The biggest red flag in a contractor marketing agency is vague reporting - if they can't show you specific, understandable numbers (calls, form submissions, review growth) tied to what they're doing, you're paying for activity, not results. Ask upfront exactly what you'll see in a monthly report.
Watch for agencies that sell services separately ("SEO package," "website package," "ads package") with no coordination between them - a website that ranks but doesn't follow up on leads, or ads that drive traffic to a site with no local SEO foundation, waste money on the gaps between disconnected services.
Ask specifically who does the work. Some agencies subcontract everything to the lowest bidder with no continuity between projects. A smaller operator who builds and runs everything personally often delivers more consistent quality - ask directly.
Finally, look for a guarantee that puts real risk on the agency, not just you. If they're confident the system works, that confidence should show up in the terms, not just the sales pitch.