The Ad-Agency Magicians of Madison Ave Have Become Obsolete!

July 21, 2009

madison ave 2

Adweek recently published an article titled “The Changing Role of Rainmakers”. In the article they quote Michael Zuna, MD of Saatchi & Saatchi NY as saying “The Mad Men rainmaker days – – that doesn’t happen anymore. It’s a tough job.”

Why, because client reviews in recent years have become more complicated, given the expanded client needs, increased presence of search consultants, holding company led contests and participation of procurement executives.

The new business role has traditionally been an onerous one that was not suited for the feint at heart. Only the most confident and brave ventured to take on the role knowing that they would live or die by the question, “So what have you done for me today?”

In fact only a week or so ago I received an email in response to one of my posts from a new business professional at a leading interactive agency. In the email he said and I quote, “I would like to believe that working on new business in an agency no longer carries the stigma of, your days at the agency are numbered.”

I believe that his words may in fact be prophetic. Today, a knowledgeable and accomplished new business professional today is worth their weight in gold. (And that’s significant, especially at the current price per ounce) In addition, they are few in number and relatively hard to find. The Adweek article describes situations where large agency groups have been searching for the right person for twelve months or more.

What makes these individuals so special and so hard to find? These are my thoughts on what those reasons might be.

The successful new business professional of today has to be skilled at:

  • Leveraging all channels and new media to target the right prospects and start an ongoing dialogue that could ultimately convert to a new client. Everything from social media to SEO/M to network relationships.
  • Building relationships with all levels within the client company. Given the complex client marketing structures, seldom is there one key decision maker any more.
  • Demonstrating broad business knowledge and especially a keen understanding of the target client’s category and business. The slick presentation approach devoid of any real insights no longer works.
  • Listening, reading people and presentingThe ability to ask the right questions and then listen to answers is paramount. So much information is provided by most clients in the early stages however, agency people are usually too busy looking for the next opportunity to talk, versus listening to the answers.
  • Utilizing sales management software and sharing information. It’s no longer about an individual’s personal Rolodex. It’s about efficient targeting and tracking of communications and, involving the right talent from the broader agency team, to help provide relevant fresh thinking.

In summary, the new business professional of today is in fact a hybrid. Someone who is able to combine a selection of skills that you would expect to find in other roles including those of the CEO, business analyst, sales professional, marketing strategist and media/technology expert. This allows them to talk intelligently about the client’s business, across all levels of the organization, and establish a positive perception of agency value.

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‘New Business Strain’… What is it and what’s its impact?

March 10, 2009

business1While all of us like being busy chasing new business opportunities, one thing that we most frequently fail to take into consideration is ‘new business strain’.

New business strain can have such a powerful impact, if not managed correctly, it can decimate what might have been a fairly profitable year. It can also have the effect of making the difference between making your numbers and breaking them in the closing months of the year.

Lets start with a simple description of what ‘new business strain’ actually is.

It’s the total cost (both external or internal) applied against new business development activities in the current year.

Most often these are very real and substantial up front costs incurred ahead of your agency benefiting from the subsequent revenue that will come as a result of the wins you have. It also takes into account the sunk costs for those pitches/initiatives that you did not win and therefore have to just eat the costs. For example, if your win rate is 40%. That would mean that you were unsuccessful in 6/10 pitches but still have to cover the costs incurred chasing them. Believe me when I tell you that this can quickly amount to a big number. Having defined what it is, let’s take a look at its impact.

It all starts with budgeting. Agency leaders are quick to insert new business growth numbers while doing their annual planning and forecasting. We are also quick to assume that this new revenue will produce a similar profit margin to that of our existing business….which in most cases is far from the truth. We might also include an expense budget for out of pocket costs like freelance etc to cover new business pitch activity. That is where it normally ends.

Not too long ago I was asked by the CFO to submit my new business budget for board presentation. I did as requested making sure that it included the estimated budget for staff time costs associated with the new business activity. The budget came to just over $2,000,000 for what I consider very modest activity at a very conservative cost per pitch. Unbeknown to me, the CFO submitted his consolidated budget with these costs excluded.

The result:

  • Inability to allocate resources to support our new business activity.
  • having to assign the team we had available to pitch versus the team to win the business. Subsequently leading to a low win rate and ultimately a disillusioned agency.
  • Finger pointing at new business for the low win rate.
  • Unbudgeted freelance costs.
  • Negative impact on service levels and work for existing clients.
  • Overworked staff that lacked creativity and the enthusiasm needed to succeed.
  • Significant attrition of budgeted profit margins
  •  Ultimately an agency in panic!!!!

All of the chaos listed above due primarily to the agency’s failure to budget for the effect of new business strain.