Marketing leaders today say 34% of their budget is spent on channels they didn’t know existed five years ago. 75% say they own or share responsibility for the P&L, a complete change to what was primarily a promotional role a couple of years back. Over 75% think the industry has changed more in the last two years than the past 50. 48% agreed that the industry is changing so fast now, it’s unclear how agencies will be viable in the future. Is there any better evidence that the ad business is changing? Is there any better reason that we must change, too?
The impact on agency business development is palpable. Many agency leaders tell me that their pipeline has slowed, leads have dried up, client spending is shrinking, and they don’t know why? I hear, “We are the same great agency we were when we had to turn away work. We are the same talented people who count gold, silver and bronze trophies overflowing our shelves. We have generated millions of dollars in profit for our clients. We won agency of the year and the cover of Ad Age. We haven’t changed our winning formula so why can’t we get more clients?” I reply you are right. You haven’t changed.
There is no denying that the pace of change in our industry is unprecedented with little sign of slowing. The same is true in the marketer’s world. It used to be that an agency could do a breakthrough campaign and then watch the clients come calling. Many agencies tell me they never had to do business development before because the brands kept calling. Not today. Regardless of past success, if your agency hasn’t changed its positioning, value proposition, services, creative, approach, and everything else in the last couple of years, your prospects will conclude you are stuck in the past and not viable for their needs today.
The implications of all this change on business development can best be illustrated on a skewed distribution curve with a long trailing tail of all possible prospects. Not a static curve, but one that is ever advancing and dragging its tail behind. At the front of the curve are all the prospects who manage bleeding edge brands and want to be the first to try the newest innovations and unproven tactics. Only a select group of prospects are bold enough or risk tolerant to try and very few agencies can compete in this space. Even though these shiny new tactics, channels, services, technology, grab headlines and keynote sessions, the vast majority of marketers aren’t going to invest.
Moving up the curve are leader and challenger brands who seek change, fresh ideas, and a different approach from what they did last year because they are experiencing new challenges and declining returns on their marketing investment. This part of the curve is the lion’s share of the market for agencies regardless of vertical expertise and specialty. More to the point, this is where so many agencies fish for new clients yet are woefully behind with their positioning and value proposition to succeed. They pitch and lose, and lose, and lose, and are rarely invited to the table. Desperate for a win, they slide down the long tail toward those remaining brands who appreciate them for their work ten years ago.
The long trailing tail of diminishing prospects represent those who are afraid of change, deny change is happening, or are content with their tried and true marketing approach, frozen in time and career. Marketers at this point hire the agencies who sit alongside them. Those agencies on the long tail are experiencing declining opportunity and increasing competition within a shrinking market. By the way, those brands are the ones who are likely to be cheap, underfunded, and little appetite or appreciation for good work. Don’t get me wrong; there is money to be made if that is your business plan. It will just continue to get harder and harder.
Agencies can be successful at any point along the curve. Those who are intentional about where they sit must do the things that improve their chances such as the proper positioning, service offerings, success stories, and industry and audience experience that is relevant to the prospects who are also around that point in the curve. Not being realistic about where you are along the curve makes your business development efforts harder and decreases your ability to win. Since the market is always moving forward, agencies on the tail will continue to fall further behind compounding business development problems even more.
The solution is obvious. If you don’t want to continue tumbling down the long tail, you have to evolve with the part of the market where you think you should compete, where you want to grow, and where the brands are that you want to win. To do so, you have to reassess your agency more frequently than you had to do in the past. Research, analyze, and understand the pain points of the marketer today and the behaviors and preferences of their customers, and then position the agency around solutions that are relevant and innovative to their rapidly changing world. That doesn’t mean to abandon whatever tactics you deliver. It does suggest that you position your services in new and relevant ways that speak to today’s problems. It’s not about reinventing the agency but evolving along with the marketplace, and the marketer.
If only it were as easy to do as it is to describe. I know because it is one of the ways I help my agency clients be more successful. There are some fundamental steps to help that I have posted here, here, and here. Next week I’ll share what I think are the things marketers want from their agency today and ways agencies can leverage what they do to capitalize on the marketer’s needs.
I want to help you find your place on the curve and achieve your agency vision. 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 LinkedIn for daily tips, tricks, and insights. #LetsGrow!