According to IBISWorld, there are 69,003 ad agencies in the USA employing 253,640 people. That's a lot of competition and it’s increasing. The rate of new agencies entering the market is estimated at 5%, while the rate of growth for other vendors that target marketing clients, such as specialty services, marketing technology, and others is increasing by double digits. If you thought last year was tough; hello new year.
As an agency, you compete against a complex system of variables in addition to straight-up experience and capabilities. People, politics, hidden agendas, and the list goes on. Add to that the high-pressure environment of the marketplace where CEOs and Shareholders are demanding faster results. Senior marketing leaders are cutting budgets and resources. Agency profit is shrinking, account turnover is increasing, and talent is getting harder to find. Why would anyone want to get into this business?
While you can’t change the industry, you can change the way you go about finding and winning new clients. The traditional approach; call, get a meeting, win them over with your personality and accomplishments, is on the decline. The new way to BD is your best approach to this rapidly changing marketplace. Make no mistake, it isn’t easy, and it requires commitment from everyone in the agency. It’s that hard work that will reverse an empty pipeline, declining win rates, shrinking revenue, and overall agency viability in the future.
Considering there are 69,002 other agencies, how you do stand apart and stand out? The traditional ways, geography, industries, capabilities, size, are important but not enough. There has to be something different about your agency that separates you from all the competition. That something has to be relevant and meaningful to your prospects. There are many different processes you can follow to find your difference but too often agencies end up defining that difference as the same thing their competitors are claiming. The tough work is pushing beyond the obvious to find benefits that are focused on the problems your customer is seeking solutions for. If healthcare is your specialty, what are the most pressing challenges healthcare marketers must solve, beyond awareness, patient volume, or revenue? Those things will happen as an outcome of what you do. If what you do to solve their problems is different, marketers are going to want to know you.
You can read more about agency differentiation here.
Once you find your difference, you want the marketplace to know. And you want the market to believe you have the answers. Agencies, for the most part, are terrible at developing and pushing their thought leadership. They don’t have time. They don’t have resources. They don’t know what to say. Yet, marketers are actively seeking new ideas, new approaches, and unique expertise to help them solve their problems and save their job. Agencies that blog, post, speak and publish thought leadership find more leads, better quality prospects, and higher win rates. It’s hard work for agencies to articulate the smart things they do and requires an unrelenting commitment to continue beating their drum, but in the end, it will make a difference.
You can read more about thought leadership here.
You have a much higher probability of success when you know someone who knows your prospect. You have a much better chance of opening the door when a past client or colleague makes an introduction. Unfortunately, today’s agency executives are too busy or too timid about leveraging their network. In the face of such extreme competition, the best way to cut through the clutter is through relationships. Too often agencies rely on their cold prospecting activities to drive new business because it’s an easier tactic to implement. Agencies who mine their networks consistently have a more active pipeline and better results compared to converting cold leads into relationships. A healthy agency spends as much time networking as they do prospecting.
You can read more about networking here.
It is our natural inclination to believe that good work for our clients will result in more work. That is true to some extent but doesn’t leverage the full potential of strong client relationships. Client facing people are focused on delivering the best results but are often not trained in finding more work or are uncomfortable ‘selling’ the agency. Your client is under siege by more and more firms vying for their budget. It’s time to train your client facing people how to go after more of their clients work before the competition gets it. An investment in training and mentoring your team along with milestones and accountability will make a big difference in agency growth and in the end, build stronger client relationships. A high performing agency should spend as much time on organic growth as they do prospecting.
You can read more about organic growth here.
Stick to it
The most common reason agency new business is weak is because agency leaders don’t stick to their new business plan. There are many valid reasons, but in the end, those reasons are the real obstacle to agency growth. As the leader of the agency, you can’t allow anything to derail your new business efforts. You wouldn’t tell your client you are too busy to do their work or you can’t continue their campaign because you had to fire their account manager. If there is only one thing you can tackle in the new year, make it new business consistency. Remember, marketers typically have one-year budget cycles and change agencies every three years. That is a long sales cycle and if you want to be considered when those changes come you have to be regularly and consistently top of mind otherwise your new business strategy will be based on hope, the hope of catching them by chance when they are considering a change.
You can read more about consistency here.
Is your agency ready for the year ahead? More competition from more places means more trouble for agency new business. Doing the same things over and over again will result in diminishing returns. This year has to be your year to turn the table on the competition by being more committed, focused, and differentiated than the other 69,002. It’s not impossible to change course. If your best client came to you saying their sales were declining, you would rally the troops and come up with a new plan to get them growing. Why not make your agency your best client and put your expertise to work for you? You’ll look back on this year as the year that changed everything.
Happy New Year!
I’ve got a lot more advice on how to make your year great and would enjoy sharing with you. I’m always open to a conversation. 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!