Marketing Consultancy

An Introspective Look at Your Agency – The Unmet Needs of Your Clients

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Consultancy

Our guest contributor today is Tim Williams. Tim leads Ignition Consulting Group, a consultancy devoted to helping agencies and other professional services firms create and capture more value.

There’s new money to be made in the agency business, but it lies in the white space of our business model – the unmet needs of today’s marketers. Unfortunately, most firms are too busy selling yesterday’s services to uncover and develop the solutions marketers will need tomorrow.

It’s as if we believe the solution to more profits is more work. More work can mean more revenue, but it doesn’t necessarily mean more profit. Not every dollar is a good dollar. That’s because most agency revenue streams are made up of work that could be categorized as “widely available services.” As a result, most agencies are swimming in overserved markets, offering common services, but hoping to make uncommon profits.

When markets are saturated with providers who all appear to do roughly the same thing (which is how many clients perceive the advertising agency industry) economists call this a state of “perfect competition.” While you may think of competitive markets as good old American capitalism, it’s actually not a very desirable place to be.

Venture capitalist and Paypal co-founder Peter Thiel observes that firms selling homogeneous services in competitive markets have no market power, meaning they must sell at whatever price the market determines. And whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. By monopoly, Thiel doesn’t mean the big bullies of industry, but rather the firms that have such unique products and services that they literally have no direct competition.

Better to be blue than red

The question Thiel advises businesses to ask is “What valuable company is nobody building?” That’s a pretty profound question, because the answer points us in the direction of the uncharted waters of the “blue ocean.” One thing that’s increasingly clear is that there is very little profit to be derived from the “red ocean” (red from the blood of competitors fighting for every shred of business).
Agencies need new revenue streams, not just more of the old ones. To start heading in this direction, we should be asking questions like:

1. What new services or solutions could we offer to help clients successfully navigate through the continually changing multichannel universe?

2. What are the persistent frustrations (beyond cost) that marketers have with agencies, and what new approaches could we develop that would solve them?

3. In addition to strategic innovation, could our firm also be characterized by operational innovation?

4. What keeps our clients up at night, and how could we develop products or services that would help them sleep better?

5. Which service areas provoke the least amount of price sensitivity among our clients? How can we develop and provide more of these types of offerings

6. What are the capabilities that most client organizations would never attempt to develop in-house?

The tyranny of “best practices”

What holds us back? Certainly the pressures of day-to-day client-related tasks, which all masquerade as “urgent.” But at a deeper level it’s the ingrained belief that the job of management is to study and adopt “best practices,” as if mimicking another firm’s current approach is the pathway to future success. As Jules Goddard & Tony Eccles write in their insightful book Uncommon Sense, Common Nonsense, “Best practices are simply plagiarism on an industrial scale.” While continual improvement is important, it’s not nearly important as continual innovation.

That’s because tomorrow’s profit pools will not be derived from today’s services. So instead of sliding further down the client’s value chain, muster the courage to go where no agency has gone before. There is tremendous value in first-mover advantage, and the first agencies to move into new territory will not only have a competitive advantage; the best of them will be able to do what the planet’s very best companies (like Apple and Google) have done; create “monopolies” in the best sense of the word.

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Agency search consultants face pressure to change with the times – Or – The Search Consultant World is Unraveling!

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Consultancy

This provocative piece by Shareen Pathak appeared in the May 14th issue of DIGIDAY. As you might imagine, I can’t go without comment, so I’ve posted my thoughts at the bottom. How do you feel? In some respects, this topic represents a turning point in our industry and it will affect your firm.

Agency search consultants long played a classic middleman role: They helped clients narrow the field of potential agencies in order to find the right fit.

But now, like most middlemen, search consultants are feeling the pinch, caught in a fast-changing agency landscape where penny-pinching clients are questioning their value.

“We’re all becoming a commodity,” said Lisa Colantuono, co-president at AAR Partners, one of the oldest consultancies in the business. “One big reason is because we’re all pitching on price.”

One major trend affecting the consultant business is the move away from agency-of-record models and toward project-based processes. Many brands like Best Buy, Mondelez and, most recently, Frito-Lay have moved to a brand-by-brand, project-by-project model that focuses on the medium rather than the agency. That means that for consultants, whose bread and butter has long been long drawn-out search processes that involve RFIs and longlists and shortlists and pitches, things just don’t look the same any more.

“It’s become incumbent on us to diversify our businesses beyond search,” said Meghan McDonnell, co-president at one of the largest search consultants, Boston-based Pile & Company.

To make up for the change — the search side used to take up as much as 99 percent of the business just a few years ago — Pile is diversifying, focusing more on management consulting, agency databases and performance reviews. It’s the same story at Ark Advisors, which is offering services such as agency-consolidation consultations.

“What we are doing is seeing ourselves less as managers of a process and more as consultants,” said partner Ann Billock. “We need alternate revenue streams.”

Another trend is procurement. One consultant said that his biggest headache is when procurement departments at clients lead the search. “It’s process-driven and rigid, and a consultant can’t differentiate themselves, and neither can the agency.” He recalled one process where it took around eight weeks until people from the marketing department were finally in the room with the consultant — a testament to how slow some clients can be to adapt.

How agencies feel about consultants can be a toss-up. Mention some of them and C-level executives are quick to admit that they’ll never even participate in a pitch if that consultant is involved. That’s because they may have a reputation for being unfair and, more commonly, for limiting client access. Billock is especially cognizant of that. “If clients want to talk to agencies, then we want to leave that unfettered,” she said.

One consultant said that the fact that compensation is going down for agencies has changed how the company charges for their fees as well. This consultant has instituted a system that charges the winning agency a percentage of the fee, for the first year. Others choose to go a different way: They’ll start asking shops to “pay to play.” “When you pay to be on a database, you pay for them to basically get to know you, which means you’ll get on a list,” said one CMO.

McDonnell said that her biggest concern is making sure the process is fair and objective. “If agencies don’t think we’re running a fair process, then we’re not going to be value,” she said. “We want to be fair. But we also know who our clients are.”

On the other hand, as one West Coast CMO puts it, he will prefer a consultant to a client-led pitch any time because “there’s an objective party we can consult with.” Consultants will also protect agencies from “outrageous” demands — requests for fully baked creative ideas in a matter of days, for example — and they can bridge a knowledge gap. At Ark Advisors, Billock said she spends a lot of time in pre-negotiations, helping agencies and clients negotiate fees so they’re fair.

Davis recalls one client who called her up saying he needed a review. After spending time asking him what the problem was — the work was good, the strategy was on point, the operations were smooth — she figured out it was a small matter of an account lead who just didn’t jibe with the client. “We do a lot of marriage counseling,” she said.

Another global CMO said she spends a lot of her time figuring out who the consultants are and what they are like. “Getting on their long lists is the most important part of my job, so people in my roles spend a lot of time building relationships with them.”

AGENCYFINDER COMMENTS:

A good way to get the ball rolling. More properly, agency search consultants started feeling the pinch long ago. That’s why they started providing a myriad of consulting options specifically for agencies. For years, clients had come to expect a search consultant to be an industry-experienced individual or firm having established contacts with a large field of qualified agencies; whose consulting business was funded only with advertiser fees; that offered no fee-based services to agencies; and that were to remain impartial in representing only the client’s interest throughout the search process.

Some of the “pinch” came as the result of many newbies putting their hats in the ring.  Just as there is no specific industry, State or Federal code or requirement as to what an “agency” is, so too is there no description for what constitutes a “search consultant.”  The changes mentioned here suggest violations of some elements of the long-standing 4A’s Rules of the Road (to which all consultants once agreed). Specifically as to conflicts – “Consultants who participate in new business searches, compensation reviews, or other assignments for advertisers should neither solicit business from agencies nor accept assignments requested by participating agencies.” Then to agency fees – “Agencies should not be required to pay a fee to a search consultant in order to participate in an agency review conducted by the consultant; similarly, agencies should not be required to pay such a fee for winning an account review.”  Note by definition the 4A’s are speaking of consultants under the old definition – the consultant’s fees came only from the advertiser.

In defense of the search consultant (as referred to by the 4A’s), there is no provision or option by which a search consultant can join and/or benefit from 4A membership. Yet the 4A’s apparently believes they are justified in describing, defining and regulating the business models of a collection of non-members, i.e. – search consultants. That’s a real reach!

Finally, some of the “pinch” had everything to do with what the author describes as “whose bread and butter has long been long drawn-out search processes” with emphasis on “long drawn-out.” Certainly doesn’t sound like an efficient or pleasant experience!

As quoted by a female consultant in this article “We need alternate revenue streams.”  Let’s hear it for the agencies – so do they!  I suggest a fair, ethical, experienced search consultant with a well-developed business model with fees coming only from the client or only from the agencies can see it work. Co-mingling or built-in conflicts-of-interest will not.

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Grumble-Fest; Search Consultants Sound Off

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Consultancy

There’s apparently little agreement on the role or place of the hired and compensated pricey search consultant in a client’s agency review. And last week (May 1st) as reported in AdAge, “agency search consultants admitted that the process of agency reviews has gotten “totally out of control” during a session at the Mirren New Business Conference in New York. Speaking on a panel called “Why You Are — And Are Not — On Our Radar,” Russel Wohlwerth stressed that the agency search process hasn’t worked efficiently in many years, and is only getting more and more unwieldy. While many in the industry say the (hired and paid) search consultants still manage about 30% overall pitches, Mr. Wohlwerth contended that number is smaller.” I contend that no-cost services like AgencyFinder; sponsored by their member-agencies, have ever-so-slowly drawn business away.

“Another focus for consultants is reconciling the transparency issue. Marketers’ reluctance to disclose the firms involved in a pitch could be harmful to a small agency’s business when that agency is trying to decide whether it’s worth investing in a pitch against a large shop, explained one agency executive during the Q&A session. Panelists agreed that clients should publicize that information.” I noticed there was no mention whether that was something the consultants should do themselves …

“Finally, the consultants advised that in order to get on consultants’ radar, they should provide quarterly updates about their agency, should be active in the blogosphere and on social media, and consider positioning themselves as leaders in specific categories.” I don’t know why they beat this topic to death! The consultants in question and attendance at this seminar were the big boys and girls; those whose fees often exceed the budget of many much smaller clients. Why mislead smaller agencies – you don’t get on their radar by sending stuff; you get on their radar when your capitalized billings are in the stratosphere of multi-millions.

A client with a $40MM budget and able to afford these pricey match-makers, isn’t looking to hire an agency capitalized at much less than $80MM!

Marketer-Led Reviews Have Shops Crying Foul

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Consultancy

For Agencies Feeling Put-Upon by Procurement, Suddenly Search Consultants Don’t Seem So Bad

The following post appeared in the August 8th AdAge newsletter and begged for comment since search consultants seem to get hammered on a regular basis …

On June 29, the head of new business at DDB North America, Brandon Snow, fired off this tweet: “Gotta love this biz. RFI shows up today, for a response by July 6th. I truly believe clients think agencies don’t need holiday time off.”

Ill-advised as it may be to bemoan a chance to pitch a new account, Mr. Snow’s hardly the only exec frustrated by the agency review process these days. A few of the complaints on the list: hyper-condensed timelines; unfair requests by marketers to own speculative creative or strategic work; a lack of transparency about the size of the ultimate prize; and inadequate or no compensation to offset the costs of pitching. One new-business leader at a U.S. agency told Ad Age that of the seven pitches her shop is currently involved in, it’s only being compensated for one.

The spike in complaints about review processes coincides with a rise in client-led reviews and a decrease in the use of agency search consultants.

This article (find and read it in it’s entirety) by Rupal Parekh attracted more than 79 posts at last count …

The first posted response read:  Agencies are commodities so there is nothing wrong with them being selected the same way other commodities are. This is obvious when you look at how they can’t even differentiate themselves on their websites. If managements’ ultra-fragile egos are hurt by this treatment, they should find another industry to work in.

I replied: Part of this problem lies in this article headline – every review should be Marketer-Led. Not to say that selector consultants or industry match-makers shouldn’t play a pivotal role in the ways others above (writing above) have already suggested, but the marketer should always take the lead role in their own review. Years ago, a well-known agency search consultant told us he needed to be so “controlling” because CMO’s were too busy to give the process their full attention! Can you imagine that – a CMO too busy to actively select their employer’s partner in destiny!

It’s good that the 4A’s and ANA publish and advocate process recommendations, but the majority of search volume falls outside their memberships. We find ourselves in the “high-ether” from time to time, but generally concern ourselves with small-to-medium clients and the thousands of agencies also entitled to professionally managed reviews. To see that happens, we devote front-end marketer dialogue to explain their responsibilities in the process and spell that out in our Advertiser Terms & Conditions.

Later, LA “VP fdf fdfd” wrote:  Sandwiched between the $100mm campaign budgets requiring a full-service AOR and the $100 logo budget requiring a crowdsourcing platform, there is a vast marketplace of clients (luxury fashion, tech start-ups, entertainment, etc.) that require specialized, project-based solutions as opposed to all-in-one agency/partner relationships.

Seems there is a huge client need for consultancy within this space and find it interesting that more pitch consultants aren’t already actively involved.

I closed out with this:  fdf fdfd – The companies you describe are less familiar with pitch consultants and would find a disconnect between their smaller marketing budgets and the magnitude of those consultant’s fees. We recognized that back in 1997 when we introduced our agency-funded match-making service.

This selector consultant issue and debate is destined to continue unabated for years to come. To each his own and to his own … Your thoughts? Have some great and not-so-great experiences to report?  We’ll post them if you write ..

Don’t Bug Me! I’m busy with all the details of launching this new website!

Written by ChuckMeyst2015 on . Posted in Blog Posts, Marketing Consultancy

I’m sorry, I didn’t really mean to snap at you … but gosh almighty, do you have any idea what it’s like to try to launch a new website while dealing with great agencies and hungry clients? Most of this site has been made ready to educate and entertain you; we also have to accomodate clients looking for new agencies, and that’s priority Number One!.  So, bear/bare with us – this blog is destined to get attention after we take care of everything else …

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