You stare at the P&L statement. You see a line item for “Digital Marketing” that costs about as much as a luxury sedan—every single month. Then you look at the revenue line. It’s fine. It’s steady. But is it because of that sedan-sized payment, or is it happening anyway?
This is the question that keeps business owners awake at night. You hand over a bucket of cash to Google, Meta, and your agency, and you hope something comes back. But hope isn’t a strategy.
Disappointingly, sometimes these campaigns are eating up your whole contribution margin, or more, on the sales they supposedly generate. You might be spending fifty bucks to acquire a customer who only gives you forty bucks in profit. That isn’t scaling. That is bleeding.
Someone will try to sell you on the idea that these loss leaders are creating “organic sales” or “brand equity” that pays off later. But unless they can prove that with cold hard data, don’t fall for it.
I’ve been around this block more times than I care to count, and I’ve seen the budget reports from every angle. Most of them are fluff. If you want to know if your digital spend is actually working, you need to stop looking at the shiny dashboards your agency sends you and start looking at the real numbers.
Now, let’s be clear before we dive in. Good agencies are out there. They are hard to find—like a needle in a stack of needles—but they exist. The tips below are the red flags that should alert you to whether yours is good or not.
The hope here is to give you the right questions to ask so you can hold them accountable. Some agencies, even the good ones, may be doing some of these things with your business, and there are always exceptions. However, the good agencies will give you clear reasons, in plain language that you can understand, with numbers to back up their actions. If they don’t give you some really compelling evidence, it may be time to start looking for an agency that will.
Here is exactly where things usually go wrong—and how to fix them.
Social ads are generally garbage
I’m going to be blunt because nobody else will tell you this while they are trying to sell you a retainer package. Social media ads are generally garbage.
Think about it. When you go to Google, you are searching for an answer. You have intent. You want to buy a shovel, or find a plumber, or fix your roof. When you are on Facebook or Instagram, you are doom-scrolling to avoid talking to your family or to see what your high school nemesis is doing. You aren’t looking to buy insurance.
Because you are interrupting people who don’t want to be bothered, the failure rate is huge. This is where you can use AI to save yourself a fortune. Instead of paying a creative team thousands of dollars to guess what might stop the scroll, you can use AI tools to generate fifty different ad variations—copy and images—for pennies. You throw them against the wall to see what sticks. If the AI-generated ad works, great. If not, you didn’t waste the GDP of a small country producing it.
I looked at the data at the last place I worked to see if any of this spend actually mattered. We had a massive budget for social. I pulled the historical data—years of it—and overlaid our ad spend with our revenue. I expected to see the lines dance together. If we spent more, we should have made more.
There was zero correlation. None. The lines looked like they belonged to two different companies. We could have lit that money on fire in the parking lot and the sales graph wouldn’t have twitched.
Here is why that happens. Meta gives you way overstated and misleading metrics in their platform. They use all kinds of virtually useless KPIs to make you believe that their platforms contribute much more than they actually do.
Just a tip here—INSIST that your agency and marketing teams use data-driven GA4 numbers to report on social performance, and definitely not the Meta platform. If the numbers don’t match, trust the one that isn’t trying to sell you the ad space.
Now—there are exceptions. If you are selling a $20 gadget that looks cool in a video, social can be fantastic. If you are retargeting people who already visited your site—reminding them they left a pair of boots in the cart—that works. But for general “brand awareness” or trying to sell complex services? It is usually a waste of capital.
The Agency “Busy Work” Trap
Agencies love to spend your money.
That sounds cynical, but it is the nature of the beast. If you give an agency a $10,000 monthly budget, they will spend exactly $10,000. If they don’t spend it, they feel like they aren’t doing their job—or worse, they worry you will cut their budget next month.
So they spend it on things that don’t perform. They buy garbage inventory on display networks just to hit volume targets. They boost posts that nobody cares about. They do this so they can send you a report at the end of the month that says, “Look! We got you 500,000 impressions! Isn’t that incredible?”
No. It isn’t. You can’t pay your staff with impressions.
But here is the good news—AI levels the playing field. You can take that confusing, jargon-filled PDF report your agency sends you and upload it directly into an AI tool. Ask it simple questions: “Based on this data, what was my actual cost per sale?” or “Point out the metrics here that are just vanity numbers.” The AI will strip away the fluff and tell you the truth in plain English. It is a game-changer for accountability.
Agencies are incentivized to make activity look like progress. If your agency report is full of big numbers but your bank account is the same size, they are just spending money to look busy. A good agency will tell you when the inventory is trash and save your budget for next month—but you have to be vigilant to find the ones who will do that.
The Branded Keyword Scam
This is the oldest trick in the book, and it drives me crazy.
Go to Google right now and search for your company’s name. Do you see an ad for your own company at the very top? If you do, you are likely wasting money.
Agencies love bidding on “Branded Keywords”—your own name. Why? Because people searching for your name are already looking for you. They are going to click. They are going to buy. It produces a mind-blowing Return on Ad Spend (ROAS).
The agency blends these easy wins with their terrible results from other campaigns. It makes their overall performance look fantastic. “Look boss, we have a 10x return!” Yeah—because you claimed credit for people who were already walking through the front door.
There was a famous study done by eBay years ago. They paused all their branded ad spend. The result? Their organic traffic went up by almost the exact same amount. They stopped paying for ads, and they lost almost no sales.
I even had agencies working for me perform this same experiment—can you guess the results? Observed the same thing. We turned off the spend, and the traffic just moved to the organic link one inch down the screen.
Stop spending on branded keywords if there is no competition. Experiment. Turn them off for a month. If your sales don’t drop, you just saved yourself a fortune and you are getting off on the right foot for the next quarter.
The only time you should pay for your own name is if a competitor is bidding on it. If you search for your brand and see “Competitor X” right above you, then you have to pay for defense. A good agency will explain this strategy clearly—they won’t just hide the spend in a general report.
The Online-to-Offline Gap
If you have a physical store, your digital measurement is probably wrong.
Most tracking tools only count what happens in the browser. Someone clicks an ad, they buy online, the dashboard goes “ding.”
Humans are messy. We see an ad on our phone while waiting for coffee. We research the product on a laptop at work. Then, on Saturday, we drive to the store and buy it.
That sale was generated by digital spend, but your digital report claims it never happened. This is the ROPO effect—Research Online, Purchase Offline. Statistics show that something like 82% of consumers research online before buying in a store.
But you have to be careful here. Agencies love this gray area. Since it is hard to track perfectly, they will often try to overstate the impact in stores. It benefits them to claim credit for every person walking through your door, regardless of whether they saw an ad or just walked by the window. It gives them more data to point at and makes their ROI look massive, justifying their fees.
This is where AI is actually fantastic. If you feed your offline sales data back into the system, modern AI tools can match those real-world purchases to the digital ads that sparked them. It closes the loop.
Make sure that you are using proper metrics to measure this, and don’t use voodoo magic. Don’t rely on vibes or “estimated foot traffic.” Use real tools. Google Store Sales Direct is a solid start. Using offline conversion imports in Google Ads is better. Even better is connecting your Point of Sale system directly to your ad platforms using integrations like Zapier or your CRM.
If you judge your digital spend solely by e-commerce sales, you might cut a campaign that is actually driving foot traffic. You need to look at the holistic picture. Did store sales go up in the region where we ran the ads? If yes, the ads are working. Don’t let the dashboard dictate your reality.
Be the Boss
This is your money. You need to manage your digital agency—not the other way around.
Hold them to account. Ask questions. Use AI to analyze the numbers they give you. If they show you a report with a million impressions, ask them “How many widgets did we sell because of this?” If they start talking about “brand lift” and “attribution windows” and can’t give you a straight answer, you have a problem.
Remember, even good agencies might do some of these things depending on your specific situation. But the good ones will give you clear reasons, in plain language, with numbers to back up their actions. If they don’t give you really compelling evidence, it may be time to start looking for an agency that will.
You need to stay one step ahead of the fluff. Demand profit, not metrics. That is how you blaze new trails in your market while your competitors are still paying for clicks that don’t convert.
Conclusion
Digital marketing isn’t magic—it’s just a tool. It can be a powerful engine for growth, or it can be a black hole for your cash. The difference usually comes down to whether you are looking at vanity metrics or real business results. Stop letting agencies blind you with big numbers that don’t pay the rent. Trust your gut, check your bank account, and don’t be afraid to turn things off to see what really happens.
