In short: Agencies specialise, and the specialisation determines what you get. The main types are full-service, performance, media, creative, PR and specialist agencies, each paid differently and good at different things. Most small and mid-sized companies need one partner who owns distribution and brings in specialists, not a full-service agency.
Key points
- Full-service agencies staff every function to an average, and their economics favour the highest-margin services, rarely the one you most need.
- Performance agencies depend on the ad platforms working for your category; if the platforms will not carry you, they have little to sell.
- A creative agency with no distribution partner produces beautiful things nobody sees.
- In a pitch, ask where the agency's revenue comes from, whether it has worked in a restricted category, and what it would not do.
- A 'we do everything' answer signals a generalist who will subcontract quietly.
"We should hire an agency" is the start of a decision, not the end of one. Agencies specialize, and the specialization determines what you will get.
The main types
Full-service agencies offer strategy, creative, media, digital, and often PR under one roof. The appeal is one relationship and one invoice. The trade-off is that every function is staffed to an average, and the agency's economics favor the services with the best margin, which is rarely the one you most need. Best for companies with broad needs and a budget large enough to be a priority client.
Performance agencies run paid acquisition, typically on the large self-serve platforms, and are judged on cost per outcome. They are fast, numerate, and dependent on the platforms working for your category. If the platforms will not carry your product, a performance agency has little to sell you. Paid by retainer, percentage of spend, or a fee plus a performance bonus.
Media agencies plan and buy media across channels, including programmatic, television, out-of-home, and audio. Their value is in access, negotiation, and measurement at scale. Historically paid a percentage of spend, which is the incentive problem covered elsewhere in this collection. Best for large budgets where buying power matters.
Creative agencies make the work: brand identity, campaigns, film, design. They are paid by project or retainer, and their output is judged on craft and effect. They do not usually distribute what they make, and a creative agency with no distribution partner produces beautiful things nobody sees.
PR agencies earn coverage and manage reputation. They are paid on monthly retainers and are judged, imperfectly, on placements. Good for companies with news, a credible spokesperson, and a story a journalist would want regardless of the pitch. Poor value for companies with none of those.
Specialist agencies do one thing: affiliate management, influencer programs, app-store optimization, search, community, a single vertical. They are usually better at that thing than a full-service shop and worse at everything adjacent. Paid by retainer or project, sometimes by performance.
How to tell them apart in a pitch
Ask three questions and listen for where the energy goes.
Where does most of your revenue come from? The answer tells you what the agency is actually built to sell.
Show me a client whose category the platforms restricted. If the answer is a blank look, the agency is built for the crowded auction.
What would you not do for us, and who would you bring in instead? A confident answer signals a specialist who knows their edges. A "we do everything" answer signals a generalist who will subcontract quietly.
The mix most companies actually need
Small and mid-sized companies rarely need a full-service agency. They need one partner who owns distribution and can bring in specialists for the parts that do not scale in-house: PR when there is news, creative when the brand needs work, a clipping or creator specialist when the program calls for it.
That is the model we run: distribution built and run directly, with PR, creative production, and specialist networks packaged from partners rather than staffed permanently. It keeps the core work close and the peripheral work with people who do it every day.
lowob takeaway: Agencies are specialists wearing general names. Find out where an agency's revenue comes from, whether it has worked in a restricted category, and what it would not do, before you find out the expensive way.
Common questions
What are the main types of marketing agency?
Full-service, performance, media, creative, PR and specialist agencies. Each is built to sell different work and is paid differently, by retainer, percentage of spend, project or performance.
Does a small company need a full-service agency?
Rarely. Small and mid-sized companies usually need one partner who owns distribution and can bring in specialists, such as PR when there is news or creative when the brand needs work.
What questions should I ask an agency in a pitch?
Ask where most of its revenue comes from, to see a client whose category the platforms restricted, and what it would not do for you and who it would bring in instead.
When is a PR agency poor value?
When a company has no news, no credible spokesperson and no story a journalist would want regardless of the pitch.