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Why SMEs Waste Money on Agencies (And How to Fix It)

Updated: 3 days ago

If you run a small or mid-sized business, you’ve probably felt this frustration.


You hire an agency. The work looks good. The reports seem positive.


But sales? Pipeline? Revenue? They barely move.


And then you wonder: “Are we with the wrong agency?”


Sometimes, yes. But most of the time, the problem isn’t the agency - it’s the lack of focus, leadership, or structure around them.


This is one of the most common issues I diagnose as a Fractional CMO and marketing consultant for SMEs and agencies. Agencies are built for execution. SMEs need direction. When those two things aren’t aligned, budgets get wasted, fast.


Let’s break down why this happens and how to fix it.


1. Hiring Agencies Before You Have A Strategy


Agencies are great at ideas and execution - campaigns, creative, ads, content, etc.


But they are not accountable for your commercial outcomes unless you give them:


  • A clear strategy


  • Defined ICPs


  • Messaging


  • KPIs tied to revenue


  • A proper brief


  • Budget guardrails


Most SMEs skip these steps and hire agencies reactively.


Without a strategy, agencies fill the gap with tactics. And tactics without strategy means wasted money.


You need to create a strategic foundation before hiring an agency (unless your agency is helping you craft some of these!)


  • Ideal customer profile


  • Positioning and messaging


  • Channel strategy


  • Budget allocation


  • Clear success metrics


A Fractional CMO can help you build this in weeks - not months.


2. Expecting Agencies to Do Leadership Work


Internal teams often look to agencies for leadership and ask: “Tell us what we should be doing.” / “Run our marketing plan.” / “Show us the right direction.”


But (most) agencies aren’t built for that. It's not for them to be working on: commercial leadership, go-to-market strategy, sales alignment, budget efficiency, internal team capability.


This is why so many SME agency relationships break down.


The agency is doing its job - but the business thinks they’re doing something else.


You need to give agencies a leader to report into - someone who sets direction, holds them accountable, and measures real commercial impact.


That’s exactly what a Fractional CMO can provide.


3. Not Knowing What Good Looks Like


Agencies say: “This campaign performed well!”


But what does “well” actually mean? Clicks? Impressions? Engagement?


None of these generate revenue on their own.


A common scenario is that the SME lacks the benchmark to challenge or validate agency claims. And the agency doesn't have (or isn't allowed) access to the numbers at the back to tie their activity back to commercial results.


You need to define “good” upfront:


  • Marketing-qualified leads


  • Sales-qualified leads


  • Pipeline created


  • Cost per opportunity


  • Win rate contribution


  • Demand creation metrics


Now everyone is talking the same language.


4. Not Running Performance Reviews (Until It’s Too Late)


Most SMEs work with agencies for years without reviewing whether performance has plateaued, if budget matches value, whether channels still work, if alignment has drifted.


The result is that budgets quietly leak away.


You should be reviewing your agency's performance every quarter at a minimum, and more formally every 6-12 months, looking at:


  • Output


  • Outcomes


  • ROI


  • Team engagement


  • Communication


  • Transparency


  • Alignment


A good agency will do this and set up their own review with you. Beware those that do not.


5. Choosing Agencies Based on Chemistry, Not Capability


This is the biggest trap.


You meet an agency. They’re friendly. They’re enthusiastic. They get you. And you think, “Yes, they’re the one.”


But chemistry does not equal capability. You need: process, proof, evidence of results, senior oversight, industry understanding, operational maturity.


Chemistry is vital, but it only matters if capability exists.



I help clients do this by assessing:


  • Measurable capabilities


  • Relevant experience


  • Clarity of thinking


  • Reporting and transparency


  • Team seniority


  • Pricing rationality


  • Alignment to strategy


This process avoids expensive mistakes.


6. Spreading Budget Too Thinly Across Too Many Tactics


Another common SME pattern I see is:


Some SEO. A little PPC. A new website. Some social posts. A sprinkling of PR. Maybe an event. Some content.


You spend money everywhere and get traction nowhere.


This is what happens when there’s no prioritisation.


Focus your budget on the 1-2 channels that will drive the biggest commercial impact. For most SMEs, that’s typically:


  • ICP-led content + SEO


  • Partners and referrals


  • LinkedIn presence + leadership content


  • Paid social targeted to specific segments


A Fractional CMO will help you cut through the noise and direct spend where it matters.


So, How Do You Stop Wasting Money?


Here’s the simple truth.


SMEs need marketing leadership before they need marketing execution. They need direction before they need delivery. They need a strategy before they need an agency.

Most SMEs waste money on agencies not because agencies are bad, but because the foundations aren’t in place.


If you want your next agency investment to work, you need to:


  • Get your strategy straight


  • Define commercial KPIs


  • Build an aligned brief


  • Set realistic expectations


  • Create accountability


  • Measure what matters


  • Review performance regularly


This is exactly what I do as a Fractional CMO. If any of the above resonates with you, perhaps we should talk!

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