A recent B-to-B Magazine headline shouted, "Desperate ad agencies scramble for business." There is no disputing that the current climate is the most challenging our industry has experienced in memory.
The traditional advertising agency model is under attack from all sides. From the strategic side agencies are being pushed out with the increasing impact of consultants; search, procurement, brand, marketing, and of course, the big fish, management consultants. On the tactical side agencies have to compete with all agency types and mediums. This is troubled water.
A recent poll indicates the current tenure for a marketing manager is only 9 months. These new Marcom Managers are younger, have less experience in advertising, are more focused on tactical issues, and recognize that they are only there for the short term. At the same time they have a wider span of control over marketing and budgets, and they want their own suppliers—people who think and look like them. Not surprisingly they don't take advice very well from traditional agency staff that often comes across as patronizing. More troubled water.
Client turnover is among the more serious challenges within our industry. Some recent studies show that for smaller accounts the churn, or client turnover, can be as fast as every two years, while larger accounts have gone from seven years to three. This trend is a part of what Faith Popcorn refers to as the 'clicking effect'. Clients, these new Marcom Managers, are growing more and more impatient and are quick to question the effectiveness of their current agency. The growing percentage of project-based work has made it easier to change—click to what's next. Yet more troubled water.
Design studios and other low-cost providers have seen revenues increase as their agency brethren have suffered. They are taking business away from traditional agencies on account of price, speed and timely delivery. Many other specialty shops who often work faster, are more focused on results, and offer tangible benefits to clients are also seeing an upswing in new business. Clients are questioning the value of all the layers at the agency; account service, traffic, and all the administration. Further troubled water.
There is a renewed focus on new business, but most agencies have no system for sustained business development and few staff skilled in new business. What was done 3 years ago no longer works. The troubled water is changing everything, but opportunities for new business are abundant for advertising agencies that are prepared.
We believe there is no better time to do new business than times like these; when clients are changing how they spend, when your competition is worrying about staying in business, when companies are changing agencies at an unprecedented rate, and when prospects want to make decisions that enable them to solve immediate challenges. Doing new business now is like fishing in troubled water. Most people don't even go out—but that's also when the pros know fishing is best. While others stay home, the smart ones go fishing.
What steps should you take in times like these? Here are six strategies we recommend.
First, make sure your firm is properly branded. Check to see if you are caught up in alphabet soup with a brand that doesn't say anything. Clients who are looking for a new agency don't want a "we-are-whatever-you-need" advertising firm. In fact, that turns them off and harms trust. At a recent new business conference hosted by the AAAA, every client and search consultant said "stand for something." You have to know who you are and why you should be considered. It is better to stand for something and not be considered for one account then to stand for nothing and not be considered for any accounts.
Second, focus on generating leads. That means increasing the number of opportunities to go visit good prospects. Too many agencies only focus on winning pitches, not working to get into more pitches. Beware of the "we'll win the next pitch' red herring. This is where an agency is busy pitching but not focused on creating awareness and relationships. Unless you are a recognized agency brand (and there are only about 10 in the US), counting on referrals and word of mouth is not a new business program. Many agencies have attempted to flip a new business switch—"we need some new business NOW! Let's form a committee!" Few are finding success.
Third, sell smarter. Focus on the overt benefits you offer. Make it clear what you do why and how it gets results. Successful agencies do this face-to-face, not by clicking PowerPoint slides at a prospect with lots of case histories and marketing babble. Stop doing capability presentations! Instead show them how you work, specifically with their brand, and how you will impact their business. This means that you have to work hard and listen to understand their problem. This sounds simple, yet it is one of the most common problems in all client/agency relationships.
Fourth, be easy to do business with. Don't try to sell what clients don't want to buy. Give your opinion, offer suggestions, but be sure to give them what they are asking for. If they want the logo larger, make it larger and move on. Forget about account planning and stop trying to get clients to pay for it. If you are in a tactical position, play the tactical game better and build trust. Only then can you move up the marketing ladder and start recommending more strategic advice.
Fifth, think about growing the old fashioned way—buy growth. A cross-town merger with another firm in your market can create a wealth of opportunities. There are some good opportunities in every market. You can gain efficiencies and add new services and resources, and create more awareness for your brand.
Finally, go after the consultants and the strategic high ground by offering consulting services of your own. This requires a separate brand that is not linked to advertising or marketing. Too many agencies forget that if you're an agency, and try to add consulting to your brand, you are still only an advertising agency—Where are my ads! However, if you are a consulting firm, then you can work at the strategic 'C' level, and open up a sizable new revenue stream. This provides more opportunities for the agency side to follow once the consulting assignment is completed.
Search consultants are saying new business is slow. They're wrong. Their business is slow. New business is heating up. The competitive landscape for agencies has been forever changed. As the economy recovers and picks up speed, you will need to adapt to win today and change to succeed in the future.