22 Advertising Agency Management Lessons

I’ve had deep conversations with hundreds of advertising agency management leaders on how to manage and grow their agencies — full-service, specialists, digital, and PR. I am about to condense these down to 22 core lessons.

Me.

I’ve been working in the advertising, digital, and Internet startup worlds since the end of the Mad Men era. My global and regional clients and new business wins include J&J, Intel, Nabisco, Northwest Airlines, and Nike. I’ve build websites and digital programs for Microsoft, Nabisco, Honda, LegalZoom and more. I founded, invented, and ran the best read online news website and invented industry-leading marketing bots.

I’ve made hundreds of business decisions. Some were brilliant and some were “learning experiences.” I’ve decided to share my top 22 business-building and management lessons with you. No, I am not so crazy to think that these will instantly make your advertising agency the next Droga 5. But, I do know that most of these lessons represent best practices that, if followed, can help make you more successful. That means richer and happier.

Quick Advertising Agency Management History

The path that got me here included sixteen years at Saatchi & Saatchi Advertising Worldwide as Business Development Director North America, General Manager Minneapolis, European Director in London, and Management Director in New York. I left advertising for seven years to be CEO and founder of two Internet publishing and technology startups. One, NJ.com, was a major online newspaper that was larger than the NYT for a couple of years. Microsoft bought the other company that created technology that allowed people to have meaningful ‘human’ conversations with a computer (pre-SIRI). If you were online in the early 2000’s you might have talked with our SmarterChild bot on instant messaging platforms. Over 20 million people did.

After my digital sojourn, I moved from New York to Oregon in 2002 to buy the advertising agency RalstonGroup. In the ten years that I ran the 2-office agency, we bought the sports marketing agency Citrus, took their name, and added clients like Dr. Martens, Legalzoom, Montana Lottery, Nike’s college and Major League Baseball AOR accounts, university accounts, and the U.N.

I sold Citrus in 20013 and write about that sale and the other buys and sells I’ve done plus how to add value to your agency in the PDF book you can get by signing up for my newsletter or just ask me via email – peter@peterlevitan.com.

By the way, I now run an agency consultation business. Hopefully, that’s why you are here on my website. I help agencies find their positioning sweet spot and build action-oriented business development plans that create significant market differentiation and make the agencies Unignorable. My experience as a consultant and the opportunity to look under the hood of many agencies has confirmed that the following ideas can help add value to most, if not all, agencies.

22 Lessons (OK, Advice)

I offer my advertising agency management thinking as advice. There are many types of agencies and not every pearl of wisdom will work for every agency. However, there are some basics that I think you should listen to and modify accordingly. I know this because I have done planning with two-person agencies up to the holding company level.

OK – GO

1

Have a two-year agency business plan. You’d be surprised how many agencies do not have even a basic business plan – like knowing how they make money. My agency’s plan helped us grow the agency’s valuation through an acquisition, open a second office, pitch and add Nike AOR business (which helped us gain even more desirable clients) and develop a focused; high-energy; 24/7 new business program based on direct marketing and social media. —- Note to the 45+ crowd. The plan also acted as a framework to begin to position the agency for an eventual sale.

2

Create an agency brand positioning that differentiates your agency from the other 4,000 agencies out there. I know, I know, you’ve heard this one before. But, having a viable agency brand positioning is critical. More importantly, have a powerful & unignorable brand positioning — in reality, it’s really a sales proposition. One that actively attracts and stimulates interest from the right new clients. Here is the most critical thing I learned in my own agency’s positioning development process: Just trying to find yet another new way to say “digital” or “full-service” agency isn’t good enough. It’s really difficult for any agency to find a brand new way to enunciate the same old, and generally non-competitive pitch like “full-service.” Some potential clients might want full-service but find a way to say it with style. Note, I  have a great example from a London agency that runs global Fortune 500 campaigns out of one office.

Maybe you should go even further. Given the rapid pace of change in our industry, it might be time to think through some agency of the future scenarios and business models that will more effectively get you to a   truly distinctive and compelling sales proposition that lasts more than six months. Double-digit growth areas like mobile or video marketing might be smart places to start.

3

You are a business first. Control all costs. This sounds obvious, but it is critical in an increasingly low-margin service business like advertising. My metric was that every dollar I paid to someone else was a dollar I couldn’t hand to my kids.

4

Stare at your financial numbers – often. We, advertising people, are visual types so Citrus used dashboards as a graphical agency management tool. We had detailed monthly financial dashboards tied to our P&L, balance sheet, accounts receivables, and owner compensation (this one tended to focus our business decisions.) We also used a real-time agency SWOT assessment for all major agency decisions like mergers and acquisitions, go-no on RFP’s and to help manage existing accounts and staff.

5

Be concerned if any single client accounts for more than 25% of your revenues. When we added two Nike AOR assignments, I got nervous in addition to elated and accelerated our new business outreach to add other accounts. Give me a shout and I’ll tell you how we added Harrah’s Casinos during that effort.

6

Learn how to say no to clients and prospects that want too much free or low-cost brainpower. Your brains, ideas, and pixels are all you have to sell. Charge like a lawyer or even SEO specialists that charge like lawyers. It is time for our industry to exhibit some self-control. If you have to give too much away for free, it might be time to examine the value of what you are selling and the mindset of your client or prospect.

Also, say no to the wrong RFPs and pitches.

7

Think about an alternative to the notion that brainpower and creativity are all you have to sell. Take some of that brainpower to find out how to create a product or service of your own that can easily be replicated and sold over and over. Create or buy some Intellectual Property. This can be done and does not require scientists from SpaceX. Think like a “start-up” and hey, “let’s build some IP” can sound like an obvious panacea. However, there is gold in them thar hills that do not require moon landings. There are agencies teaming up with brewers to create new craft beer brands; agencies moving into valuable yet fast and cheap research and agencies like Wieden+Kennedy and RGA becoming start-up incubators. I asked W+K why they are doing this. The answer… they are investing their brains and experience to make more money in a world that Mad Men couldn’t have conceived. If you need seed money for a new venture try crowdfunding.

Think big like the kid down the street. I bet your team could build one of the more effective Kickstarter sites.

8

Hire only exceptional people – that’s what Google does so why not you? Do not rush to fill an open position. You will pay in the long run. You can train people but you cannot increase their IQ. Once on the team, make sure to keep all employees are firmly in the loop via scheduled agency meetings and email agency updates. It takes more than a foosball table to build a business building culture. CEO’s need to talk it up. I have always subscribed to Tom Peter’s management concept of MBWA. Look it up.

9

Reward only your best employees. You don’t owe anyone anything. There is no question that an exceptional employee is as valuable as two marginal people. Does this sound harsh? This approach beats not having investment capital for growth or having to go out of business because you were a bit too magnanimous.

10

Miscast or problem employees should be dealt with earlier than later. Gary Vaynerchuk has fired the “wrong” hires within their first two weeks.

11

Grow your digital assets faster. Bring on more technologists (FTE or freelance) to leapfrog even early-adopter digital agencies. Pick a growth area. It’s not too late to become the smartest TikTok agency (no one is yet.) Not even the big boys have TikTok figured out. However, it may be too late to be known as the best “social media agency” given the vast sea of social experts. One more digital point, and I know that you know this — digital agencies have a higher multiple than full-service agencies. If you want to sell in the next three years, you best add MORE valuable digital skill-sets.

12

Please provide exceptional client service. All AE’s must know how to think like a client in order to anticipate client needs and address any potential issues before they materialize and metastasize. Consider sending your AE’s to an AE class where they learn advertising agency management, customer care, how to intelligently upsell clients, how to retain clients, and how to charm. The worst call I could ever imagine is a client telling me that our account service sucked. It’s just too easy to fix. Fixing creativity is much harder.

13

Process rules. Create an agency work process that is dedicated to profitability. Manage your scope of work promises.  Then stick with it. The ever-elastic creative process must be tamed. Agencies that do not manage scope of work die. If you need a work process template ask me and I’ll shoot you one.

14

Meetings cost money. Manage your meetings. Do the math. Lengthy, over-staffed meetings can easily cost thousands of staff-related dollars a month. Find a meeting management system that will work within your culture. Keep attendee numbers small, there is no reason to fill up the room or Zoom-room; clearly state the meeting’s objectives; select a meeting leader; don’t hold up the meeting for stragglers (it is disrespectful and we are all busy) and schedule a hard-stop end time. Or better, get up and leave the room when you’ve accomplished your primary objective.

15

CEOs must stay very hungry. Business development is a 24/7 priority that needs a solid plan, an active approach, and constant senior management attention.

Today, your agency marketing can work 24/7 if planned correctly. There are a wide set of tools to help you stay in front of your prospects. My own business development program that is primarily social marketing-driven (like the SEO value of this very post) is delivering business leads from around the world.

Side note question. Ms. CEO, do you know how to manage a business development director? Here are some expert thoughts that will help.

16

Think niche or being a specialist. Even if you are a full-service agency, consider leading your new business program with a high-interest niche service or product. We used “invisible QR codes” (that happened to be developed by our client Digimarc) to get us into senior-level meetings at companies like Nestle. We would have never gotten that first meeting with that Fortune 500 if we simply said that we were yet another full-service or digital shop. Think like your prospect. What would turn them on?

17

Have an agency website that is sales-oriented. You may only have 7 seconds to entice a prospect to dig deeper. Having a me-too agency website that doesn’t sell is a critical missed opportunity. I’ve reviewed hundreds of agency websites and have very strong opinions about what works and what doesn’t.

Frankly, I couldn’t deliver my POV any better than Mark O’Brien at Print.com.

“Many designers believe that their site’s central function is to show their visitors how creative they are. I disagree. Certainly, a            portion of the site should serve this purpose, but this is not the primary purpose of the site. The site’s key role is to generate   business, and demonstrating creativity is only part of what converts a visitor into a prospect.”

Here are two very different websites for winning advertising agencies. use these as thought starters. Basic and Walrus NYC.

18

Become known as a relevant and valuable thought-leader. Strategic, targeted, thought-leadership will position your agency as being smarter than the next guy, drives agency awareness, delivers traffic from the right prospects and can be extended to email programs, across social media (from Instagram to TikTok and SlideShare), presentations, paper (yes paper) and speaking engagements. My agency had a monthly thought-leadership publishing schedule/calendar and staff assignments – it worked. But, don’t go social unless you know that your agency can realistically sustain the program. Empty Twitter feeds don’t bread confidence.

19

Even if you love that sexy consumer work, think about working with more B-to-B clients. I didn’t go this route fast enough despite my agency having very compelling B-to-B client case histories. Why B-to-B? It’s a less crowded playing field; B-to-B clients have on-going budgets; positive ROI drives incremental spending and these clients will make you more digitally savvy. I am continually surprised at how many agencies leave B-to-B work to so few. This will work especially well for digital agency management.

20

I am about to repeat myself to hammer a point. Consider revising your current business model if it doesn’t look like the agency of the future – even the agency of 2021. Explore the benefits of employing a leaner and meaner approach. Good or bad, the pandemic has woken up many advertising agency managers to the idea of leaner + meaner.

21

Act with a need for speed. Before my partner and I decided to sell Citrus, I thought about renaming Citrus “Portland” (why not own the essence and brand of this creative city? The brilliant agency LONDON Advertising did this.), building a smaller core senior team and moving the other employees to freelance contractors managed by a symbiotic community system. The goal was to create a highly intelligent and lower-cost ecosystem that would be managed on a client-need basis. To put it another way, we thought through creating a much more nimble, less FTE dependent approach. I shoulda, coulda, woulda… but didn’t.

22

Have smart partners who share your vision and are smarter than you. PLEASE!!!!!! Strive to not be the smartest guy in the room.

Bonus…

Use the services of a strategic agency business consultant that can offer fresh eyes, new perspectives and savvy recommendations based on years of experience. I did and saw the value. Now I am one.

One more thought. Have you read my fabulous book, The Levitan Pitch. Buy This Book. Win More Pitches.

Really… One more thought…

What would I do if I started it all over?

I’d use strategic scenario planning to plan a new agency that’s built for the future – say three years out. I’d do research with CMO’s to help find out what they are really looking for in an agency. Oh, and how they actually search for agencies. Guesswork can be expensive. FYI, I am planning a series of posts on how clients find advertising and digital agencies for the Advertising Week blog.

Major point — I am very sure that my new agency wouldn’t look like my old one.

It would certainly have more digital chops (more access to digital strategists and engineers like I had at my Internet companies) and the agency would run much leaner. If you can’t do a complete agency overhaul (I wouldn’t drag my feet too long), then at least begin to make real market-based modifications to meet the accelerating changes happening in the business of advertising, design, and technology.

Frankly, this need for new thinking applies to all advertising, digital, PR, etc. agencies. New models will quickly displace even today’s savvy digital agencies. Need a quote to stimulate the need for speed? Here is a great one from Mario Andretti…

“If everything seems under control you are just not going fast enough.”

I know 22 advertising agency management points are a lot to chew on. I can help you get going. I work with just a few agencies that want to stand out from the pack – and make more money. Let’s talk.

Take me up on my contact page –  Vito Corleone offer.

Peter