If I had to narrow 2017 down to one lesson it’s that there’s no longer such a thing as a straightforward agency-client courtship. So, what should you be thinking about in 2018 to win more business for your agency from the right clients with less work?
There's less money to go around... maybe
Marketers are spending less on marketing. A Gartner survey released last month showed that marketing budgets hit a plateau in 2017 after three years of growth. Backing that up, consultancy R3 cited the size of the average US account win shrank 38%.
Where is the money going, if not to agencies?
Some of it is going in-house. Commenting on R3’s findings, Pivotal Research analyst Brian Wieser observed that big-name brands are moving more work to their own internal studios while seeking a balance between “the lower costs of in-housing along with the higher quality of working with a traditional agency.”
I feel like I’ve seen this movie before. Eventually, the marketers realize the error of their ways and return to the agencies, asking if they can try again to make it work this time.
In the past, one could credit the shift back to high-profile disasters like the in-house ad for Pepsi featuring Kendall Jenner. But I think the issue has less to do with tone-deaf creative and more to do with a whole new set of capabilities around digital, production and marketing tech that only a few agencies have been able to master.
As NYU professor and L2 founder Scott Galloway pointed out, we’re witnessing the death of the advertising industrial complex thanks to Amazon, Apple, Facebook and Google (“The Four,” as he calls them in his new book). Agencies courageous enough to adapt to the new rules of advertising will be the ones to welcome the marketers back home.
Marketers have their eyes on other balls
Some marketing functions are seeing an increase in budget. One of them is marketing tech. Forrester expects investment in marketing technology to grow by double digits in 2018 as brands try to remain in control of the “brand experience”. And as touchy-feely as brand experience sounds, it’s all about the hard data. The Four also happen to own most of it and have, therefore, assumed the role of gatekeeper between products and the consumers that want to buy them.
That’s why we’re also seeing the metamorphosis of some CMOs into a new kind of butterfly, the chief growth officer, an executive who can blend marketing and tech to drive growth. (Adweek honored sixteen of these tech-savvy CMOs, from GE to L’Oreal, earlier this year).
Why would anyone want to get into this business?
Budgets are getting smaller, assignments are getting shorter, the clients are getting harder to please…
Seems like no one sent the memo to management consultants. They continue to encroach on the turf of ad agencies as they add branding and marketing expertise to their core strategic offerings like technology services, data analytics and customer segmentation. Firms like Accenture and Deloitte believe they can build a better mousetrap, or at least renovate and modernize the rickety mousetrap that more traditional agencies have been trying to keep functional.
Plus, because they’ve historically been the data experts, management consultants are better equipped to work with those chief growth officers. They simply tell a better story to people whose jobs depend on making a positive difference to the top line
What might your agency do in 2018 to be better prepared to compete?
The headlines and research that document these trends are more tied to big agencies and marketers than the small agencies I tend to work with but they’re leading indicators that you can use to make adjustments to your new business strategy.
Get comfortable with project work
A lot of smaller agencies dream of the day when they can escape the cycle of project work and enjoy big fat retainers their bigger agency brethren have enjoyed for years. Unfortunately, if you’re one of those small agencies, recent history is not on your side. But the good news is you don’t have to adapt to anything new. Instead, learn how to optimize how you’ve always worked.
One way to do that is with your pricing.
We’ve been edging away from the dollars-for-hours model, but it takes a lot of time and effort to unravel internal systems and processes that were designed to support it.
This is where smaller, younger agencies unencumbered by legacy systems have an advantage. You see this in what I call the HubSpot Generation, agencies that have grown thanks to new tactics like marketing automation and the support that certification programs like HubSpot’s can provide. You’ll often see HubSpot agencies mimicking HubSpot’s pricing, using a tiered the model of different packages at different price points.
This year was the first time I saw a critical mass of other kinds of agencies experiment with the model. One of them was a client of mine, a small creative agency focused on marketing to women. A more high-profile example is the agency, Joan. According to an interview with Adweek earlier this year, Joan’s founders have unapologetically abandoned the dollars-for-hours model in favor of predetermined packages with set prices. (Interestingly, though, nowhere on the agency’s website do they promote this. Seems a shame not to tout such an interesting differentiator on such a visible marketing tool.)
It might feel weird to put your services in packages that have set prices, but there are benefits. When you’re competing for projects rather than retainers, this approach saves you time and money. Think about all those custom proposals you’ve written for prospective clients than never went anywhere…
It also helps you prequalify prospects by forcing you to have the money conversation early and often. Clients that shop based on price will be eliminated faster so you can nurture those who seriously want what you offer
Know where you fit within the ecosystem
If it’s impractical for the largest “full-service” agencies to offer everything the modern marketer needs, then it’s impossible for a smaller agency. Small agencies will be better off if they are crystal clear about what they do and why it’s effective.
On the other hand, the complexity requires us to be Renaissance men and woman. It reminds me of a story about the legendary ad woman Charlotte Beers who years ago won a new business pitch to Sears by taking apart and then reassembling a power drill without missing a beat. It demonstrated her commitment to becoming as much of an expert as she needed to be to understand the product.
As deep as your area of expertise is, your knowledge of the ecosystem should be broad enough to speak to clients and prospects about how your offering affects/is affected by other tactics. You should be in a position to talk intelligently on, say, Amazon brand pages, without feeling compelled to hire an expert on them.
Work well with everyone
The complexity requires us to be collaborative like never before and partnering with complementary service providers can extend your capabilities. Try to think strategically about the best kinds of partners for you and avoid last minute hook-ups simply to fulfill a pitch requirement.
Some of you are also actively pitching your services to agencies that are conduits to the clients you want to work with. I think we’ll see more of this and, while I’m all for exploring new ways to generate revenue, I recommend that you set up some ground rules first.
Get back to basics
Is this a cop-out? Like the convenient “it was all just a dream” ending to a complicated story?
Maybe, but the basics never go out of style. Make a commitment to telling your story better. And I use the word “story” literally. Don’t try to get your clients’ attention through flashy technical wizardry. Their lives are already complex enough. Instead, make it easier for them to understand where and how you add value to the ecosystem.
Wishing you a bountiful 2018!