An Advertising Agency Business Plan Thought Starter.
Ten years ago I was the owner and CEO of Citrus, a Portland and Bend Oregon advertising and digital agency. Just so you get the picture, our clients included AOR work for Nike; the Montana Lottery; Harrah’s; Providence Health & Services (5 states), and lots more. As you will see below, I knew that we needed to change our approach to the business. We needed a new advertising agency business plan. A radical shift from what was starting to look like a way too traditional advertising agency business model. My team and I looked at different approaches and ultimately, I determined that I (that means me) did not want to make the required revisions. At that point, I decided to craft the agency for sale. I wrote about how I sold the agency in my 57-page PDF, “How To Sell An Advertising Agency.” Links to it are on this page.
2020. Is It Time For You To Invent A New Business Plan?
I talk to lots of advertising agencies. Many are looking very hard at how to reinvent their agency. This is driven by ongoing factors like waves of recessions; clients asking for more and more for less money; lower profits; unhappy and overworked staff and, of course, the results of the pandemic. I talked yesterday with a New York agency buddy that is shutting down his office, asking his landlord for rent concessions, and will go full-time virtual. He is not alone. Again, in many cases, the need for a new business plan is being forced on agency leaders. Being forced is OK. Not changing is not OK.
Back to my past as one model for the future.
10/12/10: Twas Time For A New Business Plan
Before I sold my Portland agency, I spent some time thinking through what a new, an evolutionary, a smarter, competitive, and higher profit advertising agency business plan might look like. Simply put, how could we make more money? This is what I was thinking a few years ago.
I think that my thought process at that time might help you think hard about your agency’s business plan.
A bit of background. Citrus was a successful Northwest agency. We had offices in Portland and Bend, Oregon. Our clients included Nike (we were an AOR agency for major league baseball and college sports); Oregon State Football, Harrah’s Las Vegas; Wildhorse (a large Oregon casino); the Montana Lottery; LegalZoom; a couple of major west coast banks and Providence Health and Services (a multi-state hospital and healthcare company) and a range of leisure accounts.
I bought the majority share of Oregon’s full-service advertising agency Ralston Group in 2002. I had just left being CEO of ActiveBuddy, a serious natural language company that proceeded Siri and Alexa. It was time for me to get out of New York and get some fresh air. Over the course of the next 8 years, we bought Portland’s Citrus, renamed the agency, and grew our account base across the USA.
However, by 2008, after the horrible recession, clients driving down profits, the increase of workload from digital and social media, the increasing cost of running a marketing company (ala healthcare costs), I decided that we had to either reinvent the agency or I’d move on.
The Birth Of “Portland”
Ok, what should we do? I needed to reinvent the agency via a new advertising agency business plan to be more competitive; leaner; more nimble; lower cost; and NEW. As in, new and improved to get the attention of more of the high-profit clients we wanted.
Here is the document, the 2010 think-piece that I used to help guide me. I hope you find it, um, maybe inspiring.
My 2010 Plan – A New Agency Model: Food-For-Thought For Your Agency
Citrus needs to change.
The agency industry (especially full-service agencies) knows it must explore new business models. The old 15% commission + 16.5% mark-up is so long gone. Plus, we know that finding a way for clients to pay up for “big ideas” is difficult.
Within this context, clients are confronted by fast-paced changes, are skittish and are understaffed. Media options have grown exponentially, clients are asking for program metrics, they need smart digital solutions, can’t figure out how to manage integration and do not fully understand social marketing. They still want big ideas but want all of this for less. All of this is compounded by the view that “agencies” are costly and inefficient. Many prospects don’t even want to take our calls.
To further compound the issues, a sea of agency industry sameness and lack of clear brand and service differentiation confronts us. It is very difficult for small full-service agencies to stand out from the crowd. Defining a unique and focused agency brand for a non-specialist agency isn’t easy.
Citrus shares these issues and at present does not have a clear and compelling brand story. We have our “Move” positioning but we need to express this beyond just words.
There must be a new way.
An idea…Move To Small + Smart.
In my mind, a Small + Smart Citrus is the smartest customized agency in the world.
It is comprised of a core internal team that works directly with clients as the Brand Leader but would go outside of agency walls to find and hire the best partners and freelancers to meet each client’s unique marketing goals. We already do this with creative talent (writers, designers), Internet programmers, direct marketing backend, Facebook developers, etc. So why not build a business model on an enhanced – read smarter – outsourced model?
I think that Citrus can become this new agency. The idea needs to be expressed in a compelling brand positioning that is believable, can be supported with smart business practices and has standout brand power.
We must also be able to wrap it in a clear benefit story for clients.
“Smarter solutions, less hassle, reasonable cost.”
How? Move from our current large FTE plus large overhead model to a managed lower overhead model. The right people for the right jobs.
In addition, I propose that Citrus owns the bigger idea by wrapping it in a story that has some greater branding potential.
Portland As A Brand
I propose that we steal a bit of Portland thunder and even lay claim to it — own Portland.
Rename the agency — PORTLAND.
Imagine this competitive pitch:
“Why hire an agency when you can hire a city?”
All Portland agencies (all national agencies) use freelancers. However, no agency has really grabbed the idea of creative-hub, codified it and wrapped it in a big Brand Positioning. FYI: For those of you around at the end of the recession, Victors & Spoils offered a similar but different (as in crowdsourcing) model – a model that died in 2018. From AdWeek: “…described the agency’s 2009 opening as one of a series of entrepreneurial efforts aimed at reinventing the ad industry wheel during the last recession. Crowdsourcing quickly became a buzzword, inspiring fierce debate among veterans who questioned whether it devalued the creative process.”
Portland As A Pitch
Owning a city does that. Owning the most creative city in America does that. Portland has a great reputation — harness it.
“Why hire an agency when you can hire a city?”
PORTLAND the agency can own the idea of “being” Portland and sell it. Note: even if we use Serbian programmers and Boulder copywriters we can still hold onto this positioning.
Importantly, it is sellable. It would get us meetings. It isn’t the same old same old bullshit. It is memorable and comes with a story.
How do we own Portland?
- Hone the model and build a small, smart, nimble, and experienced core in-house team. Have the best Account Management team to manage clients. Best production management. Creative leadership: ACD / ECDCreate a symbiotic agency and freelancer partner management system (a new model freelancer-friendly HR system)Consider teaming with Portland’s creative talent agencies like 52 LTD and Aquent.Build on sound finance management
- Keep current Citrus client base going for cash flow.
- Drive Portland as hub-base.
- Create a compelling “Citrus as Portland” business development story and program. Use creative and media and database partner work in our portfolio. be upfront.
- Make sure that this system can be explained and sold a truly special and beneficial solution to potential clients.
- Build that symbiotic agency and freelancer management system. A system that sources, manages, and rewards freelance partners financially and emotionally.
- Critical… Create a community-effect that recognizes the unique needs and constraints of the freelancer market.
- Build a compelling “Portland” PR story. 1)National: New agency model. 2) Regional chops: Portland is America’s creative city. 3) A local press story… PORTLAND can help Portland and its workforce achieve its potential. Right now Portland isn’t.
The Spoke: Act Different
The hub is our key FTE managers.
The spokes in this idea are the creative talent.
Go out to the creative, digital and strategic community with a strong value proposition — we will find you more profitable work and will support you. You will benefit from our business development program, our ability to find on-going work and our creative community approach.
Once up and running, consider small retainers for the best and brightest; hold group events and parties; create a specialized website (LinkedIn group?); maybe create some form of “Class B stock” to provide a sense of ownership. I’ve talked to many freelancers. They enjoy autonomy. But, can feel lonely. They don’t get invited to agency Christmas parties.
A SWOT Analysis
Better work – lower cost structure. It’s a story that works for clients.
Custom build the team for the individual job.
Own and leverage the idea of Portland as a big, talented creative resource.
The “Portland” USP separates us from the agency pack.
Go after larger clients.
Dramatically expand our perceived marketing communications skills and portfolio through partnerships. Add partner work and skills to our book.
PORTLAND is a memorable name.
Difficult to manage – will need to build systems and have the right internal staff to manage accordingly.
Have to count on as needed availability of outside freelancers and companies.
What to do with “Citrus” brand?
Some clients might want a full on-going team. Be careful to NOT go backward — this idea can work.
Compete with national agencies in pitches (From AdAge – “Who’s pitching Levi’s? M&C Saatchi, Big Spaceship and… PORTLAND.”) Helps the old Citrus look much bigger. What is bigger than a city?
Adds best and brightest to our team. Align small company partners and freelancers behind our “new” system. Help them grow.
Reduce FTE and overhead.
Business development leverage behind the story and system.
Get the city behind us. Hey, PORTLAND has a business plan to help Portland achieve its “Creative-class” employment goals.
Some clients might not believe in the model or our management system.
Some creative and digital partners and freelancers might not believe in or want the association.
Getting to this solution will require free time to think and build. Do we have that? I think we have to make the time.
The Biggest Threat
Failure… If we can’t really deliver on making the IDEA sound big… the idea becomes just another agency yawn.
A Single Named 2019 Side Note
Like many of us who watched the Super Bowl, I was intrigued by the Burger King Andy Warhol commercial. It was ‘done’ by the well-named DAVID Miami (part of a multi-country agency). Their stand-out pitch – a pitch for 2020 plus a name you actually might remember:
DAVID is a first-name agency. We believe in the personal.
I have written extensively on building a new advertising agency business plan and brand positionings. Here is a link to my best read: How To Position An Advertising Agency
If you want to spend a few minutes hearing me out on this serious subject, one that could make or break your agency… give me a shout: firstname.lastname@example.org