Transcript:

00:00:00 Casey: In this episode, I talk with Dawn, one of my members inside of the CMOS Accelerator, and she is an agency owner. And Dawn is seeing how the agency is valuable, but also losing its edge a bit. You know, agencies aren’t as needed as they used to be. And she’s thinking, what do I do to grow my impact and keep my income high? And she’s adding fractional CMO services. And I want you to see how she thinks about the agency model, how she thinks about AI, and how she thinks about growing her business so that she can make more money, have more fun, help her clients deliver more value. Let’s get into it.

00:00:34 Casey: Marketers of the world, why do we work hard to solve small problems? Why do we reinvent ourselves and our clients over and over, and why are we giving away marketing strategy for free? With advancements in AI, we’re all seeing the marketing department shrink from the bottom up, and companies need you to serve them as their fractional Chief Marketing Officer. It’s time to solve bigger problems and bring home a bigger paycheck. It’s time to create the lifestyle we deserve and to make a greater impact.

00:01:06 Casey: This is The Fractional CMO Show, and I’m Casey Stanton. Join me as we explore this growing industry and learn to solve bigger problems as marketing leaders. The Fractional CMO Show is sponsored by CMOx, the number one company to teach you how to attract, convert, and serve high paying fractional CMO clients on your terms.

00:01:30 Casey: Alright. Welcome back to another episode. I’ve got an agency owner here, Dawn. And Dawn’s in the Boardroom at CMOx Accelerator, and I’ve gotten to know her, I don’t know, over, like, the last year or so. And, she runs a great agency. But she sees something that’s happening right now for agencies. And I think Dawn is ahead of her peers in this way because she’s shifting to the fractional CMO model, because I think it’s more advantageous, but I want to hear about it from her.

00:02:02 Casey: Dawn is the kind of person who, like, always wants what’s best for her clients, and she really fights for them. And I just get a vibe from her that she just doesn’t take any shit from anybody, and she gets a lot of good stuff done.

00:02:16 Dawn: That’s true.

00:02:17 Casey: Yeah. It’s true. Good. I’m excited that you’re here, Dawn. Thanks for jumping on.

00:02:21 Dawn: Yeah. Thanks for having me. Appreciate it.

00:20:24 Casey: Yeah. Okay. Your agency, what is the main function that your agency has been doing forever? What kind of agency are you guys?

00:02:30 Dawn: So, eleven years, I’ve had my agency, and we have primarily focused on ecommerce brands. So national brands that are growing and scaling online, specifically. We focus a lot of our attention over the last couple years have been in health and wellness. After COVID, we kinda niched down even further. But we’ve got pet brands and coffee brands and, you know, other sorts of brands that we work with. And I think over the last couple of years, kinda like you said, I started to notice this trend of, like, we would do a lot of stuff with the agency, but nobody was running the strategy. And everybody was like, oh, my marketing tech does this, or the CEO is doing this.

00:03:14 Dawn: And these are companies that are doing, you know, several million a year or more. I mean, they’re not hundred million dollar companies, but they’re big enough where they should have some sort of structure. And, you know, it just sort of then came to us. Right? Like, we were just the ones doing all the strategy, or I was doing one – I was the strategy person.

00:03:37 Casey: The agency owner.

00:03:38 Dawn: The agency owner is doing the strategy for a company, but we’re not getting paid to do –

00:03:43 Casey: You wouldn’t get paid for the strategy. You would just get paid for the implementation management.

00:03:46 Dawn: Right. Right.

00:03:47 Casey: You get what like, generally, like, a percentage of media buy? Like, media spend would be your –

00:03:50 Dawn: Yeah. Flat rate and a percent of media buy. Yeah.

00:03:52 Casey: Got it. So that doesn’t compensate Dawn for working on strategy for a company late at night.

00:03:57 Dawn: Right. Or thinking about, boy, if they just did this, it would be so much better. Or if they just were doing this, it would just be, you know, life would be so much easier for them. And so I had your first book for a long time, and I’ve been following you for a long time. I’ve been in group for a long time. And I don’t know. Something about it – I had another friend that was, you know, in the group, and she said, I’m an agency owner. I’m kinda flipping – you know, I’m gonna try this new thing.

00:04:22 Dawn: And I thought, okay. Well, let’s see what this is all about. And I’ve been in a lot of mastermind groups over my many, many years. And I think, you know, for me, it was like, okay. Let’s see what this thing’s all about. And can I actually make, you know, some decent money doing the fractional sort of stuff and then think about how maybe the agency works itself maybe out? I’m not done with the agency yet.

00:04:53 Casey: Yeah. Because it still works. Right? It’s still a good model.

00:04:55 Dawn: Oh, yeah. It’s still great, and people still, you know, we still have clients, and we still are doing stuff for clients. I’m just not actively recruiting for the agency, but I am actively recruiting for CMO work.

00:05:07 Casey: Okay. So tell me tell me about what is the delineation between, like, agency and fractional CMO. Why does the agency need a fractional CMO? You know what I mean? Like, why do they need to work together? Like, what’s that dynamic?

00:05:18 Dawn: Yeah. Yeah. I think, you know, you need implementers. Right? And an agency should really be an implementing team for you, and it should implement certain things that a business doesn’t know how to do. Specifically, we do paid media. We do, you know, Shopify specific. We do email marketing, those types of things. A lot of people don’t have that resource or know that on their teams. They don’t have people that can do that. So an agency comes in and does it.

00:05:45 Dawn: Now there’s horror stories about agencies. Everybody hates an agency. I’ve been burned by agencies. I hear it all the time. Right? But there are good agencies out there.

00:05:53 Casey: There’s good agencies. Yeah.

00:05:54 Dawn: There are people who do good work and who really care about their clients and things like that. But an agency really is meant to be an implementer. Right? An implementing arm of a business. It is not intended or should not be intended unless being paid for to be the CMO of a business. It should be the CMO is coming and telling you or the Marketing Director, whomever, from the business is coming and telling you, hey. These are the things that we need. And then we, as the agency, say, hey. This might work better if we do this or fix your landing page or, you know, do the more tactical kind of stuff. Not like, hey. If you, you know, go into China, you’re gonna triple your growth or things like that. You know, that that kind of stuff isn’t what an agency should be doing for you.

00:06:39 Casey: Got it. Okay. So the agency is doing the technical work, and you see with these clients that you had in the agency that there was just a bunch of opportunity that they weren’t tackling. And you weren’t going to do it because if you were gonna do it, it was just kind of like a favor, and favors aren’t scalable. They don’t get priority in your life. Is that it? Got it.

00:06:57 Dawn: Totally. Totally. Yeah. So I kind of took one of my clients that I have been with for a really long time and said, okay. Let’s shake this up a little bit. And I know there’s a lot of opportunity with this business, but you don’t have anybody sort of driving this for you. I want to take on the CMO role and want to do this with you in a very different way than what we’ve been doing before. You know, are you open to it?

00:07:24 Dawn: And so that was kind of my first step into this, which, fortunately, for me, I have great clients that are, you know, ready and willing to do some of that with me. So that was great. And, so now I took that role on in January with him and his company, and we’re working through a lot of stuff.

00:07:44 Casey: That’s great. Okay. So you’re now offering two separate services. Can you just tell me, do you have two separate organizations, two, like, different legal entities, or do you do it underneath one?

00:07:55 Dawn: I am splitting. I will split it now. Now, this year, I will split it into a different entity just because I think it needs to have its own separate worlds. Right? And particularly as I start to maybe, you know, move this around a little bit, the agency side of things, I think it needs to do some shifting as far as, like, legal entities go. Plus, you get a better tax write off if you have another one. You can kinda move things around a little bit.

00:08:20 Casey: Yeah. Right. Yeah. You play the game that you can play.

00:08:23 Dawn: Play the game.

00:08:24 Casey: So as I think about that, so you started off just, like, launching your fractional CMO practice inside of your agency just to keep it simple. And then once it had, like, a little bit of maturity, you’re kind of breaking it out into its own separate organization, every P&L. And, like, what does an agency just generally, what should an agency aim for, you think, on profit margin?

00:08:47 Dawn: Usually, I mean, I feel really good if I’m in the 30% to 40% range. It feels – I mean, I would tell you most agencies are probably in a 20-ish, 20% to 30%. I mean, everybody thinks all these agencies are like, oh, we’re making all this money, but they have a whole team of people they gotta pay too. And, you know, so the margins on an agency can be really, really tight.

00:09:09 Casey: Yeah. And then what is it like on the Fractional CMO side? How do you see your margins?

00:09:14 Dawn: Pretty much, like, almost 100%. I mean, it depends. You know, obviously, it depends on some of the things if you’re, you know, hiring a person to work under you or you’re hiring for, you know, the company as a marketing tech, kind of how you’re just structuring. I know some of us have different things. Like, they’ve hired assistants to help them manage projects. There’s people who are hiring, you know, marketing techs that are working across multiple, you know, businesses just to kinda get things sorted, you know, that kind of stuff. So there’s probably some, you know, margin that goes to that. But really, the goal is that it’s all profit. I mean, that’s really what the intent is, is that that should be money for your particular services, not for your team.

00:10:00 Casey: Yeah. Yeah. Great. So I see, like, agency owners that think about joining the accelerator and they might have a co-founder at the agency. Would you recommend then that the person who wants to be a fractional CMO start up their own fractional CMO business outside of the agency?

00:10:16 Dawn: Yep. I think so. It’s hard because you really have to sort of get to the mindset that this is different. Right? And I think the hardest part for me was, well, I’ve been doing this a lot already for people, you know, as a favor or just because I couldn’t help myself, you know, sort of thing.

00:10:33 Casey: Doing, like, marketing strategy and leadership. Because you couldn’t help yourself because you just love this stuff?

00:10:39 Dawn: Right. And it’s like, I just can see the opportunities. Right? And so many people just have, you know, not a clue or an idea. And so it was like, oh, but you gotta separate yourself from that in the agency side of things. And I think a lot of agency owners are doing it and not getting paid for it. And so pulling yourself out of the agency space and saying, this is its own business. This is a different way to look at business, I think will definitely help you.

00:11:10 Dawn: And if you have a cofounder and they can still run the agency for you and you guys can kinda you know, whatever that looks like, but, yeah, it’s gotta be separate, and it needs to be more delineated that you’re not gonna do that work for agency clients unless they become fractional clients. Which, again, some of us have talked about, it gets messy because you’re still using your own team and how does that work and so on and so forth. So it’s not a clean-cut, you know, do this, do that. Everybody’s situation is a little bit different, but that would be my opinion and separate it out.

00:11:44 Casey: Yeah. Totally. Totally. Yeah. I think that, ultimately, I wanna see all fractional CMOs build their clients’ teams and not really hire people internally on their fractional CMO company to service the client. But if you come from an agency background, that’s probably hard to give up.

00:12:00 Dawn: It’s hard to give up and particularly hard if you have really dedicated people that you know can do good work. Because that’s one of the things I think we’ve talked about so much in the Boardroom too is, like, who’s hiring? Where are you getting these people? What are we doing? And it’s like, oh, I’ve got, you know, four people on my team that are, like, rock solid, have worked for me for years and years. It would be really hard for me to say, I don’t want you to work for me anymore when I know they can work. So it’s about shifting those people, though, to not get paid from me, to get paid from the business that I’m supporting. You know? So making that model transition a little bit different.

00:12:38 Casey: Yep. Yeah. That makes a lot of sense. And, also, it shows kind of your heart and care for the people that you’ve worked with for so long.

00:12:45 Dawn: Yeah. For sure. Yeah. And they know my team too, and so that, you know, there’s a comfort level there.

00:12:51 Casey: So how do you position differently for the business owner? What would you say, like, your major positioning differences when you sell the agency versus fractional CMO services?

00:13:04 Dawn: I think for me, it’s really about the strategy of what I can do for your business at a holistic view and how to really take a look at that business from that holistic perspective, not just the paid media side or whatever you’re coming to us for. And a lot of people don’t realize that there are fractional CMOs out there. I think there’s still a lot of education to be done in that space. But I think for me, it’s really been, you know, I’m not just the implementer. I’m not just making sure that the team is doing all the tactical things. I’m helping you set the strategy. I’m helping you set the plan.

00:13:44 Dawn: We’re doing these higher level discussions that aren’t, you know, what’s your ROAS and your CAC is this. And, you know, it’s much bigger and broader about, you know, getting into new markets, doing new things, trying new stuff, and, you know, much higher level. And so when I’ve had those conversations with, you know, people, they’re like, oh, I didn’t even – I mean, yeah. That sounds cool. You know? Like, they’re into it, for sure, but it’s almost like people just didn’t realize, you know, that, oh, I can hire somebody fractionally to do that? I didn’t even know that was a thing.

00:14:19 Dawn: So I think for all of us, we have got a lot of, you know, cool opportunity. I think you’d asked Rachel, you know, are we on the cusp of this or, you know, too late from the fractional side? And I think we’re, like, barely even hit the mark yet. You know? People just –

00:14:32 Casey: We’re very early to the market.

00:14:34 Dawn: Very early to the market on this one. I don’t think people understand at all what this means or the fact that you can do it and get it for such a good price. Even though we may think we’re charging a fortune, I worked for a Fortune 500 company. I know how much they’re paying their CMOs. It’s not cheap. You’re getting a deal.

00:14:54 Casey: Yeah. That’s a great point, especially if you’re the kind of person who can deliver the same results. Okay. So one thing I know about you is, like, you’re trying to, like, play bigger games. Like, you’re just trying to get bigger and bigger, with, like, bigger clients and work in ways where you’re more valuable. How does being a fractional CMO open the door differently than being an agency owner?

00:15:21 Dawn: Well, I get to see a side of the business that I would never have seen as an agency owner. Right?

00:15:27 Casey: Oh, yeah. Like, with the P&L.

00:15:28 Dawn: The P&L side of things. I mean, some people are totally transparent, and other people are like, why do you need to see that? You know? There’s no reason for you to see that. So as a fractional, I think you get much bigger line of sight to those types of things. Hopefully, you get the CEO here versus maybe a marketing strategist or the copywriter that’s working on ads. You know, that’s who you’re interacting with as an agency owner a lot of times or the marketing tech person or the social media person or, you know, whatever it is, you get a higher level, you know, insight.

00:16:01 Dawn: And I think for me, it’s been really eye opening because there’s so much opportunity that’s outside of even the digital space, right, which is where I focused primarily. But even just, you know, in person events again are starting to happen. And, you know, really going into other countries and different markets, and what does that include, and how do you do that kind of stuff? I mean, just such bigger conversations at such a higher strategic level that, you know, you’d never see that as an agency owner most of the time.

00:16:32 Casey: Like, you’re invited like, you’re –

00:16:34 Dawn: You’re invited to the table. Yeah.

00:16:36 Casey: Yeah. Like, you’re, like, at the big kids’ table. You’re, like, having the real conversations about the business. I talk about solving bigger problems. Can you give me an example of a bigger problem that’s come your way, maybe without too much detail? But, like, what’s a bigger problem that you’ve seen now that you otherwise would have been blind to as an agency partner alone?

00:16:57 Dawn: Distribution is a big one for us that is becoming a problem. And it may seem like how is that marketing, but it really is a marketing problem if we can’t get the product to the places we’re trying to sell.

00:17:11 Casey: What is distribution referred to? Like, logistics of actually getting –

00:17:14 Dawn: Yeah. So getting a product from point a to point b, like a 3PL going through a distribution center. You know, these are physical products, so it’s a little bit different than the B2B space. But, you know, still the logistical problem of being able to get a product from point a to point b. Well, as a marketer, if I’m just selling everything I possibly can as a, you know, I’m, let’s sell, sell, sell, and we can’t get a product or now tariffs are causing havoc for everybody. You know? How do we balance our marketing strategy with problems with distribution? There’s gotta be, you know, a balance. And I would never have seen that as an agency owner. It would’ve just been sell, sell, sell. You know? We’re going hard and heavy. You know?

00:17:59 Casey: Until you weren’t because –

00:18:00 Dawn: Until we weren’t because we ran out of product or we can’t get it somewhere. And that happened a lot during COVID, right, with people who, you know, they couldn’t get their products. They couldn’t get things across borders. They can, you know, all that kind of stuff. And it’s similar in how things are happening right now. But those kinds of things, line of sight to that stuff, and, really, what does it cost to get a product from point a to point b, and how that impacts the margin of your marketing, you know, that kind of stuff just never – you just don’t get line of sight to that as an agency owner.

00:18:31 Casey: Yeah. Yeah. That makes sense because, I mean, the agency owner are outsiders, and the fractional CMO is an insider.

00:18:39 Dawn: Yeah. Right. And you’re part of the team. You know? And somebody just put in the comment, I think this is really good. You’re, you know, you’re speaking to owners as CEOs as an equal, not as a service provider. And that’s exactly right. Because agencies, they see you very much as a thing. Right? It’s very much you’re providing me with the service. Yep. Do better. Do hard – you know, do the service, not as a partnership. So I think that’s really great [inaudible].

00:19:06 Casey: They can replace you as an agency. They say, the agency, you’re out. I’ll get another agency. They can do 90% of what you guys do, like, within thirty days.

00:19:14 Dawn: And sometimes cheaper. Right? You know? I’ll go find somebody cheaper. They basically do the same thing that you’re doing, and that’s that. And so it’s definitely the strategic side of things that, you know, you wouldn’t have line of sight to as an agency owner.

00:19:29 Casey: Yeah. What do you think is happening in, like, the media buying space for agency owners? Like, could you put into words what you think is happening with, like, AI automation, kind of the future?

00:19:40 Dawn: I think there’s always gonna need to be a human element to media buying, and I think there’s always gonna need to be a human element to graphics and copy and how we present ourselves online. But the tactical button pushing of media buying is gonna go away. You’re not gonna need to have a person who just pushes the buttons for you anymore because you can set it up now so that it just runs on autopilot. Right? And so that’s good and bad because that can help. Right? A lot of the tactical sort of, you know, things that you’re paying for on the back end that you can just set up with AI, but it does lend itself to having to have somebody check the work, still having to have somebody who knows what they’re doing. So you know? But I do think the way in which we media buy is gonna be very different in the next couple years, for sure.

00:20:37 Casey: If we just look back, like, ten years ago, you would have a full media buying staff.

00:20:41 Dawn: That for sure. You’d have a copywriter. You’d have a graphic designer. You’d have a media buyer. You’d have a junior media buyer. You’d have a senior media buyer. You’d have, you know, somebody overseas that was helping you do, you know, the reporting. You would have, you know, I mean, you’d have all these people. And now, really, you just need kinda one really good media buyer who can sort of figure out where to go to get all the goods. You know? You don’t need it as much, particularly for the copy. You just – you know? And now graphics are getting so much better and different stuff too. I think the button pushing is definitely gonna go away.

00:21:21 Casey: For sure. I was playing in Meta Ads this week. I haven’t been in there in a long time. And, I was putting together an ad, and it’s like, what’s your headline copy? And I wrote it. You know? And then it says, here are some AI variations. What do you like?

00:21:36 Dawn: Totally. Right. Meta is doing it for you. Right?

00:21:39 Casey: Yeah. I upload an image and it’s like, here’s five derivative images that we edited with AI. Right. Bang. Like, they were okay. I didn’t like them because they didn’t feel right, so I’m not gonna run them. But I’m sure they would have performed okay.

00:21:52 Dawn: Yeah. And it’s gonna get better and better and better. The more data it gets, the more it’s gonna have. You know? Meta is really working hard to get a lot of that stuff going for them. So I think, you know, the graphics and the suggestions and all of the things that, you know, in placement and that kind of stuff is all gonna start. AI thinks, you know, based on what you’ve put in here, this is gonna be better, you know, or this is gonna be a better, you know, headline for you. We’re gonna just convert it for you. You know, that kind of stuff is just gonna kinda take over in a lot of ways.

00:22:25 Casey: Yeah. Yeah. And, obviously, the content writer or the copywriter that you would have had on staff before. I mean, that’s just not required. Right?

00:22:32 Dawn: Nope. Nope. I let my copywriter go last year about this time, and, you know, she saw it coming. I mean, everybody knew it was coming. But, you know, I was paying $800 for a blog. You know? I mean, that’s a lot of money to pay for blog posts and research and all that kind of stuff. And now I can just, you know, and get the same thing in five minutes.

00:22:55 Casey: Yeah. It’s really tough. It’s a tough market for those folks.

00:23:00 Dawn: It is.

00:23:01 Casey: And that’s why I think just being at the top is the safest place.

00:23:03 Dawn: Yep. Agree.

00:23:05 Casey: Yeah. Yeah. This is really interesting. So okay. Any parting thoughts for agency owners? An agency owner who’s, like, considering maybe becoming a fractional CMO or sticking into the staying on the agency game. What would you say to them?

00:23:18 Dawn: I would say, you know, being a fractional CMO definitely elevates your status within an organization. And so if you’re looking to play at a higher level, that is definitely the place to be is a CMO, fractional CMO. There are great things about an agency, but I think the world of the agency with AI is gonna go away or look very different in the next couple years as well. And I think we need to all be ready for the fact that they aren’t gonna need agency owners.

00:23:50 Dawn: They’re still gonna need strategy. They’re still gonna need the high level people, but the doers and the service providers, you know, that’s gonna change a lot in the next couple of years. And so I think it’s time. I think it’s time for us to all kinda shift a little bit. We still need agencies. I’m not saying that. You still need to have an agency or you need to have a workhorse team or somebody that can get the tactical stuff done, but you’re not gonna need a big old agency like you used to.

00:24:17 Casey: Yeah. Totally. Yeah. I mean, I think of those huge agencies, they’re probably shedding a lot of their staff.

00:24:22 Dawn: Yep. I would think. I would think. So take the leap. Try it once. You know? I mean, you can try it and run your agency on the side and do a fractional CMO, you know, gig and see how that works and see if you like it. But I think it’s great, and I am definitely all in to it at this point.

00:24:39 Casey: I love it. Dawn, thank you so much. Thanks for being here. Thanks for sharing all the stuff that you’ve been working on. It’s awesome to watch you grow and, like, our conversation that we’re having right now, I’m super, super excited for.

00:24:49 Dawn: I am too. Because if it works out, it’s gonna be amazing. It’s gonna be one of those deals where you go, holy buckets that made it all worth it. So, yeah, it’s gonna be great. So I also will pitch for CMOx for anybody. No. He did not. Casey did not ask any of us to pitch any of this or to say anything. But, like I said, I mean, I probably spent half a million dollars on different masterminds and groups over the eleven, twelve years I’ve been doing this.

00:25:17 Dawn: And this is one of the most elevated groups that I have seen. I love that we’re all from different backgrounds. It makes it so amazing because we’re not competing with each other, but we’re also learning from each other, you know, in so many different ways. And it’s been really helpful to have high level conversations and strategy conversations with people that are doing the same sort of thing. So thank you for creating that community because it’s been amazing.

00:25:45 Casey: Yeah. And thanks for being here and playing full out. I mean, that’s what makes it different is that I think it’s we’ve got great people in it, but the people are, like, kind, sharing, open. We just had a member pass a really great lead to another member, and that member just closed it for 5 figures a month. That’s awesome to watch that stuff happen.

00:26:03 Dawn: Yep. Absolutely.

00:26:05 Casey: Yeah. Well, thank you, Dawn. Appreciate it.

00:26:06 Dawn: Thank you. Appreciate it.

00:26:08 Casey: Thank you for sticking around for the full episode. As you know, learners are earners, but you’ve gotta take action on what you heard today. For more information and show notes, visit fractionalcmoshow.com. If you’d like me to answer your questions on an upcoming episode, you can share your question at fractionalcmoshow.com. And last, please hit the like and subscribe button so that I know that this content is helpful to you. Alright. Go get them.