Reddit wiped out of ChatGPT, what agencies are really worth, & the new services playbook

0:00Eric Siu:You know that feeling when the strategy is done, the brief is written, everyone's aligned, and you realize someone still has to sit down and actually create all the content? That someone is you, and it's due tomorrow. Breeze Assistant can help. It works right inside HubSpot. Drafting campaign copy, blog posts, emails, all in your brand voice. All grounded in your actual customer data. So you don't just create content. You create content that converts. Check out HubSpot.com, the agentic customer platform for growing businesses. Did you see that Reddit got wiped out in the ChatGPT results?

0:34Neil Patel:Yes, it's pretty much almost zero. So did G2 and a lot of the other review sites as well.

0:40Eric Siu:So this is a graph from PromptWatch that I have pulled up right now. And so Neil, would you want to describe what we were seeing?

0:45Neil Patel:Yeah, so PromptWatch is talking about how often ChatGPT is citing Reddit. And if you can look on August 14th, it pretty much dropped down all the way. Now, this is nothing new. I still love this data and chart from PromptWatch, but ChatGPT was cited really heavily early on in the Reddit days. Reddit went public. Sam Allman also has stock in Reddit. I believe it benefited him to do a deal. And then Reddit kept getting cited less and less over time. And you and I called this on previous podcasts. We also said we don't think Reddit is going to be cited that often in the long run, as well as G2 Crowd and a lot of these review sites.

1:25Neil Patel:for chat gbt to do really well they got to look at proper industry websites and see what they say about businesses within that industry versus people who can sign up anonymously on reddit and say whatever they want it's too easy to game in a bad way in a negative way yes and actually in a

1:43Eric Siu:positive way too yeah well everything but actually when you think about i was talking about with with our mutual friends this week everything is a game right like the way you behave in a company the way you serve your customers, all these things. But anyway, so I thought that was interesting that Prompt Watch called that out. And these algorithms are always shifting, right? But I was also, I was looking at this tweet over here. So this guy, Matt Swilinski, he works for Victor now. He used to work at growth. He used to do growth for Whisperflow and Superhuman. So he said, meta quietly ended the media buyer job and most SaaS teams have not noticed.

2:17Eric Siu:So creative is a targeting now at 100k a month k account per month spend needs 400 to 500 new creatives a month to feed the algorithm two static ads and a lookalike audience is not a strategy so we should talk about how we think about this because we're we're doing this for clients right now as well but my opinion on this is that the really whether you're an seo or paid medium what we're hiring now neil is what we call four deployed marketers okay so four deployed marketer needs to be a t shaped marketer that is deep in one area. So it could be SEO or it could be paid media, but then they're actually very broad across other categories.

2:52Eric Siu:They don't know how to do analytics. They know how to do organic social. They know how to at least talk about this stuff. Right. And so you can't, I believe in today's age in 2026, you can't just be a media buyer. Like it's unfathomable to me, Neil, that people today, they're like, if you think back to when we're like 24, 25 years old, do we know how to do analytics? Like, yeah, we did, but now it's considered a different job. And I do believe you should go deeper in it. But to be a well-rounded marketer, I think I look at you, I look at me, it's like, sure, we might've started in SEO, but we know affiliate well, we know SEO, sorry, we know paid media well, we know all these things.

3:26Eric Siu:We know email well, we know copywriting well. And that's what I think it is. So this is not even the end of the media buyer job. I think this is the end of the, we're going to see less specialist marketing jobs. I'm going to want more generalists that are just strong strategists at the end of the day.

3:42Neil Patel:Yeah. And I look at, this is the same thing as engineering. If you look at a lot of the engineers now, I know there's more job openings for engineers, but the ones who are adapting and leveraging the latest technology are doing really well. The ones who are slow to adapt are getting fired and replaced. The same thing with marketers, whether it's media buyers or anything else, you have to adapt. And I think that's a big problem in which a lot of people just get stuck in their ways in marketing, but they don't realize that the number of changes these platforms make just to their algorithm is ridiculous.

4:12Neil Patel:Like Google's at over 10 algorithm changes a day based on the last posting they did. It was around there, nine point something. If you're not adapting, you're kind of screwed. And platforms change so often, technology change so often. Don't get into a field that requires a lot of adaptation if that's not you. You want the same old thing over and over again? Fix roofs. It's a great job. Pays extremely well. HVAC. HVAC is another one. There's not as much change. if you're going to feel that requires change, either buckle up and adapt or don't get into it at all.

4:45Eric Siu:I think one thing I'll speak for both of us is Neil and I were both looking to continue to hire and we're looking to continue to hire people who have a great relationship to change and are very, um, there are self-starters and they're learners, right? If you, if you love learning and you have a great relationship to change, that's how you're going to succeed in this, in this new world for a very, um, you know, a fast changing environment. Again, if you're an HVAC, maybe not so much, right? Um, if you're building buildings right now, maybe like I'm looking at the Amon that they're building over there right now.

5:11Eric Siu:Maybe not so much for the next, you know, little while before the robots takeover. You know, Neil, I want to talk about something in terms of how we're thinking about marketing mergers and acquisitions. There's mergers and acquisitions in general, because earlier, let's just say earlier this month, I sent you something on something that you might want to consider, but there's a reason you didn't want to consider that deal. So, yeah, what can you say about your deal underwriting process in your head? For that deal specifically or any deal?

5:48Neil Patel:We can go with that one. Yeah. You can make numbers up. I can make numbers up. People aren't going to know the company. I can actually even say the real numbers because it's so generic. This person was in a pickle. They needed$350 ,000. And when they were needing$350 ,000, Eric messaged me and said, if you do deal with this company and they can't pay you back, you can just take over the company and the company is worth a lot more. They have investors. They raise eight figures. It's not that easy to take over a company when someone doesn't pay you back the money right away. That's number one. Two, I believe the company is going to have mass AI disruption.

6:35Neil Patel:They already are facing it, and I believe it's already affecting their numbers. So I don't know if I even want to own a company like that. And then the third one is if I give them$350 ,000 and they only needed the money for three months, even if it was for a year, how much interest am I really going to collect on that money? Let's say they want to give me 50 % and then I had to pay 50 % taxes of that money. is it really worth doing all the legal paperwork and everything for call it a profit of you know 75 80 000 after taxes also how many more times are they going to need to do that

7:08Eric Siu:that company that 350 that 300 the 350 oh i think they're going to keep needing more and more money

7:15Neil Patel:but i'm not in that business of trying to make you know 10 cents on a dollar um there's a lot of people out there they're in that business they're in the lending business and it can be a great opportunity. I'd rather go invest that money and buy companies that have long-term potential. Dude, yesterday I looked at a company. I won't reveal the name. They work with most of the big tech organizations. So if you look at them, you'd see a massive agency. They do 30 million plus in revenue. They claim 11 and change in profit in EBITDA. I see 9.8, 9.5, somewhere around there in EBITDA. I don't think they're at 11 either way.

8:00Neil Patel:But they have heavy client concentration. The lowly growth 6 % this year over last year. Their margins used to be 14%. What kind of agency? A creative shop. Their margins used to be 14 % max. They all of a sudden jumped up because of AI and their revenue jumped up. So if you look at the last three years, three years ago, they were doing okay call it in the 20s then two years ago they declined from the third year so did profit then a year ago they grew rapidly because they got one or two big contracts which made up the majority of their revenue and they use ai to cut costs so the profit shot up this year they'll grow five six percent similar margins as last year because they use ai to cut costs and they have a lot less headcount.

8:50Neil Patel:And I told the banker, I love this business. I would have bought it three years ago if they were reasonable. The guy told me when I talked to him in 2024, at that time, call it, they were doing, I don't know, three, four million bucks in profit. I'm just rounding, but let's call it, I know it was more than three, but less than four. He wanted 12 times his profit for a non-recurring business. I'm like, no one's going to give you 12 times he's like yeah i'm gonna get an offer soon someone wants to buy it so i'm like no they're not i didn't tell them that but i was like i'll just wait until they don't buy you and then i'll come back because everyone knows what things trade for it's really hard to bullshit that so then when i hit them up again i'm going through it and i'm like one you have client concentration it's too heavy two this company is going to see price compression because they just cut a lot of staff they're using ai to do a lot of stuff and they're pocketing the money.

9:43Neil Patel:They're going to get competition and the margins are going to drop. They're like, yeah, they're already starting to see it. And I'm like, yes. So the banker's like, yeah, maybe you can buy this company for eight times. I was like, eight times for something where I believe half the profit's going to go away. So now I paid 16 times. They have client concentration. So a little bit more of the profit's going to go away. I think the business was realistically run correctly when they were doing around three to four in profit. And at that point, I would have paid eight times that business. It's funny.

10:14Eric Siu:You could actually reverse the math and say, Hey, if we take away your other profits and everything, you would actually divide it. So whatever he's, he's, he's asking for like 20 times, right? You divided by two divided by another two, right? You had to pay like five times or something.

10:27Neil Patel:Yes. And, and when I was willing to pay years ago, I would have given them four times their money up front and then did a few year earn out where they can get the other four. Right. Cause you just want to make sure the business doesn't go backwards, especially when everything's not recurring contracts. And then these businesses are very founder driven too. It's very founder driven. So you have to be careful on that, but their clients are a lot of repeat. And then on top of that, when I looked at it and I told the guy this, cause I remember talking to him two years ago and I was at Javier's, which we're going to later today.

10:56Neil Patel:I talked to him when I was in Javier's. The same one? Same one in Century City. I was on the phone call while I was at Javier's. And I remember him saying, oh, we're part of a agency network and we get a lot of business from that. And I was like, well, we're not going to get business from that network because we're a competitor to almost all those agencies. Well, you only offer creative services. So people, of course, will push your business. And on top of that, he gets a good chunk of his business from other competing large holding companies like the WPPs, the Densus, the Publicis. I'm like, they would never drive us any revenue because we're direct competitors.

11:29Neil Patel:And we do a majority of the services that they offer in a lot of the countries that they focus on. While you only offer creative services in the United States. so I was like you start wiping out all that revenue I'm like I can't pay what he was looking for but because they have such solid brands and do such good work I would have gave him eight times his profit call it two years ago when the economy was bad and even with the a disruption because I knew I could take that business and grow it globally into something that was like four or

11:59Eric Siu:five times the size but also these things take the the unseen point Neil's making here as well is these things take time because Neil might check in with him in a year or 24 months or 30 seconds. He will not sell this company for the deal he's looking for.

12:10Neil Patel:Neil is just going to keep,

12:10Eric Siu:a lot of these things take time, whether it's recruiting an executive or doing a deal. You just need to keep checking in.

12:14Neil Patel:Dude, at every single M &A deal we did, how many do you think happened from the first conversation? Zero. Only one. Yeah. All the other ones happened years after we originally reached out. It doesn't mean that the businesses didn't grow or there was something wrong with them back then or when we bought them. It's more so it was hard to align.

13:03Eric Siu:DTC pod wherever you get your podcasts. Fine. All right. So I wanted to take a moment to tell you about my podcast co-host Neil's agency called NP digital, and they work with a whole host of global companies or a global organization. Also Neil has SEO tools such as Uber suggest and answer to public. All you have to do is go to np digital.com to learn more and we'll see you on the other side.

13:27Neil Patel:Expectations with what the market's willing to pay and what some of these founders want. I find that in almost every single deal, I reach out to tons of companies and I end up buying them three, four years later.

13:37Eric Siu:Do you know what the equation is for happiness? What? It's your expectation minus reality is your happiness. So if your expectation is too high and reality is this, then you end up depressed. You're not happy about it. Right. And this is the situation. Like they've gotten, they've gotten told that the multiples are just supposed to be this and that, that you just keep following up with them until their expectations drop because then they start to realize what the reality is, right? And I'll tell you how I'm thinking about M &A for us in the next few years. For us right now, right, I'm thinking more so how are we selling all this stuff?

14:08Eric Siu:Because when we're on conversation with these, like, what do we do about data hygiene, data security, permissioning, all these things, right, that we're building with the AI implementation stuff. So for us, it's still much more about signal for the next 12 months or so, right? Then we can figure out, okay, once we have more or less product market fit on this stuff, then we can go out to market. And plus, the market will have matured a little more, right? Because I think going out there to buy, at least for us right now, agencies, because chances are, we're probably, they're not going to be aligned from an AI standpoint, right?

14:37Eric Siu:Chances are you're going to have to cut. You look at what Bending Spoon is doing, private equity model, where they're just buying companies, you're just cutting a lot of headcount, right? I'd rather focus more on, hey, what have we figured out? What do we need to plug in? And then 12 months into it, once we figured it out, we go out there and we go to market and then we can say, okay, we know exactly what we want. But we're going in right now because this stuff is so nascent, it's a little too early.

14:59Neil Patel:Dude, you want to know what my favorite thing about M &A is?

15:02Eric Siu:What?

15:03Neil Patel:You like the negotiation, I'll tell you that much. Yeah, I do like the negotiation. I talk to so many entrepreneurs, I learn a ton. I would probably say I do two, at least two new calls or not every day because I don't really do them Saturday and Sunday because people don't want to talk then. But I do at least 10 new M &A calls a week with brand new companies that I'm hitting up. Forget my team. This is just me, right? It's even more if you count my team. And I remember I was talking to a guy in the UK and his agency operates all over Europe. So I hit him up to see if he was interested in buying his company.

15:48Neil Patel:I asked him for numbers. He wouldn't tell me the numbers. I told him what we pay. And I'm very direct because I don't like wasting time. So he wanted me to sign NDA. I signed the NDA. And then we jumped on a call this week. So when I jumped on the call, he landed from his flight. It was an hour late, which I didn't care for because I wanted to learn more about the business. And they had a good amount of employees. And I'm like, man, if I plug them in, they can help us in multiple markets all at once. And he tells me about the business. He's like, yeah, this is a perfect time to sell. I don't want to keep working on this business.

16:21Neil Patel:I'm over it. So one, I never want to hear that. If I'm buying you and giving you money and you tell me you're just done with it, I'm like, okay, then why would I give you money? But I never stop the conversation. I ask why and I try to dig in. So then he tells me, oh, I sold 70 % years ago and he sold it for a good amount of cash. The business, let's say, was smaller at the time. I don't know what he got, but let's call it$10 million. It was something like that. It's different currency. It was in pounds. But let's round with roughly$10 million. And when he was telling me about this, so he still owns the remaining chunk.

17:04Neil Patel:Maybe his team owns some percentage. I didn't ask him. Even though he operates in a lot of different countries in Europe, I was like, why are your investors in you looking to sell? You must have grown. He's like, well, we're struggling. Valuations are down. So I'm over it. And I'm just willing to take a loss. I'm like, but what about your investors? He's like, oh, I can talk to them. I'm like, well, this is up to you because they own majority. That's the first thing. So then I was like, this guy's not going to even be able to sell. It's not up to him. It's up to the investors. Two, I don't want this business because the guy running it doesn't even want to be here.

17:36Neil Patel:So then three, I started diving in to all the countries they're in. And he's telling me on how he has this model in which you can run an agency for one country, but service many countries all at once. We haven't been able to do that. We actually have offices and people in a lot of different countries, which just increases costs drastically and just makes the economics less efficient. I was like, this guy's model must be better. He's growing because you can look at LinkedIn and look at headcount, but a lot of times it's off. So when he's breaking it all down and he's breaking down his revenue and his churn, I quickly see that the economics aren't working out by being in all these countries and not having too much of a physical presence.