Organic Growth Eludes Ad Agency Holding Companies

July 30, 2009

existing clients 2

Recently Omnicom, Publicis and IPG all reported disappointing results for the first half of 2009. Each one’ revealed that significant declines in organic revenues exacerbated the situation. Could this issue have been predicted and minimized? I think so.

The amount of time and effort that is spent on existing client relationships by agencies pales into insignificance when contrasted against their new business efforts. During my career, I have spent time working at agencies within three of the top five holding companies, and I can tell you that I never came across a Key Client/Account Plan.

Yes, there were key client leaders and dedicated client teams etc. There were also client strategic plans, media plans, communications plans etc. But never any Key Client Plans. In fact, once the client was “on-boarded”, the agency soon moved from the proactive courtship mode to reactive do only what needs to be done mode. Is it any wonder that over 50% of current agency/client relationships don’t last more than 2 years?

To be realistic, there is no doubt at all that every downturn in the economy negatively impacts the advertising and marketing fraternity. Client budgets get cut, decision timelines grow longer, and certain initiatives are delayed or cancelled. But the real impact does not necessarily need to be as bad as is reflected in these numbers: 

Omnicom reported an 11% drop in organic revenue. Publicis reported an 8.6% decline. IPG reported that viewed in organic terms, revenue plummeted 14.5% during the second quarter. IPG went on to state that they were “actually in a negative position in net new business compared to the year-earlier quarter”. Even more surprising is that most of them are predicting that the full year drop in organic revenue will be comparable to the year to date decline.

As I read through each of the reports, I looked for editorial commentary about existing clients and what was being done to keep them in the first instance and curb the revenue decline in the second. There is no mention of it. Michael Roth, IPG’s CEO, did say and I quote, “IPG execs at the operating units continue to be maniacally focused on cost controls.” While cost controls are imperative while in survival mode, service levels and key client satisfaction is even more important.

In my opinion, they may not have suffered such large declines in organic revenue if those same execs also had a “maniacal focus” on their key clients from the start of the relationship. In the end, it all goes back to my five pillar agency growth strategy, of which minimizing client churn and driving organic revenue growth are the first two pillars.

 

Share

Advertisements

Ad Agencies: Effectively Reach Client C Suite Executives

July 29, 2009

Internet acess 2

According to a recently published study By Forbes Insights and Google, titled “Rise of the Digital C-Suite”, the internet has replaced traditional media as the prime source of business intelligence for executives. It ranks way ahead of personal networks, business contacts, outside consultants and media publications!

74% of respondents rated the internet as a very important source, 51% for at-work contacts, 43% for outside contacts and 36% for personal networks.  

These findings should raise some concern within the ranks of senior ad agency leadership. I say this because most agencies do not leverage the online channel as much as they should. Most agency new business and PR plans are focused around the more traditional media. In fact, when looked at closely most are void of any business development innovation within the digital media.

Why not take a few minutes right now and think about your own agency new business plan. How would you rate it against the following diagnostics?

  • How good is your website? I am not asking how creative and how full of content it is, but rather how good is it as a communications tool? Does it allow your prospect to quickly find what they want to know, and is it clear and compelling in its message? Does it contain the right content? Do you have specific site goals?
  • Have you put the necessary time, thought and money into your agency search engine strategy? Do you even have one? How often do you update and optimize it?
  • Do you have a social media strategy? More importantly, have you defined what success might look like for you and your prospects? (Remember social media is about building a following). If you want to understand the impact of social media on your business, you must define what success means to you.
  • Does your agency have a blog site? If it does, have you defined its purpose or is it just an afterthought? Do you have a following and are you providing real perceived value to your following? Do they seek you out for your opinions/content when it comes to a specific category or need?

The increasing pace at which client organizations change, combined with the increasing involvement of C-Suite executives in marketing decisions, makes it even more critical for agencies find an effective way to influence them. The reality is that it has become more and more difficult for agencies to get access to the same individuals. This provides agency leadership with even more reasons to ensure that they leverage the internet effectively.

 

 

Share


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.

Share


Wow! What an Innovative Agency New Business Growth Strategy!

July 16, 2009

IMC2Interactive Agency IMC2 has put $500,000 into what it calls “The Social Media Innovation Fund.” Talk about putting your money where your mouth is! Not only does this demonstrate how serious they are about the social-media space, it also will allow them to attract additional business from both new and existing clients. Not to mention build an enviable agency social media portfolio at the same time.

All agencies spend a significant amount of money trying to develop new business opportunities. In a pitch environment it is not unusual for an agency to invest anything from $100,000 to $500,000 in agency time and effort in a single pitch, with only a 1/5 chance of winning it. As I have said before, new business strain is one of the largest cost overheads for any agency.

IMC2 has cleverly set up this fund in the amount of $500, 000. In reality, no more than their normal investment in single pitch for a marquee client. When you take into consideration that by far the largest costs associated with social media are internal billable agency hours, and you have a very low cost low risk offer from the agencies perspective

  Even more ingenious is the way they are allocating the funds – by matching up to $50,000 against what a marketer spends on a social media project that “creates brand impact and showcases our thought leadership and offerings”.  In other words, it will only be allocated against projects that the agency considers worth of supporting, and that will help build their portfolio.

Wow, now the agency is a partner and enjoys joint decision making responsibility on the project alongside the client. If IMC2 allocate all $500,000 of their fund, that will have generated a minimum of $1 million dollars in innovative showcase work for them. And if all that’s not enough, IMC2 have also made it a condition that the client agree to allow the work to be promoted via case studies and agency PR efforts.

In an environment where all you read about is clients cutting back on their budgets, this is a great idea to give clients like that a reason to approach IMC2 and in the process not only hire a great agency but also double their social media project budget.

I know I am sitting here thinking that I wish I had done that.

Share


Client Procurement Depts. Ad Agency Friend or Foe?

July 15, 2009

ProcurementWhen you make mention of the client’s procurement depart to ad-agency people, their eyes automatically role to the back of their heads and they invariably let out a groan of frustration. It really does not have to be like that. Let me share with you why.

Whether we like it or not, I can assure you that client procurement departments are going to continue to become more and more involved. This is especially the case in difficult economic time’s when companies are trying to better manage every cent of expenditure. Their focus is not necessarily lowest cost, but more often than not best value for their company. They will pay a reasonable fee for acceptable perceived value. If you approach the relationship understanding this, you actually have a good chance of making them your friend versus your foe.

Inherent within the ad-agency business are legacy practices that tend to be “like a red flag to a bull” to most procurement professionals. Ignoring this fact and trying to “pull one over them,” is counterproductive and will only make your life more difficult. Put yourself in their position and consider what approach would be best from their perspective. Here are some suggestions:

  • Focus on the value you deliver first and then move on to fees. Just because you put in the hours does not mean you should be paid for them. Most procurement people perceive paying for hours as nothing more than an incentive for you to spend more time than necessary. Start by documenting the value you bring and the results you deliver. Then move onto to fees.
  • Know your audience. Spend some time in advance researching what is likely to be important to them, both from a company perspective and individual perspective. What company initiatives are top of mind? What is that particular person’s hot buttons? Forewarned is forearmed.
  • Share industry information. The procurement person you are dealing with may not be very familiar with our industry. Most of the job may entail purchasing products and materials. Take the time to share with them industry information and common practices etc.
  • Be confident, prepared and stand your ground. That does not mean be arrogant and demanding. Rather exude a quiet confidence, know your facts and have back up at your fingertips. Do not cave to intimidation in the early stages. Quite often they are testing you to see just how much conviction you have.
  • Simple, easy to read and no hidden extras. Procurement people are born skeptics and are always looking for the trap. Make sure your proposal is simple, clearly laid out with adequate explanation, and does not contain ambiguity or other misleading items.

What you want is a procurement department that is just as comfortable with you and confident in the partnership as the client marketing team. They can in fact end up being one of your best allies as opposed to you biggest foe.

Share


What’s the best place in the pitch order for an Ad Agency?

July 14, 2009

best chanceA question I am often asked by ad-agency colleagues is, “Does it matter where we are in the order of go at the final pitch?” My answer is as follows. I prefer to be either first up or last in the order. I am not fond of being stuck in the middle, especially if there are 5 or more finalists and, if the process extends over a few weeks.

 

When you are first up in the order you have the opportunity to spend a little more time setting up your research, insights and solutions. You also have the opportunity to be the first to answer the key questions that are in the clients minds, and set the benchmark by which all the others will be judged.

 

You are also most likely to get the most questions from the client, as everything is new and they are hearing it all for the first time. Do not be surprised however, if there may be less client interaction than you would hope for or expect. They may just be absorbing all the facts and information.

 

If you are able to go last in the order, you have the opportunity to be that star public prosecutor who makes the most convincing closing statement. Your presentation is the freshest in their minds and so are all the detail and the work you presented.

 

In that coveted final position you have to be more direct in your presentation style and to the point. Spend less time on the insights and set up. They have probably already heard similar information from five others agencies, and unless you have something new, it’s old hat by now.

 

 Interactivity is likely to be high as the client team are at the end of the process and less concerned about taking copious notes. The atmosphere may be a little more informal and relaxed too. This is the time that I believe it critical to get to the work even faster than you normally would, and support afterwards with the detailed facts. Sixty to eighty minutes of strategy and insights preceding the solutions, ideas and work will probably prove to be a killer for you. Get to the work as quickly as possible.

 

Theatre is more important and a higher level of energy and enthusiasm is required to pick the client team up and carry them through what’s probably been a grueling couple of weeks. Tony Louw of Louw’s Management always suggests starting off by making a bold promise or statement about what you will deliver to the client, should they hire your agency. This gets their attention immediately.

 

In reality, if you have done your homework, have actionable insights, great ideas and solutions supported by outstanding work/ideas, included measurement and proved out ROI as best you can….It probably does not matter where you are in the order of go.

 

Call me superstitious but I still like to be first or last!

Share


Fear of the Cold Call. Rx for Ad Agencies

July 10, 2009

cold callFor most individuals within an advertising agency, there is nothing more feared than the new business cold call. Well, if you have done your homework, are mentally prepared, and know what to expect then it’s not that hard. Here is a suggested cure for that dreaded ‘cold call’!

In a recent new business presentation, Cleve Langdon shared the following statistics about cold calling. He said that 20% say “go away as I am happy with my agency”. 20% will tell you that they are about to fire their agency, and 60% are not sure. That means a full 80% of the people you call could possibly end up being a new business opportunity. That cold call is starting look a less intimidating.

While not everyone has the mindset or ability to be successful at cold calling, here are a few tips to help make it easier for you and help improve your hit ratio:

  • Do your homework and prepare before calling. It’s a lot easier if you prepare yourself mentally, do your homework and run through the available research. Decide what it is you want to say and what‘s the key message you want to communicate. Less is more, focus your words and listen for clues at the same time. You are not delivering a public service message.
  • Use sales management software and keep a contact log. Keep track of all your calls. Limit leaving voice messages to no more than two a week. Keep trying to call and if you get VM all the time just hang up and try again.(I have known instances where it took no less than 150 calls to finally make contact with the client and get the first meeting set up)  Avoid Mondays and Fridays as Tuesday through Thursdays are usually better. There seem to be less distractions and its is generally easier to contact them.
  •  Experiment with shoulder hours. I have had good success calling during shoulder hours. (7.30 -9.00am and 5 – 6.30pm) Often the person is alone and at their desk and the more senior person tends to answer their own phones during those hours.
  • Get to know the Gatekeeper. Personal assistants are very influential and can either make your life easier or impossible. Getting to know then on a first name basis often helps.
  • Establish a routine. Rather than haphazard calling, set yourself a routine and stick to it. The discipline will help you focus and be more consistent in your efforts.
  • If you get the opportunity, get off your butt and get on a plane. At the slightest hint of an opportunity get on a plane and go and meet with them. It’s much easier to do business with someone you have met and like. It’s also harder to turn away the same person. Technology is great, personal relationships are even greater.
  • Follow through and call back. So many agencies send out materials, say that they will follow up and then never do. Always follow through and do not give up until you are told to do so. Tenacity pays.

Share