Beyond the Smoke and Mirrors: What It Really Takes to Build a Successful Marketing Agency

by Dennis Yu | Feb 4, 2021 | Growth Mindset, Business, Client Management, Communication, ethics, Featured, Guest Posts, Hustle, people management

This is a guest post by Nick Jaworski of Circle Social Inc.

Owning a multiple 7-figure digital marketing agency, I never found the typical social media crowd very helpful. There are a lot of smoke and mirrors in the digital marketing world. Fake gurus are everywhere, but even the bonafides have never appealed to me very much.

When I started my agency, I wanted to build something meaningful and impactful. And one thing I learned about impact over the years is that the bigger you are, the more impact you can have.

I quickly realized that the majority of the experts out there were one-man bands. Maybe they had a couple VAs or a Community Manager helping them out, but they’re not what I would now consider to be a large or scalable business.

As I’ve learned over the years, that’s about as far as most people want to go. Whether it’s fear, lack of know-how, or just no interest in taking on the huge amount of work and responsibility that comes with growth, most agencies don’t make it past the 3-4 person stage. 

I’m a big admirer of Dennis and all the work he’s put into helping young people and really having an impact on the world by sharing his knowledge. He also knows what he’s talking about. When I first started my agency, I had so much to learn and, like many in the same boat, scoured the internet for people to learn from.

However, all I ever heard were platitudes like “content is king,” “marketing is about building relationships,” or “tell your story.” From the get-go, my agency was focused on return on investment. What really attracted me to digital marketing originally was the data. The fact that I could tie our work to real ROI, where I could prove our value to our clients.

This is where Dennis stood out. I could tell from reading his content that he had a true expertise helping real companies. That’s why I was very interested in sharing my experiences on his blog as he’s the real deal.

When I entered the realm of digital marketing, there was something glaringly missing to me in the world of social media and marketing influencers I found online. None of them owned large companies with a lot of staff. 

Instead, as I started to network and get into the world of business, I saw all these people running 8 and 9-figure companies, but I never saw these people online. These people led or had built huge companies and most didn’t even have a Twitter profile. More than that, many of their companies didn’t either! That told me that following the online social media crowd was unlikely to be the road to success.

Speaking with Dennis, I wanted to share a real story of what it truly takes to grow a successful agency. I registered my business in 2016, but didn’t actually launch it till late fall, so almost 2017. By the end of 2020, I had scaled it to a full service agency with a consulting wing, marketing wing, over 20 full-time, W-2ed staff, and a national reputation as the foremost experts in our niche. Our largest client does over a billion dollars a year in revenue, while most land somewhere in the $10-300 million range.

That’s a pretty cool success story, but the reality is that it’s extremely rare and it took a tremendous amount of effort, risk, and investment to get where we are today.

This article is not going to feed you a lot of BS about overnight successes and “passive income.” It’s going to talk about the never-ending real work and sacrifice that goes into it.

Unemployed and Starting the Business

I had been a teacher and, eventually, a school administrator ever since I left university. I had developed a reputation as a turn-around guy for schools, someone who could come in and fix failing programs. This led to me being called in by the largest daycare operator in the US to fix one of their most troublesome schools in Indianapolis, IN in 2015. 

That turned into a nightmare. It was in a low-income area with lots of drugs and gun violence. We had just had a shooting at the school less than a year before and now the program was on probation by the state for the third time in less than 4 years and was going to be shut down. My job was to come in and turn it around. 

After a year of 80-hour work weeks, no organizational support, and the challenge of finding quality teachers willing to work in one of the more drug-infested, violent areas of town for $8 an hour, I finally got the school re-licensed by the state and on track to national accreditation.

It was an amazing accomplishment, but I didn’t want to be there. It’d been hell, so I asked for a transfer to a new school. Instead of transferring me, they told me that, since I clearly didn’t want to be there anymore, they no longer needed me. I was let go that day.

That was the last straw. I’d been in education and working for other people for nearly two decades. I was burned out. So I decided to start Circle Social.

I started it out of my house in-between caring for my daughter. We had just $2,000 in the bank and my wife was only making $10 an hour, so we couldn’t afford daycare. Circle Social was off to a pretty inglorious start. I was writing 1,500-word blog posts at $10 a pop under the company moniker, but really I was just a freelancer, since it was just me and these were piece-meal projects.

You see, nobody starts a business charging high fees. Most who do are quickly realized to be frauds by their clients. Their business may limp along for even a couple years, but eventually folds. To succeed in business, you have to charge less than established competitors while delivering more than they do. This helps you build a reputation so that, one day, you can actually charge real fees.

We did the same thing when I started the consulting wing. We took on our first couple clients for free. In fact, it actually cost us money as I had to fly myself and staff to their facility. Then our next consulting clients we did at cost. Then we charged a little bit extra to make a profit. Now we charge $250 an hour for consultations and make a significant profit because our level of expertise commands those rates.

Anyway, in order to get the work done at the time, my daughter and I would go to these free open play sessions at various churches around town. Most were only open for half a day one or two days a week.

So I had an entire schedule worked out of which church we went to when. While my daughter ran around and played with the other kids, I’d get to work writing blogs.

Of course, she still wanted to play with me a lot and I was responsible for most household duties, so I could only get so much done. The rest I would get done at night after my daughter had gone to bed.

Working for Cheap and Working for Free

Now, I had actually run for-profit marketing campaigns before. At most of the schools I ran, I was responsible for marketing. While working as a teacher abroad in Turkey, I’d learned how to build a personal brand online through Twitter and blogging.

It was a skill I brought to the table for my employers.  At one of my schools in Chicago, due to the success I was having with organic social media, I was given an actual budget for ads since Facebook had just opened up their advertising platform.

This was back in 2014 when CPMs were under a dollar and you could call them up and get a Facebook representative to help you out even if you were only spending $500 a month. I turned our $500 a month in $50,000 a month through new enrollments. 

Still, this had been a short run. Shortly after, the executive team was fired, costs were cut, my budget was eliminated, and we were back to “free” marketing through phone calls and organic social media.

I definitely had more marketing experience than most, I understood how to use social media to grow a business, and I understood the value of paid media vs “free” organic. But could I really help other businesses grow? I didn’t feel right taking other people’s money unless I knew I could do it.

So on top of my blog writing, I studied everything I could get my hands on. I took all the Google, Hubspot, and Facebook certifications that were out there. More importantly, I reached out to a couple contacts who had small businesses. I told them I’d run their digital marketing for free for a couple months in order to validate my approaches.

This was critical. Before I charged anyone any money, I did months of free work. I was basically surviving off of unemployment and the little bit my freelance content writing was bringing in every month. This got me positive reviews, a couple referrals, and the confidence to ask for money, knowing that I’d be giving them their value back and more.

We took our first monthly retainer client about three months after I officially started working on the business. Our first retainer fee? $500 a month! We now have clients paying us as much as $70,000 a month. It’s always amazing for me to look back at how far we’ve come.

I also want to make clear here that we do an incredible amount of work for $70,000 a month. Sometimes you see these people that talk about charging high rates, but it’s only because they’re gouging their customers. At $70,000 a month, I’ve got 15 staff working on that account, all with very high levels of expertise, and we’re running very sophisticated, multi-channel campaigns with some of the best creative in the industry. 

We don’t charge more because we can, we charge more because we’re delivering a level of value and service that no one else can. We also deliver results above and beyond anyone else in the field.

For example, with this client, we cut their cost per client acquisition by 80% within 2 months, literally saving them millions of dollars a year in ad spend.

For another one of our clients last year, we brought in $15 million dollars of revenue through a combination of cost savings and revenue growth. Paying $840,000 a year and getting a $15 million dollar return is a damn good deal.

Invest in Yourself and Your Business

Building the business was a slog. I didn’t take a day off for 3 years. Even today, we’ll take month-long trips. We did Turkey a couple years ago, Italy last year, and a National Parks road trip this year.

But I still worked a ton on those trips. As a business owner, you don’t really get a day off, not if you want to grow your business and deliver the results your clients deserve.

There are no overnight successes, no sitting on beaches and “earning money while you sleep,” just years and years of hard work until you’ve got the flywheel spinning to the point that it becomes self-sustaining.

Passive income? I don’t know anyone running 7-figure businesses that doesn’t spend the majority of their week working.

Do you know how much I paid myself in my first year? $30,000 before taxes and that was working 60-80 hour work weeks. I could have worked at McDonald’s and made a better hourly rate! But if I hadn’t put that work in, we wouldn’t be where we are today. Building a business is an investment in the future, one you won’t see returns on often for years. 

All this crap you see online about someone opening a business and then “hacking growth” or “finding the magic marketing funnel,” it’s all BS. Every once in a while, people get lucky. But the reality is that 80% of businesses fail in the first five years.

Moreover, a really good rate of business growth is 15-20%. So, if you made $30,000 in year one, a realistic revenue for the next year would be $34,000-$36,000. That’s why most people don’t own a really profitable business until they’re 10 years in or more.

Investing money as well as time is important for success. There was so much I needed to learn about business, taxes, leadership, growth, etc. So I started going to a lot of business events and meeting business owners and executives.

They always wanted to meet at some nice restaurant where a meal and drink came to $30 or more. At the start of the business, we barely had money to go out to McDonald’s, much less me pay $30 for a burger and soda at some fancy restaurant.

But I did it anyway. It meant sacrificing in other areas, but some of the most valuable knowledge I learned early on was from these meetings and networking events.

Then, in our second year in business, I decided to invest $10,000 to work with another agency who was willing to share some of their systems and processes with us. That was a HUGE amount of money for me as we still weren’t making very much overall.

It turned out to be one of the best decisions I ever made. I learned so much with their help. That $10,000 paid itself back 10-fold that year alone. Of course, I didn’t give my money to just anybody. It wasn’t some random guru online claiming they could help me scale to a billion dollars (In the entire US, there are only 135 companies valued at over a billion dollars. That’s valued at, not annual revenue. That’s .00054% of the 25 million businesses in the US. So when some guru talks about helping you build a billion dollar business, it’s time to walk away. Almost nobody does this. Remember, only 0.3% of Americans make a million a year in annual income. 99.7% of people don’t even come close, so this is not a realistic goal).

These guys were up front and honest with what they could provide and made no claims as to what we might be able to do with it. All they said is they could help me build the foundational systems we needed for growth and it was our responsibility to take it from there.

You get out of your business what you put into it, both in terms of time and money. If you’re cutting corners, always trying to get the cheapest deal, or trying to do it all for “free” by doing it yourself, you’re not going to be able to grow your business. At the same time, you have to research well and understand the risks as not every risk is worth taking.

Investing in Relationships

Another thing I did to make our business standout is I actually went to visit clients and paid for it all myself. Why? Because nobody else did this and I knew it would help us better serve them. If I could see their businesses in action, then we could create better campaigns. Did it cost us a couple thousand dollars per trip? Yes. Was it worth it in the end? Absolutely!

Nowadays, due to our prominence in our niche, we get tons of sales calls from other vendors. They want to partner with us. “We’ll send you referrals if you send us referrals,” they say. I have no interest in those kinds of people. I would never refer a business to someone I know unless I can vouch for them and trust them. Our reputation is far more important than some tiny referral fee or the fact that they may also refer us business.

Relationships and reputation are everything in business and the worst thing you can do is sacrifice them to make a quick buck. We actually refer out business all the time.

I’ve made several businesses a couple million dollars in contracts last year alone. But it’s only because I knew the caliber of their business, I trusted them, and I knew they’d take good care of the providers we referred them to.

Hiring the Right People

Another way to invest in your company is by hiring the right people and delegating out work so you can focus on business growth. Circle Social hired its first employee 3 months after we started. It was a pivotal moment for me when I realized we could leverage my expertise and their time to create a profit while also helping a client. 

As I’ve continued to grow the business, the second we have the revenue for it, I hire in a new staff member to take something else off my plate. This allows me to focus on business growth.

I also hire when I think we can solve a client need or do something better. We built out our Creative Department this year because I wanted to give clients better graphics. Nobody had ever complained about the stock photos we’d been using, but I’m obsessed with quality. Once we had the revenue, we started hiring that team so we have a designer, videographer, and creative director. Our client campaigns standout much more than before.

My goal is to either hire experts or have the training systems and processes in place to bring someone in and make them an expert. Both require time and money. Hiring good people takes forever! They are so hard to find. So you have to look long and hard. I’ve had employees cost me a lot of money in bad decisions. 

We’ve lost clients accounting for tens of thousands in revenue a year. I even once had a paid media specialist put an extra 0 in a Google Ads campaign so we were spending $3,000 a day rather than $300. Luckily, I caught it within 3 days, but that was our fault. I called the client immediately, let them know what had happened, and sent them a check for $9,000.

At the time, that was a huge amount of money for us, but I did it because it was the right thing to do and it was our mistake. Moral of the story – hire slow, hire well, and always have quality assurance systems in place to catch mistakes.

Hiring those with less expertise is quicker, but not necessarily less difficult. You have to spend a lot of time with them and you also need to spend a lot more time on quality assurance to double check their work, like the lesson I learned the hard way above. Last year, we invested in building out an online training library. It has cost us over $50,000 so far and we’re always adding to it, but it’s worth it as we now have the best training in our industry. This makes my team better, which then allows us to deliver better results for our clients. 

Even with all this, we still have people that don’t work out. I’ve had to fire 7 people since starting the company. That’s not that many, but firing people is never fun. You, your other staff, and your clients deserve the best staff you can afford though. If a person isn’t working out, then they have to go, and the sooner the better.

And firing people is expensive! I ran the numbers last year. Between the recruitment costs, training costs, and wages and benefits paid to the team member, it costs us $8,500 per new hire. So when people don’t work out, it really hurts. That’s one reason I like to hire slow when possible.

Nowadays, since we can offer higher salaries, I’m looking for great talent, not just average talent. Our most recent termination was someone that was doing an OK job. I’m paying too much money for an OK job. So we let them go and brought in someone to do an excellent job. 

To run a growing business, you have to be willing to make the tough decisions. You have to both lead and manage people. The more people you have, the more difficult it gets. Being part of a growing company is not easy. Our systems and processes change constantly. What worked for us three months ago, doesn’t work today. And the bigger we get, the longer things take to implement.

We recently rolled out a new project management program. It took us three months! First we have to demo the programs, trial them, decide on the right fit as a team, come up with a roll out schedule, create the trainings and training schedule, train the staff, then finally roll it out. Things get more difficult and complicated as you grow, rarely easier.

But this also allows you to build a defensive moat around your business. Because it’s hard, it’s unlikely another agency will be able to build and scale to the same level to compete with us.

These days, there are three layers under me. I have my VP, then the four department leaders, then frontline staff. I couldn’t tell you what most of the frontline staff is doing on a day-to-day basis since that is all delegated to my leadership team. It’s hard to let go. As the owner, you want to have your hands in everything, but if you hire the right people and provide the right training and guidance, you can delegate a lot of that responsibility. 

Following the Data and Focusing on Customer Results

Data is the foundation for everything. If you don’t have data, you don’t know what’s working and what’s not. Circle Social has over 2 billion dollars worth of data in the behavioral health space, more than anyone else as far as I know.

We have this through our consulting and marketing work because we get very involved with clients. We don’t just run their campaigns, we partner with them to help run their businesses, so we have P&L data going back years from some very large companies. We have benchmarks for CPC, CPL, CPA, RoAS, timelines for SEO builds, timelines for paid media builds, cost on website development, strategic allocation per channel, conversion metrics, salary ranges, startup costs, etc, etc.

Then we have all of our internal data. We know how long it takes to write a 1,500 word article for SEO vs PR vs paid media. We know how long an infographic versus in-article graphics take. We know how much time management spends on QA versus training versus implementation. 

This allows us to get results for clients while controlling our costs. In the marketing world, there is a ton of fluff. For different projects in the past, we’ve partnered with marketing VPs from Disney, Hewlett Packard, and other big companies in our niche. They often talk about branding and messaging, but have no clue how to tie that to the bottom line. I find a lot of agencies are like that.

They’re vendors.

They spit out content and campaigns, but couldn’t tell you how or even if it’s helping their clients. They certainly couldn’t tell you which channel is driving which stage of the customer journey and how to allocate budgets appropriately across them to get result X.

That’s what we do. It’s what helped build Circle Social in the beginning. We were different from other marketing agencies our clients had worked with in the past. We were transparent, data-driven, and as focused on results as they were.

So there’s a lot of fluff in some generic marketing platitudes like “tell your story” but there is also a lot of BS in the supposed technomagic of various platforms that you hear spouted by various gurus. Facebook has no magical algorithm. Google Ads has no magical algorithm. They certainly have algorithms, but they’re pretty dumb. 

Marketing campaigns don’t fail because you don’t understand the algorithm, they fail because you’re targeting the wrong audience, delivering the wrong message at the wrong time, not building enough trust before encouraging action, or because you think that some magic marketing formula is going to solve all your problems. 

Nike, Starbucks, McDonald’s, Coca-Cola, think of any big name brand in the world. None of them built companies off of marketing funnels and algorithms. They built multi-billion dollar companies by delivering on their promises surrounding their product or service. They then learned how to leverage marketing to amplify their growth, but their marketing certainly didn’t create it. 

As we tell our clients, marketing amplifies the good and the bad. If you have a poor product or service or, even worse, if you lie and exaggerate in your marketing so that your message doesn’t match what you actually deliver, your business will fail. 

We don’t even use the algorithm in our Facebook campaigns. It actually gets it wrong for us more than it gets it right. We have much more success with broad awareness campaigns because we know who to target when with what message. 

Real companies are built through trust and reputation. I didn’t scale Circle Social to multiple 7 figures with marketing hacks. I did it by providing best-in-class services that get results for our clients. Nowadays, our reputation speaks for itself. I haven’t done a sales call in 3 years.

All of our clients know who we are before they call us and have often been following us and our content for six months or more before they make first contact.

Once they call, they’re rarely calling to test the waters. They’ve already decided they want to work with us and just want to know how much and when we can start. 

That’s how good marketing works, and it takes a ton of time. We made a decision after our first year of business to focus exclusively on the behavioral health space. It took us four months from when we initially made that decision to getting our first new client in the space! And, as already mentioned, our typical sales cycle is around six months from when clients first encounter us.

I don’t even track things like CPL for us because it’s nonsensical. Clients consume so much of our content across so many different channels and such a long time frame that it’s meaningless for me to worry about our CPL on LinkedIn vs. Facebook vs. Google Organic.

Finding Our Passion and Purpose:  Niching Down

I always tell our clients it’s better to be a big fish in a small pond, and that’s us. Behavioral health is maybe 1% of the overall healthcare space. Because we made it our exclusive focus, we do it better than anybody else out there, and that’s not bragging. We are far and away the best consulting and marketing agency in our space because it’s all we do, we’re so committed to it, and now we have more data and experience than anyone else. 

This has contributed to creating a moat around our business. If some startup wants to come in, there is no way they’re going to amass 2 billion dollars worth of data and hands-on experience with over 100 facilities across the country. And the expertise we’ve built off that can’t be matched. We have a head start that is unlikely for anyone to ever catch. 

Our passion also makes each day a pleasure. My agency is unique in that we’re not selling clothes or used cars or real estate. We’re genuinely helping connect people to care that will potentially save their life. It’s very meaningful work. This focus keeps me passionate about what we do so I don’t see work as work, and it’s the same way for the team. Everyone that works at Circle Social has a passion for behavioral health. 

So many agencies try to be everything to everyone. They just end up spinning in circles, always struggling to find the next client because they have no reputation in a particular niche nor any specialized expertise. If you were in an accident and needed an attorney, would you hire any old attorney or would you hire one specialized in injury claims? Marketing is no different. Great marketers are specialists.

If You’re Willing to Put in the Time, Work, and Money, It Can Be a Rewarding Ride

80-hour work weeks, no real vacation for 3 years, difficult client calls at 10pm on your Saturday nights, and investing time and money in the risks of building something successful. That’s often what it takes to be successful.

These days, I’m not just growing my own business, but we help many other businesses, both large and small, grow theirs. If there is one thing I’ve learned, it’s that it is always, always a challenge. You think it’d get easier over time, but it actually gets more difficult. There are nights I pass out at 8:30 pm, just exhausted from a day that started at 6am and didn’t end till when I fell asleep. I’d had to cram in lunch and dinner in the 5-minute increments between phone calls. 

It’s not always like that. There are definitely weeks where I only work a traditional 40 hours. And my business is in a place with an excellent team and solid systems and processes that I rarely have to work a weekend anymore. But we only got to that point by investing blood, sweat, and tears for years beforehand. You make a lot of (often expensive) mistakes along the way, but, if you learn from them, they only improve you and your business in the end.

The more you grow, the more challenges and responsibilities that come with it. I worry about my team every day. I’m not just responsible for myself, I’ve got 26 staff that depend on me for their incomes, their retirements, and their healthcare. And not just them, but them and their families.

And, of course, we have the clients to think about. Between actual execution and our consulting, we oversee more than a million dollars in marketing spend a month. That’s a lot of responsibility!

Most small businesses fail in the first five years because it’s so hard. You have to be willing to keep going after mistakes, after losing a lot of money, and ridiculous amounts of pressure and stress. It’s just not worth it to most people, very understandably. 

Whatever technique the latest gurus are peddling isn’t going to save your business or help it take off. Good techniques certainly make things easier, but the core of any business is its ability to consistently deliver on its promise related to its goods or services. Reputation and compounding success is built upon that consistent provision of differentiated quality. 

Nobody ever built a successful business, agency, or course by “finding the right audience” or “creating amazing ad copy” or “figuring out the algorithm.” Once you have a product or service worth buying, these things will absolutely help you scale, but the execution in the delivery of that differentiated product or service is what matters. If you don’t have something worth buying, then amazing marketing will just create a whole bunch of really angry customers who work to tear down your business through bad word of mouth and online reviews.

I remember I bought some stupid Facebook audience finder software online one time from some startup firm. Don’t even remember the name of it. But it was terrible and I asked for a refund, which they refused to give. I wrote bad reviews all over the entire web.

This was two and a half years ago and I just last week got some person reaching out to me asking for confirmation that they shouldn’t buy the product. I’ve had over 50 people reach out to me in that way and you can just imagine how many didn’t reach out, but read the reviews and decided not to buy.

By not creating a quality product, and then refusing to refund me, a single customer, this small company has lost and will continue to lose thousands of dollars. Be smart and put your customers first or it will cost you far more in the end.

Business isn’t a math formula or paint by numbers, there is no “lead faucet” to automate your business growth just like there is no road map to follow that works across the board at all times, regardless of how many gurus tell you there is. You have to think about business and marketing like a game of chess. If you just copied your opponents’ moves, you’d lose. If all I had to do was copy some other successful model, I would have built a coffee shop that grew to rival Starbucks. I know what their stores look like, where they get their products, what all their marketing campaigns are. But knowledge of all this doesn’t mean I can build a multi-billion dollar coffee company.

Like in chess, success is dependent on outmaneuvering your opponent, adapting to a constantly changing environment where what worked last game won’t work this game, where each move creates an entirely new realm of possibilities and obstacles. Circle Social has succeeded because we put our clients first, are always innovating, and always investing to make ourselves and our work better than the day before.

I hope my story helps others out there as they look to start or grow their own business. It’s not easy, but it’s absolutely worth it. What makes it worth it for me is the impact we have. Yes, it’s brought financial success, but, more importantly, we have an outsized impact on improving the entire field of behavioral health. 

We help people better understand addiction and mental health issues through our marketing campaigns for clients. We help connect people to quality care. And we have CEOs, private equity firms, investment bankers, and clinical directors call us for advice and guidance, affording us the opportunity to dig into our data and our expertise to help them make the field more effective for everyone. 

If you’re interested in contacting me, the best way is through LinkedIn. I share a lot of free advice on there every week. I also recently did a podcast on building a successful company through passion, purpose, and profit that might give you some helpful insights. Just a head’s up that I don’t do free consults for those starting off or struggling to grow, but I am always open to casually connecting or engaging in a more formal consulting arrangement.

Good luck out there!