New Direction for Interactive Agencies

The next time you have the ear of your agency’s CEO, ask the following question: “Which competitive organizations are taking business away from our agency?”

Odds are your CEO will rattle off the names of several consultancies that previously were not known for their expertise in marketing work.

The Rise of Consultancy Firms

There are some interesting forces at work in the marketing arena these days. Consulting organizations that had been making their money primarily from management, technology, and strategic consulting have been taking business away from agencies in such a way that agencies are left scratching their heads. It’s not such a huge feat for agencies to understand why and how these consultancies are stealing business right out from under their noses.

Consultancies are making huge investments in developing marketing capabilities. Marketing represents a huge opportunity for consultancies because consultancies already have an advantage over agencies: Consultancies are typically plugged into their client companies at a very early stage. Once a client has committed to a consultancy for strategy or IT work, it is very easy for that consultancy to upsell marketing services, particularly as those services pertain to online marketing, media, and overall marketing strategy.

Consultancies also tend to take a holistic approach to marketing. Clearly, they aim to fully understand a client’s business model before they make any marketing recommendations. Clients who are tired of hearing that a $20 million ad campaign is the solution to any problem understand and appreciate the holistic approach and are often eager to let a consultancy handle some or all of the marketing duties.

The problem is actually very simple to comprehend: The consultancies have marketing capabilities, they’re plugged into the client’s business before the agency is, and they have a “whole business” approach to spending money that almost any client can appreciate. So, does this spell the end for agencies?

I doubt it, but I do think that agencies need to make some adjustments to the way they do business in this day and age.

The “Whole Business” Approach

Recently, I had the chance to do some work for a new agency client in the B2B space. Getting direction from some of the account executives (AEs) working on the business, I found that I had many questions about how media dollars should be allocated among the various targets the client wanted to reach. I had so many questions, in fact, that I felt uneasy about putting together a media plan. Rather than spin my own wheels doing work that would need to be revised later, I asked the account folks to set up a meeting with the new client in order to go over the business model.

The client meeting was a tremendous eye opener for me. It turns out that while the AEs on the account had done a good job of explaining what the client did and who the client’s targets were, I gained a tremendous amount of insight from the meeting that completely changed the direction my plan would eventually take. Understanding the business model allowed me to prioritize targets, consider some changes to the media mix that would make the overall plan more effective, and get a much better understanding of how each target should be addressed.

Getting in on the Ground Floor

Understanding the business model and taking a “whole business” approach is only the beginning. Getting in early is also key. Remember that consultancies are usually on the scene early in the game when a client is just getting started, or they are present when clients are entertaining a shift in business strategy or similar realignment. It is at these critical points when a consultancy can build trust with a client and introduce the idea of handling marketing duties that otherwise might be handled by an agency.

Many agencies are addressing this potential threat to their livelihood by acting more like consultancies. Some agencies are making a concerted effort to begin relationships earlier or to diversify their services to allow for more “touch points” with potential clients. You can see this clearly in the investment strategies implemented by the large agency-holding companies that have invested in expanding capabilities and have earmarked money for launching new consulting practices.

If there is one tip I can share to help agency planners learn to cope with a lot of the changes going on in the market, it’s this: Your primary duty is to your client’s business and not to their ad budget. Prioritizing your actions in this way will make you a more valuable business partner and will help build trust between you and your client.

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