Posts tagged ‘agency’
With two of the UK’s top grocers headquartered in West Yorkshire the marketing community up here tends to keep a close eye on both Asda and Morrisons – after all most of them work for one or the other. So there was discussion last week about the news stories naming Morrisons as a possible buyer for Iceland. After their purchase of online kids retailer Kiddicare last February, Mozza’s new approach to business development seems to be ‘if you haven’t got it, buy it in’.
Which led me to think about how agencies approach a similar problem. Forgot to set up a digital department five years ago? Suddenly need to be an expert on redemption rates or press packs? As an agency MD, you seem to me to have three options:
1) Buy it in. Find a stand-alone smaller agency that does nothing but specialism X and buy them lock, stock and client list. On the upside, you get a ready-made department with a client list that will at least partly offset their running costs and that can hopefully be cross-sold other specialisms too. On the downside, you may have to integrate a culture ever-so-slightly at odds with your existing set up…
2) Recruit a specialist and let them build an empire. You’ll need someone senior enough to eventually lead a team but who doesn’t mind getting their hands dirty in the meantime. Which will make the press release writing / social media updating / desk research / contact report writing bit pretty pricey in the short term. And do you direct their resources to bringing in new business or supporting your existing accounts?
3) Hire it from other specialists only as and when you need it. Either a separate agency (a lot of purportedly integrated agencies seem to do this with PR or digital) or hire freelancers (obviously my preferred solution :-)
I’m not saying that there’s one right answer. But anything is better than the old-fashioned agency approach of “that will be a nice problem to have”, “we’ll deal with it when we win it” and “we’ll just have to blag it”…
I’ve come to the conclusion that it’s becoming extremely difficult for a medium sized UK agency to actually make enough money to stay afloat. Factor in a desire to produce creative and effective work (and of course, the two things are connected) and it’s a seemingly impossible task. Why?
1) Work has massively shifted from contracts and fees to projects and tendered rosters. With every single project having to be competitively pitch/tendered for, the opportunity to charge the kind of management and creative fees that a business needs to develop and evolve (rather than merely survive) aren’t there. Price is now such a significant element of the tender appraisal process that you can’t afford to charge the sort of money you really need to keep moving onwards and upwards.
2) Many clients now seem to lack basic marketing skills and knowledge. I was a bit taken back the other week when I had to explain to one of my VIP clients what the difference between retailer press and trade press was. This seems to me to be down to a combination of spreading staff too thinly across sales and marketing functions and/or categories, putting staff with category but not specialism experience into senior roles and allowing senior staff without a marketing background to override strategic marketing recommendations whenever they see fit. Which brings me nicely to…
3) …the mantra Think Global, Act Local seems to have been replaced with Think Global And Query Everything Local, Then Act Global Anyway. See my rant about European Marketing Managers for more details.
4) Thanks to the current economic climate, in my experience every pitch seems to necessitate a pitch list of a dozen agencies and every tender has anywhere from 30 to 130 firms going after it. The economics of this just don’t add up – if the value of an average (outside London) marketing pitch is £250,000 and an agency could expect to make, say £50,000 in revenue off that, twelve agencies each spending £10,000 worth of time and resources to pitch doesn’t add up. Because the law of averages states that they’re only going to win one pitch in twelve, thus spending £120,000 to win £50,000 of revenue. I oversimplify. But you get the point.
So the agency model is, if not broken, then severely cracked.
Got any ideas about how to fix it?
I’m due back at work this week, so to ease me back in I’ve been wading through my emails from home.
There were about twelve emails that I actually needed to read and digest – the remaining 878 consisted of:
- Junk 10%
- The sandwich man / coffee man / courier is here announcements: 7%
- Please move your car because you’re blocking me in: 5%
- Rants from the Traffic/Admin/IT departments: 5%
- Birthdays, babies, joiners and leavers: 4%
- Frivolous banter: 20%
- General new business stuff: 7%
- Lost, Found and For Sale: 6%
- Other: 36%
Is this average for an agency inbox?
I can confirm today is Tuesday.
I know it’s the first day of the working week and it’s a bit confusing, but today is Tuesday and tomorrow will still be Wednesday.
On the plus side, this means Friday arrives 24 hours earlier in your working week than usual. On the minus side, this means Friday arrives 24 hours earlier in your working week than usual.
I’ve had a couple of instances recently where I’ve had to tell a client that what they are proposing is mind numbingly, completely the wrong thing to do. To explain that I’m giving them our best advice and that we wouldn’t do it if it was our money.
But do they act on my advice? In some cases, no. In some cases, they even adopt a “la la la I can’t hear you” approach.
If clients are paying their agencies significant fees to give them best advice on communications, surely they should be at least listening? I do appreciate that sometimes there are other factors at play that the agency hasn’t been exposed to, but I’m getting quite depressed at the amount of clients (and new business prospects too) who seem to want to employ ‘yes men’.
Maybe its the slightly wobbly state of the economy that is denting client confidence, maybe its a reflection of the changing client/agency power balance.
But I’m way too bloody minded to just take the money and run.
(pic by bullish1974 via Flickr)
I was having a chat with someone with decades more agency experience behind them than me yesterday about integrated agencies and their evolving role.
His take was that the problem was that an integrated model required Specialist account managers (DM, Advertising, PR etc.) but Generalist account directors who could advise their clients across multiple disciplines/specialisms/channels. The snag being how do you advance specialist account managers to become generalist account directors?
Account managers are inevitably focused on getting the day-to-day stuff out of the door and keeping the client happy – but is it also their responsibility to develop themselves into Creative Generalists with a wider view of communications, design and the world in general? Or does that responsibility sit within the Planning discipline? Or should Planning be responsible for this staff development need?
Thoughts welcome on this one – I’ve certainly not got the answer…