1. State of the Online Marketing Services Industry A Publication of HubSpot’s Partner Program

2. 1 Executive Summary

3. The State of the Online Marketing Services Industry Report was conducted by HubSpot's Partner Agency Team in the summer and fall of 2011. The survey consisted of 45 questions, which spanned topics from agency size and annual revenue to service offerings and business processes. 750 survey responses were received. The goal of the survey was to profile the online marketing industry as a whole, and identify what service offerings and business processes were being leveraged by the most successful agencies. We also probed respondents around their biggest pain points, aiming to understand what financial, service and operational challenges were most prevalent. The following report contains data and charts derived from these questions, as well as interpretations of that data by HubSpot. STATE OF THE ONLINE MARKETING SERVICES INDUSTRY

4. 2 Breakdown of Agency Size & Structure

5. Question: Does your agency have professionals dedicated to specific functions (e.g. sales, copy writing, etc.) vs. multi-disciplinary? Question: Which specific business functions does your agency dedicate resources towards? Note: percentages are based on the number of employees dedicated to a function out of all employees dedicated to specific functions (sums to 100%) 5 Agency Breakdown: Organizational Structure

6. 3 of the top 5 services offered are web-related. Question: What are your agencies top 3 service offerings? 6 Agency Breakdown: Top Service Offerings

7. Question: What services do you currently offer? What services do you plan to add in the future? Currently Offer Service Additional Agencies that Plan to Offer the Service in the Future 7 Agency Breakdown: Top Service Offerings

8. Question: Do you recommend or resell software in any of the following categories? 8 82% of agencies recommend or resell software. Agency Breakdown: Technology Used by Service

9. 3 Biggest Agency Challenges

10. Question: On a scale of 1 to 5 (with 5 being the most painful), how painful are the following challenges? 10 Agency Challenges: Biggest Pain Points

11. A Solution: Grow your Firm’s Retainer Base The most acute agency pain points (from the previous page, 3% and higher) are, at their core, functions of sales and/or marketing deficiencies. HubSpot believes that shifting from project-based revenue and adopting processes that position your firm to earn retainer business is the optimal way to overcome these challenges. Retainers are a client's commitment to employ their agency for a defined period of time, for a fixed fee per month. Most agencies will define the scope of services they'll provide as part of their retainer, as well as an estimation of the frequency of those services and/or time required to deliver those services. Our most successful Agency Partners have adopted this model and continue to experience significant growth. We used data from a series of survey questions to test this hypothesis. The following slides segment respondents into four quartiles, according to what percentage of their business is retainer- based. We then compare these cohorts to see how agencies with small amounts of retainer-based clients compare to those with large amounts of retainer-based clients.

12. Question: What percentage of your agency’s revenue is from retainers (split into quartiles)? 12 Retainer Revenue: Percentage by Quartile

13. Question: On a scale of 1 to 5, how painful are the following challenges (broken down by retainer quartile)? 13 Biggest Challenge: Challenges by Quartile Agencies who sell more retainers are less affected by the industry’s biggest challenges.

14. Longer Retainers Larger Retainers Higher Revenue Growth $4,090 $2,065 Retainer Comparison: Length, Value & 3-Year Growth

15. 4 Key Agency Takeaways

16. Question: What are your 3 main service offerings (1st quartile)? 16 Services Offered: Top Services by Quartile

17. What is the Delta between the 1st and 4th quartile’s main service offerings? 1st Quartile Agencies Focus More on These Services 4th Quartile Agencies Focus More on These Services Top agencies don’t just focus on common services like web design -they offer differentiati ng services. 17 Services Offered: Top Services by Quartile

18. What percentage of firms (by quartile) use a number of sales process activities? Agencies that have robust sales processes are 2x as likely to be in the top quartile. Example: 39% of firms that perform all 5 sales processes are in the top quartile 18 Agency Processes: Robust Sales Processes 1. Use a documented sales process 2. Completed sales training 3. Have a standardized set of questions to qualify prospects as opportunities 4. Use a CRM to track sales activities and forecast revenue 5. Have a process to help prospects establish sales and marketing goals Sample Sales Processes

19. What percentage of firms (by quartile) use a number of different business process tools? 1. Content Management System (CMS) 2. Customer Resource Management (CRM) 3. Project Management 4. Time Tracking 5. Internal Social Network (e.g. Yammer) 6. Wiki 7. Other Sample Business Process Tools Agencies that utilize business process tools are more likely to be in the top quartile Example: 33% of firms that use 6 business process tools are in the top quartile 19 Agency Processes: Robust Delivery Processes

20. Peter Caputa IV is HubSpot’s Channel Sales & Marketing Director. Pete has helped hundreds of online marketing agencies scale and grow their businesses by adopting inbound marketing. Patrick Shea is the Marketing Manager for HubSpot’s Value-Added Reseller Channel. Patrick has written and presented extensively on agency growth strategies, and runs a weekly webinar on agency-specific topics. Follow him on Twitter: @pc4media Follow him on Twitter: @mpatrickshea About the Authors: Peter Caputa IV & Patrick Shea

21. A Publication of HubSpot’s Partner Program www.hubspot.com/partners