The myth of the “full service” advertising agency

Finding the right advertising agency requires being honest with yourself

Finding the right advertising agency requires being honest with yourself

The advertising/marketing ecosystem is too large and complex to offer all services in-house

It’s an old illusion in the advertising business that agencies wanted to look larger then they actually were. The thinking behind this was that the more services you claimed to offer, the better chance you had of reeling in new accounts. It was this mindset that coined the phrase “full service” agency.

Enter reality

Today’s advertising/marketing ecosystem is far too complex for any one agency to possess all of the needed skill sets in-house. In fact, the major advertising holding companies have been on a buying spree acquiring specialized agencies and then trying to integrate them into their multinational brand name agencies.

What clients are ending up with is a convoluted mix with a lead agency that directs different specialized groups under the holding company umbrella. Of course, what goes along with this are turf battles, divergent strategies, off-brand messaging and a revolving door of well-intentioned agency people operating with a minimum amount of knowledge, trying to keep the client happy.

The small agencies specialize and the big agencies get bigger

Advertising Age recently published an article about how the forces of technology are ushering in and shaping new business models that will affect advertising agency service offerings, size, and profitability.

What we are seeing now is the rise of small boutique agencies that specialize in category, market, or technology expertise. These agencies have no illusions as to their service offering and are very transparent with their clients about what they bring to the table. They also offer their clients the greatest amount of flexibility, because they can contract with best of breed suppliers when a specialized service is required.

The multinational holding company agencies will continue to gorge, fueled by large brands that use advertising as a blunt force weapon. For all the prediction that consumers want to engage with brands and have a relationship, the majority of consumers just want to watch TV and tune out of their socially hectic worlds for a few hours entertained by mediocre television programming, supported by advertising that makes it hard to remember the name of the brand or what it is actually supposed to accomplish with daily use.

The forecast for the future does not bode well for mid-sized agencies

Mid-sized agencies suffer in two areas. First, they try to staff for too many specialized skill sets in the belief that their clients care about this. There is too much technology and infrastructure at play for any small department to be competent in the nuances of code and the required updates of operating systems to keep this humming along.

Secondly, mid-sized agencies suffer from non-billing personnel “creep,” ranging from administration to human resources to accounting. This starts to take a bite out of agency profitability at a time when clients are demanding more services for less cost.

Finding the right agency requires being honest with yourself

Do you want a long-term or a project-by-project business relationship? Do you need strategic planning and research or more of a tactical execution of internal strategy? Are you looking for an agency of record or interested in working with several agencies based on the need at hand? Each relationship has its pros and cons based on resources and expectations. I believe the agency of the future is small and nimble, creatively driven and staffed by a small team of experienced managers that can bring forth the forces and talent needed to complete the task at hand in an efficient manner.

Additional articles you may find of interest on this topic:

The Precarious State of Advertising & Marketing

Why Business-to-Business Marketing is Transforming to People-to-People Marketing

When to rethink

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Making a case for business-to-business marketing investment

Marketing execs need to provide accountable metrics that contribute to company revenue.

Marketing execs need to provide accountable metrics that contribute to company revenue.

Soft marketing metrics don’t impress the CEO or CFO.

In most business-to-business vertical marketing segments, marketing is viewed as an expense on the balance sheet. One reason for this is that the justification for marketing has relied on soft metrics — awareness levels, brand recognition, website visitor traffic, target audience reach, etc. While these metrics are important and part of the marketing equation, they lack accountability for revenue generation. This reinforces the perception with the CEO, CFO, and COO that marketing is a cost center, not a revenue center.

Moving to a revenue center requires marketing execs to rethink their role and provide accountable metrics that contribute to company revenue.

Moving beyond soft metrics to revenue cycle metrics

Business-to-business marketers have their feet planted in two different worlds. One foot is in the traditional (and comfortable) world of paid media placement, ad campaigns, direct mail, trade shows, and public relations. These tactics yielded soft metrics and worked to exclude marketing from the revenue generation conversation. Because of this, marketing became the stepchild of sales. It was easy to see the expenditures and hard to justify the results.

The other foot is in the digital world. In this world, everything can be measured, tested, and scrutinized. This can be an uncomfortable place because there is nowhere to hide. However, it does present the opportunity for marketing to shift from a cost center to revenue generation center if it is properly planned, executed, and measured.

Where to start

Start small and plan the program with ROI measurement from the beginning. The goal is not backwards measurement to prove ROI but rather forward focused measurement that influences decision-making.

Don’t try to measure all things. Because digital has a lot of moving pieces, select areas to measure that contribute to profitability.

Plan and establish ROI estimates upfront. Consult with management team members that have a negative view of marketing, and build their pessimism into the marketing forecast. Remember, there is nowhere to hide and it’s all about making better marketing decisions that lead to revenue generation.

Success measurement

  • Select 3 to 5 key metrics
  • Measure success versus goals – good, bad or ugly
  • Drill down – measure every campaign, channel, sales rep, and region
  • Track tends over time
  • Create a dashboard that shows what marketing is achieving and contributing to revenue results

Very few small to mid-sized B-to-B brands have a 100% digital customer base. Many marketing automation programs (MAPs) lean heavily on online lead generation as the basis for marketing ROI planning. Small to mid-sized brands may struggle with this due to the size and sophistication of the markets they serve. Therefore, it is incumbent on marketers to identify digital initiatives that lend themselves to ROI measurement and revenue planning.

Additional articles you may find of interest on this topic:

Marketing Automation Platforms (MAPs)

Big data and creativity

People-to-People Marketing and “Small Data”

Please leave your comments or thoughts below.

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