By all indications the business climate this year will be slightly better than last. The economy will continue to improve, and marketers will see a little extra budget in their stockings. However, there will be more agencies competing for those marketers. Experts predict about 8 – 10% growth in new “ad agencies” and ad agency employment is at its highest level since 2001. To make this year a great year, agency owners need to refocus their value proposition around the things that hold the highest value to their best-fit prospects - the things that solve their toughest marketing challenges. Sound familiar? It's the same every year!
More competition from more sides
The sluggish economy of the last eight years has taken its toll on advertising agencies. The industry has seen an unprecedented change to stay relevant in this new economy. Many new specialists have come onto the scene and continue to broaden their service offerings to attract new prospects. Generalists have added services to keep up with the evolving needs of marketers. Larger agencies are going after smaller opportunities to keep growing, and smaller agencies are aggressively seeking more business outside of their geography and expertise. Marketers are encouraging more competition to drive down costs, and procurement is undermining and undervaluing agency services and fees.
At the same time, ad spending is expected to increase by 6.5%. This year, more agencies and a broader range of agencies will go after the business you want. Last year I participated in an RFP with 40 – 60 other agencies, one that previously attracted 10 – 12. Imagine the marketer trying to find a new agency. They have to review all these new choices, so many different flavors, different services, different approaches. How can they spend even a minimal amount of time evaluating, comparing, and concluding the one to pick?
If you are planning to grow, you can expect the task to be more competitive than ever. You can also expect your funnel metrics to decline, response rates to dip, the pipeline to wane. More competition from agencies looking to outsmart you means your target prospects will be getting more outreach from an increasing number of aggressive competitors. How on earth do you stand out and get noticed?
The agency brand is your best weapon
The more competitive the market gets, the greater the need for a distinct agency brand. Adobe found that 75% of marketers believed the industry has changed more in the last two years than in the past fifty. Maintaining the status quo of a full service, all things to all marketers agency will be increasingly tough to sell. Sure there will be a need but these trends indicate a declining opportunity overall and especially so without strong differentiation.
This year, more than ever, the agency brand must stand for something so that it will stand out from the growing competition between newcomers and peers. Agencies must rethink and articulate what they offer, what is unique, distinctive and differentiating from their competitors in service offerings, verticals, consumers and channels, the things they legitimately have expertise in. That doesn’t mean you have to rebrand as something new or different. It means you have to demonstrate relevant value to the marketer that will solve their marketing challenges. You don’t necessarily have to be a tactical expert like a digital or content shop. You can be a category, customer, or business problem expert – something you probably already are. Whatever your expertise, you have to make it top of mind as the expert she/he is looking for. You have to be the agency brand they are searching for.
What do agencies need to do?
It is not that hard. Agencies need to reassess what they offer to marketers that is relevant and timely today and focus on that rather than proclaiming all things to all people. It can be a tough process to separate what has worked well in the past from what will work today and in the future but keep in mind, marketers are doing the same as they plan for the new year. They can’t keep doing things that no longer work. They are desperate for help from an expert; a specialist in what is challenging their business today. They are desperate for you but not if you are still talking about ideas that were conceived five years ago.
Marketers are looking for a better strategy to battle declining response from their consumers, and the shifting role consumers play in discovering, learning and selecting products and services. Marketers get fired when they don’t make their numbers and depend on their agencies to figure out how. No surprise that agencies are getting fired more often because they can't make their client’s numbers. Agencies have to innovate and evolve to be of value in a rapidly changing consumer world. Marketers know things are different. Do they know that your agency is different?
Get out of the agency, find a quiet place and ask these questions.
- What do I do that is in demand now
- What is the market buying today and tomorrow
- Does my brand (website, collateral, pitch deck, social channels, et al.) clearly express what they want
- Who are my best prospects
- Who are the marketers who value what I do
- How can I separate them from those who don’t
- How do I find and connect with them
- What are the best methods to discover, connect and engage them
- Can my prospects find me
Think about these questions for 50 - 100 of your most desirable prospects rather than 1,000. Articulate the high-value services that you can uniquely customize for their needs. Engage them on multiple channels to demonstrate your understanding, your expertise and the value you alone can provide. Do whatever you must to be on the list and top-of-mind when any one of those 50 – 100 prospects begins their search for a new agency.
This year will be scary-good
The good news, there will be more money to fight over. The bad news, there will be more agencies fighting for it. As the economy improves, the feeding frenzy will only increase. Agencies who focus energy and resources on only the best opportunities will more likely escape the coming pitchamageddon. Happy hunting!
I want to help you prepare for a great year and get more clients and better clients despite the growing competition. I’m always open to a conversation regardless of your needs. If you like this post, click the thumbs up, so I’ll know and then sign up for my new business newsletter. Follow me on Twitter and LinkedIn for daily tips, tricks, and insights. #LetsGrow!