrace experimental results over having absolute certainty
  • The best resources for wannabe data analysts or those just starting out

“I think the most important thing is to stop looking at the data as to where the answers are. What matters is the questions.” @jimsterne Click To Tweet
“The longer the analytics agency is working with a specific client, the more valuable their recommendations are because they understand the client's business, politics, and culture.” @jimsterne Click To Tweet
“It's the anomalies that matter.” @jimsterne Click To Tweet
“Data collection, data cleaning, data crunching, data interpretation, and interpretation delivery are very different skills.” @jimsterne Click To Tweet
“What does your client want? What is important to your client? Now we become the data storyteller, and instead of giving them a dashboard or raw numbers, we tell them a story.” @jimsterne Click To Tweet

Ways to contact Jim:

Resources:

Speaker 1:

Running an agency can be a lonely proposition, but it doesn’t have to be. We can learn how to be better faster if we learn together. Welcome to Agency Management Institute’s Build a Better Agency Podcast presented by White Label IQ. Tune in every week for insights on how small to mid-sized agencies are surviving and thriving in today’s market. With 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey, everybody. Drew McLellan here from Agency Management Institute. Welcome back to another episode of Build a Better Agency. Super glad you’re here. If my voice sounds a little scratchy, it’s because we are just coming off the Build a Better Agency Summit last week if you’re listening to this real time. So, if you’re listening to it the week of May 22nd, we just wrapped up the summit and it was awesome. If you were there, thank you for being there with us. I hope you just soaked up all of the smarts of all the people.

I am always in awe of not only how smart everyone is, but how generous everyone is and how good they are to each other and how they good they are to us and how really amazingly they come with such a sense of abundance and the ability to share what they know. I just love it. I love to soak it up, but oh my gosh, that’s a lot of talking for all of us. So, my voice is a little scratchy. I apologize, but super glad if you were there. If you were not there, please, please, please, plan on joining us in May of 24. It is an off the charts couple days in terms of just energy and enthusiasm and learning and passion and camaraderie and laughter. It is just really great energy and we would love to have you there. To join us, early bird tickets, believe it or not, are already available for sale.

So, you can head over to the Agency Management Institute website and grab a ticket cheaper than you will ever grab a ticket again. So, get it now and get it at its bargain, bargain, bargain basement price. We’ll see you in Denver for 24, the week right before Memorial Day. So, we’d love to have you. Let me tell you a little bit about our guest. So, Jim Sterne is an analytics and data number crunching expert. Many of us, I don’t know about you, but one of the reasons why I ended up in marketing with an advertising degree was because I didn’t have to take a lot of math classes. I was not a fan of math. I’m a writer by trade.

So, jokes on us, I mean now math and data and numbers and statistics are such a huge part of our business and we don’t really have the luxury of not paying attention to it and not learning it. So, Jim is a deep, deep subject matter expert, and he has knowledge that I’m going to try and glean from him as best I can. I will be honest. I suspect I’m going to have to ask him to talk slow so that I can understand everything that he’s teaching us, but I promise I will ask as many of the questions that I know you need and want to ask as I can. I also suspect that Jim will not be a one-time guest.

So, after the episode, if there are things you wanted me to ask him that I didn’t, shoot me an email and tell me, because I think this is going to really be a great conversation, but I feel like we’re just going to scratch the surface. So, all right. Without further ado, let’s get started. Jim, welcome to the podcast. Thanks for joining us.

Jim Sterne:

Sure. Thank you so much for having me.

Drew McLellan:

So tell everybody a little bit about your background and the work you do before we dig in. I’m going to warn you right now, I’m a writer by trade, so you’re going to have to use little words and talk slowly as we go through the conversation so that I can track and translate.

Jim Sterne:

Fair enough. Let’s seem background. Well, I got my degree in Shakespeare, so that set me up perfectly to be in technology. My first job out of college was selling Apple 2e’s out of a retail store, so explaining computers to people. Then I sold business computers to companies that had never owned one before. So, explain computers to businesspeople. Then I sold software development tools to engineers, and I had to understand what the engineers were talking about in order to explain it to the engineers who might buy the product. During that, went into marketing, because yeah, I can do sales, but I had such crappy marketing materials, I had to create my own.

Then I tripped over the internet in 1993 when Mosaic came out and said, “Oh, wait, this changes everything.” I ran around and I found a webmaster at IBM, a webmaster at HP, and a webmaster at Sun Microsystems and said, “What is your strategy? What are you doing for marketing?” They said, “Well, I don’t know. What did the other guys say?” I realized, “Oh, that’s what being a consultant is.” You ask a whole bunch of impertinent questions and then you write a book. So, I’m 12 books later.

Drew McLellan:

Still asking impertinent questions. That’s a lot of impertinent questions, 12 books worth.

Jim Sterne:

That is my stock and trade. That is my superpower is, wait, I don’t understand. Explain that to me.

Drew McLellan:

I like it.

Jim Sterne:

So 2000, I said, “Hey, you know what? I’ve been telling everybody that their websites are ugly for a long time. Now we can measure how bad they are. So, let’s get together and talk about web analytics.” So I wrote a book called Web Metrics. It came out in 2002, the same time I started my conference, the Marketing Analytics Summit, which is still going. It’s coming up in June in Las Vegas. The audience created the Digital Analytics Association, which I’m a director emeritus and still deeply involved in. So, for the last 22 years, that’s been my life. In 2017, I said, “Hey, wait, this machine learning thing’s pretty interesting. I should write a book about that.” So I did. Then now, oh, here comes generative AI. So, damn, I have to write another book.

Drew McLellan:

Yeah. So, what things are chatted about at the Digital Analytics Association? What does a cocktail hour conversation look like at that event?

Jim Sterne:

That’s actually the fun part. That’s why it’s a community. The first conference I had, there were 50 people. Thirty of them were vendors, 10 of them were consultants, and 10 of them were actually people trying to do the work. We were inventing the industry. So, we closed the lobby bar every night, and the conversation is the usual. It’s people, process, and technology.

So, how come my boss doesn’t understand what I’m trying to tell them? How come my clients don’t take my recommendations when the data clearly shows they’re going in the wrong direction? How come I can’t get my team to focus on the stuff that’s important process? We are trying to do it the right way and we keep changing how we do it. We try to automate stuff and it’s not working. Does anybody have a best practice we can cheat on? Then the technology, which changes so fast, that’s just a constant conversation.

Drew McLellan:

Well, the technology changes, which means process and people have to change all the time.

Jim Sterne:

Yeah.

Drew McLellan:

Yeah. So, I will tell you the challenge of wrapping our heads and hearts around this as agency folks, this is one of the banes of our existence. First of all, for most people in the business over 40, this is not why they went into advertising and marketing, right? So in fact, many of them majored in advertising and marketing to avoid doing math.

Jim Sterne:

Wait, did I mention I was a Shakespeare major?

Drew McLellan:

So this is a rude awakening for a lot of people in our industry, and it’s a challenge. I mean, it’s a challenge to think differently. It’s a challenge to help clients understand it. It’s a challenge to understand it well enough ourselves that we can help clients understand it. So, we can actually use the data points to know something of value to help our clients achieve their goals. All of that, I think, is an ongoing challenge. The fricking target keeps moving, right? Everything keeps changing so fast that by the time you learn a methodology or a tool set or whatever, it’s different.

Jim Sterne:

Yes, absolutely.

Drew McLellan:

How do you see people wrapping their heads around this and getting a handle on it so that it’s useful to them? In our vernacular for agencies, it’s useful for them and how they make it useful for their clients.

Jim Sterne:

I think the most important thing is to stop looking at the data as where the answers are. What matters is the questions. So, each client that you’ve got has different goals and has different levels of understanding. To just take a Google Analytics homepage dashboard report and try to explain it is going absolutely backwards. The numbers are raw material and the skill is asking the good questions. That means asking questions of the client, what are they trying to accomplish? Where are they now? What do they think a good outcome would look like? How important is it to them to get likes versus sales? If you’re working for a company and you’re working for a specific person in the company and their job is social media, they want followers and likes and tweets and that’s their job.

So, okay, that’s what we’re going to go after, but wouldn’t it be better if we focused on sales and churn and loyalty? So the constant refrain for any consultant, the answer is it depends. It depends on what the client is after and what they’re asking you to do. One of the biggest hurdles that every agency faces is asking their client to trust them. Look, we’re going to do this work for you and we’re going to tell you what the numbers are. We’re going to do our own report card to tell you how good a job we’re doing for you. That’s a tough trust hurdle to get over.

Drew McLellan:

I think it’s also a tough trust hurdle, say that 12 times fast, when you are struggling to stay current and up to speed. So, I think when you lack the confidence, it’s even harder to earn that trust, because I find interesting about what you said, which is asking different questions. That puts a different onus on the agency. So, if I am the keeper of all the data and all the knowledge, that’s a lot of pressure in a world where I’m constantly trying to learn the new thing.

But if I am the asker of great questions, which really is at the core of agency life and always has been, really, a great agency asks better questions, then now I’m the investigator that uses the data to try and figure out how to answer the question, which I think is much less of a daunting task than explaining all of the data all of the time and being able to predict what’s going to happen next.

Jim Sterne:

That is everybody’s challenge. Whether you’re an agency or you’re in-house, one of the solutions… It depends on the size of your agency. If you are large enough and you are specialized enough and you can afford it, the recommendation is to find a third-party analytics agency that all they do is analytics. Because boy, marketing, I started in sales and I taught myself marketing, advertising in magazines and doing direct mail and going to trade shows and then came digital. The amount of stuff that you need to learn and to keep up with is ridiculous.

Now, we just look at digital analytics. I mean just even web analytics, forget search and email and social, I mean just web analytics. You need seven people with seven different capability, technology, knowledge bases in order to put a whole story together, because it is that complex. So, if you are of a size you can afford to go outside and get a third-party agency to work alongside you, then it’s no longer you doing your own scorecard and it’s no longer you trying to learn. I mean, you just want to drive from here to there. You don’t want to have to change your transmission. That’s somebody else’s job.

Drew McLellan:

What if you’re not that big?

Jim Sterne:

Right. Then you keep it as absolutely simple as possible. What are you trying to accomplish, Mr. Client? Well, we want more people to come to our website. Okay, how come? What’s the benefit to you? Oh, well, then it improves branding. Okay, so how do we measure branding? By we, I mean, what does the client think that branding measurement looks like, right? Because that’s what we have to satisfy. We have to play in their court, to their level of knowledge, because we can’t learn everything in order to teach them everything. That’s not possible, but we can find out what’s important to them and let’s be as simple as we can.

The number of people who show up, number of people who open the email, number of people who spend more than five minutes looking at more than two pages on the website, people who are willing to come to a webinar. I mean, those are just your basic metrics and that we can keep it simple.

Drew McLellan:

Well, and today, I think right now anyway, our clients, as a general rule, as a broad generalization, they’re freaking out about leads and sales, leads and sales. In case anybody is not listening in real time, we’re recording this in May of 2023. Sales have been tough in 2023. The sales cycle is elongated. Clients are taking longer to make a decision. We have agencies that have been awarded the work, and three months later, they don’t have their first project, because the client is so slow to crack open the wallet to actually spend any money. So, I think a lot of agencies are being tasked with… So, it’s not just our sales, but also clients are having the same problem with their customers.

Jim Sterne:

Exactly.

Drew McLellan:

So in terms of leads and sales, again, I think that’s where a lot of clients are leaning on agencies to say, “Okay, you have this digital tool set. We’re doing all these things. Are we driving more leads in sales?” Agencies are struggling to close the loop on that with the data that they have available to them.

Jim Sterne:

Yeah, so from the agency perspective, the smaller agency, number one source of leads in sales is referrals. We all know that. We want to think we’re good at marketing. Oh, let’s just put more content on our website and we will attract people. If referrals are your main source of finding new clients, do you have a formal referral program? I don’t mean that you’re paying commissions to people. I mean just do you constantly ask your clients for names of people that they work with or colleagues, or hey, is there anybody that you know that needs this kind of work done for them? That’s a standard practice that you’ve got to put in place. The larger the agency you are… Well, actually it doesn’t matter the size.

Another way to go, an additional way to go is specialize. Anybody who says, “We will be your marketing department for you,” well, if you have 27 people in your organization and you can actually be that marketing department, hey, God bless you, that’s great. But you might say, “Hey, you know what? There are 47 different things that need to be done for any client. Let’s specialize in one of them and provide that as a superior service to other agencies and have other agencies be your clients.” I mean, my world in digital analytics, I know 50 small analytics agencies and that’s all they do. They don’t do creative, they don’t do branding, they don’t do graphics. They just do analytics, and they’re good at it because that’s all they do.

Drew McLellan:

Yeah. So, I’m curious about that relationship. So, if an agency just does analytics, they’re not the ones that are placing the ads. All they’re doing is looking at the data and helping their agency client interpret the data. Correct?

Jim Sterne:

Exactly.

Drew McLellan:

Yeah. So, what does that relationship look like? Because that’s not a common relationship in our world, so maybe it needs to be, right? So what does that relationship typically look like? Is that a retainer model? How does that work?

Jim Sterne:

In a number of different ways, but ideally retainer. Well, let’s see. It starts with assessment. An analytics agent, she’s going to come into your client and say, “Okay, what data do you have? How valid and clean is it? You know what? Gee, have you not heard of Google Analytics 4 and that you need to upgrade quick because their data’s going to go away? So that’s a place to start. We need to retag all of your assets.” That’s step one. Step two is, okay, now that we know where we are, let’s sit down and create a strategy of where you want to get. You want to be able to measure what, what, what and what, and what business value will those metrics bring to you. Okay, well, now that we have a strategy and a goal, we can map out a plan and assign a cost to each step in that plan.

Yeah, some people can come in and go, “Yeah, we’ll tag your website for you and then God bless you. You’re on your way.” Others say, “Well, we’re here to be your analytics arm to help you out.” So starting with projects and then it can be an ongoing retainer. Here’s the magic part. Let’s see, let me reframe that. The longer the analytics agency is working with a specific client, the more valuable their recommendations are, because they understand the client’s business and politics and culture. They can walk in and say, “Hey, these numbers are putting up some red flags.” They know which red flags to talk about and which to keep [inaudible 00:20:06] about, because they know the client doesn’t want to talk about those things.

Drew McLellan:

Yeah. I think that’s part of the challenge. I think part of the challenge is there’s so much to talk about. There is so much data that I think a lot of agencies struggle with. I spend time with agency owners and leaders seven days a week, and it is very, very rare that the conversation of reporting doesn’t come up. So, they have so much data, but they don’t know how to package it, they don’t know how to frame it, they don’t know how to highlight it.

They don’t know how to really talk about the data from a perspective that is discerning and also useful to the client. So, I do want to talk about that with you in terms of, okay, how should agencies think about and plan for… I’ll give you a great example. We’re working with somebody who’s doing some PPC and SEO work for AMI, and I got an email today saying, “Hey, here’s a link to our dashboard for the results this month.” Completely not helpful to me.

Jim Sterne:

Next on my list of blog posts, well, actually newsletter now, the title is dashboards are where data go to die.

Drew McLellan:

Yeah, right. So, I said, “Tell me what the dashboard says. Are we hitting our KPIs? What is it telling us we should do less and more of? Where are we?” But I think agencies struggle with that translation.

Jim Sterne:

Yeah. So, data starts with data collection and data cleaning, because it’s not accounting. It’s statistics. It’s likelihoods. You mean you can’t tell me how many people came to my website? Well, no, within a certain degree. What I can tell you is that you had 5% more or less than last month, but I can’t tell you how many. That’s a fool’s errand. So, we start with collecting, cleaning. Then we munge it together with other data so we can cross reference stuff, so we can try to glean some meaning out of it. Then there is standard reporting. Now, standard reporting, I believe, should be replaced with alerts. I don’t need a report. Everything’s fine. Or I need an alert that tells me things are not fine. What is not fine, or what is over the threshold?

Oh, my God. We tripled sales this month. How come? Let’s go find out. It’s the anomalies that matter. So, I want alerts, and then after alerts, I want automation. I want the data to trigger functions. We had so many people respond to this email that we need to automate a response to it because we can’t handle it ourselves. We want to automate a retargeting program that says, “Everybody came to our website. Let’s go chase them out there on the ad networks.” In the middle of that is reports and dashboards, and I look at them and I go, “Yes, so what? Tell me what it means.” That’s what the analyst is for.

Drew McLellan:

I want to talk a little bit more about the reporting issue, but my last question before we take a break is, do you believe that a traditional agency that does not have a data analyst can actually do adequate reporting for clients? Do we all need data analysts on our staff or on call to actually be able to figure out what the heck the data is saying? In essence, where’s the puck going, and where should we be going next?

Jim Sterne:

Oh, maybe we should take the break now, because that’s a long answer.

Drew McLellan:

Okay. All right. We’ll take a break and then we’ll come back. The question is, again, can we do this without having a data analyst either on staff or on call? So all right. We’ll take a quick break and then we’ll be back. Just a quick reminder that every week, we send out a newsletter. We brilliantly call it The Weekly Newsletter. It comes out every Wednesday, and it is filled with just some ideas that I have around something that’s important to you. So, the lead story is always something that I’ve been talking to a lot of agency owners about or something that I want to put in front of you to get you thinking. A lot of times, there’s questions to think about or some resources. Then there’s always a link to the weekly video and then a list of the workshops and whatever else is going on.

Also, we get a lot of promotional offers from friends who are running agency programs like Macan or other folks like that with discounts. So, that’s also where we share all that information. So, if you’re not hearing from me every week in your inbox and you want to do that, just go to the AMI website and scroll down to the footer and you’re going to see a link to our newsletter. Just click on that. All you have to do is give us your name and email and we will start putting that in your inbox. We would love to be a resource for you every week. So, if that would be helpful, sign up today. Thanks. Okay, that was a serious pregnant pause. I love that we left everybody hanging.

Do I have to go out and hire a data analyst? Because what you said earlier was we have to have seven people with seven different skill sets to figure this stuff out. So, I’m sure a lot of people right now, a lot of agency owners are breathing in a paper bag, trying to figure out how they’re going to staff for this. Let’s say, an agency of 20 people or less. They’re buying some digital ads. They’re doing some PPC and SEO. They’re doing all the things. They’re doing price and social for clients. Their clients are asking them if their spend is doing what it should. What does that kind of an agency need on staff, and is it a data analyst or is it something else?

Jim Sterne:

Well, to throw an analytics term at you, this is a multi-variate problem. So, one of the variables is the client. One of the variables is the agency. So, the agency is 20 people. Now, what does the client look like? We’re doing a small job for a major corporation. Well, gee, that major corporation has a team of data scientists, so we don’t need to do any analytics. They’re doing it themselves. What if it’s an agency of 20 and a client who has 50 people and $1 million budget? In that case, they are going to look to us to tell them whether or not the spend is worthwhile. How sophisticated are they? If they just want to know how many impressions and likes and clicks, that just spits out of GA 4, we’re fine.

But if they want to get heavy duty, then we say, “Oh, well, that changes our statement of work, and we have to set that up as a separate project.” Now, as a business owner, I get to decide, do I hire somebody who purports to have all of those talents? Do I find a freelancer? Do I find an outside agency? Eventually, I am going to have to hire a person who is the data person who manages my outside agency/freelancers.

So, I might not be doing all of the video editing myself. I have a freelancer that I work with or an outside agency. Same with analytics. If the client says, “I want you to look at all of our data and do a projection. We want a predictive analytics model of what sales are going to be in the next six months,” it’s like, “Oh, all right, open your checkbook. We can make that happen.” But I don’t have to hire people to do that. I can go to outside services.

Drew McLellan:

So can an agency work with someone who basically builds for them the predictive modeling, the dashboards, the things like that in a way that then the agency, the account service people, whoever’s assigned to that can then interpret that data or does that have to be an ongoing relationship to make that valuable for both the agency and the client?

Jim Sterne:

Data collection, data cleaning, data crunching, data interpretation, and interpretation delivery are different skills. So, if I go to an outside agency and get a predictive analytics model and it spits out a bunch of results, I need to work with somebody who can help me interpret those results. What does it mean? Hey, thanks for the dashboard. What does it mean? Well, it means that when this number goes up, that number goes down. When you spend more over here, you get more of this kind of traffic and less that kind of traffic. Wait, what does it mean to my client? Well, what does your client want? What is important to your client?

Now, we become the data storyteller. Instead of giving them a dashboard or giving them the raw numbers, we tell them a story about when you advertise this product in this way to this audience, we get these kinds of results. When you change your messaging this way, we get a little bit of a lift and that’s great, but we haven’t tried this message on that audience with this frequency. Would you like to invest some in testing that? That’s a conversation. It’s not a report.

Drew McLellan:

Yeah, right. Well, it’s not only just a conversation, it’s also an experiment, right?

Jim Sterne:

Everything is.

Drew McLellan:

Also, it’s the willingness to experiment and be iterative, which I think is also a shift in our business. It used to be we would buy an ad on a channel and we could predict with a certain amount of certainty what the lift would be or what the change would be or the reaction would be or the traffic in the store would be, fill in the blank. I think one of the challenges for agencies today is our work has gotten much more experimental and iterative, and that’s hard to help clients embrace that. They want certainty in a world where certainty just doesn’t really exist.

Jim Sterne:

There is a point at which you have to decide that it’s time to fire the client if they can’t understand, if they can’t be flexible. They’re just going to suck up all your time, and they’re going to argue about every bill. They’re going to talk to you about how your hourly rate is out of range, and they will destroy your soul.

Drew McLellan:

This is really an upbeat conversation so far, Jim. You have to have a staff of seven, and your clients will suck out your soul.

Jim Sterne:

No problem. Here comes generative AI. So, from seven, you don’t need all of them anymore.

Drew McLellan:

We choose to do this for work. That’s the fascinating part.

Jim Sterne:

It was that or dentistry.

Drew McLellan:

Oh, that sounds awful. Yeah. The only thing would be worse would be podiatry, I think, but yeah. So, I think one of the challenges for agencies, and I’m curious about this. So, if they are either going to hire for it, if they’re going to bring some data analysts or that skillset inside the shop, if they’re big enough to have a team or they’re going to hire one of these analytics agencies that you have spoken of, it’s a little like me hiring a Portuguese translator when I do not speak Portuguese. How should I as an agency owner or leader, how do I evaluate if somebody actually knows their stuff and isn’t just blowing smoke up my skirt, whether I’m bringing them in internally or I’m looking for a partner?

Jim Sterne:

Exactly the same way that your clients evaluate whether they should do business with you. They talk to referrals. I’m sorry, first blast always. Tell me about some other clients you’ve worked for. Give me their phone numbers. I want to know what the relationship is like. How valuable have they been? How easy are they to work with? I’m just going to do my homework. Now, the thing that makes it cloudy is tha