My Advertising Agency Survival Guide. 2020 Version.
Having gone through the 2007 – 2008 recession as an agency owner, I saw approximately one-third of advertising agencies fail or shrivel. My current survival advice is based on watching that storm as well as recent deep conversations with small and medium-sized agencies. I did not choose to rush out my thoughts. I actually thought about my thoughts. LOL.
Plus, this is not short and sweet. You will actually have to read all of it. OK, it is sweet.
Quickie… I am giving away my 30 years of huge and small agency experience, guidance and coaching for free – for awhile – the right thing to do. If you want smart advice, go here. It will open a new window for this offer.
Two Quick & Very Important Points.
How long will the shit-storm last?
Like you, I have no clue when any semblance of normality will return. I have to assume it will. Plan accordingly.
Chamath Palihapitiya is one of my most respected “advisors”. He has said that companies should be able to adjust and make new plans to survive 36 months. 36! Yes.
He says, think like this is another depression. Whoa. Are you ready?
This is what I do know… If you want to be in the top 1/3, you can’t lose all or even some marketing energy or brand awareness. Why make your voyage back too uphill?
You will get my marketing recommendations below. But first, the big question.
Will Your Advertising Agency Fail?
Here is what an advertising agency principle should be doing right now. I admit that this is generalized given the diversity of the types of advertising agencies. But generalized does not mean its not an effective how-to for virtually any agency.
- “Advertising Agency”: This is my universal term for most types of communications marketing firms.
- “Client”: A client is a company that has consistently used any form of advertising or digital marketing. In your case, it is a client that meets your target criteria (you have that, right) and you think would want to hire you. Sorry, Nike and Adidas do not want to hire you.
OK, Advertising Agency… What Are You Going To Do About it?
I am going to be tough here. At least 30% of advertising agencies will fail in the next twelve to eighteen months.
This post provides my take on how to survive, my advertising agency survival guide. For the winners, how to set yourself up for growth.
6 Advertising Agency Pain Points – I Know You Know This. But, It Is Worth Restating.
- Your current and future clients are freaked out.
- Some current clients have already reduced or canceled advertising and project spend.
- Agency profitability sucks.
- You will be too slow to manage your costs.
- Agencies, too many, are already poorly positioned, and, worse, are unbelievably ignorable.
- Prospective clients “probably” do not want to hear from you.
Advertising Agency Survival Strategies
I know what I am talking about. I’ve won and lost. My advertising agency survived the 2007-2008 recession. My $30 million VC funded digital business did not survive the 2001 dot-com bust. Don’t feel bad for me, Microsoft eventually bought our technology.
Current Client Opportunities
An always… think like a client. I’d imagine that you get really stupid supplier messages that look like the marketer has no clue about your needs. Don’t do stupid, ignorable marketing yourself.
- Now is the time to become close friends. Get past just being a project-based “supplier” to become a sensitive business advisor. In many cases, this is the job of an agency principal or CEO.
- Dial-up your position as a business and marketing strategy advisor. Talk to your clients about their issues – and help find market building ideas and opportunities. Be a compassionate, valuable marketing guide. Be perceived as a friend and not a supplier that is focused on its revenues. A smart, knowledgeable “friend” will get listened to. 1/3 of you can do this.
- Do client triage. Create an existing client hierarchy. Determine what current clients should get the most attention. You do not have the time to uber-manage every client. If it makes sense, fire clients or just let them mosey along. Again this is a time-management and resource issue.
- Who will be the client or client category winners? Slow down and understand what client categories will survive and grow in the short to medium term. For example, when we all go outside again, many will head to Las Vegas or their local casino to party.
- Think like a CFO. If a beloved client is having cash flow problems, work with them on payment terms. I know, easier said than done and potentially painful for you, but this is one way to maintain the relationship. To balance client needs with yours, consider providing advantages, like a discount for advance payments.
Agency Management Action – Skip This Section If You Want To Get To Marketing.
Be paranoid. Internalize Intel founder Andy Grove’s mantra…
“Only the paranoid survive.”
- Understand your cash runway. We will start to see many well-funded yet low-revenue Silicon Valley startups run out of cash. Your agency is not immune. If you really think you are doomed just close your doors – or merge/sell. See below.
- Reinvent your business plan (maybe your business)… Never let a good crisis go to waste. Look at your early 2020 pre coronavirus business plan. Toss it. What plan, and advertising agency, makes sense today and for the future? I know that for most of you the old plan is useless. Think about what a client would buy from you not what you want to sell. “If you don’t like change, you’re going to like irrelevance even less.” A bit of guidance from General Eric Shinseki.
- Dial-up scenario planning. Think through three or four business scenarios. What would you do if a quarter or one-half of your clients split? What categories should you begin to specialize in? What if this pain lasts for 12 or more months? Get into future-think, offer scenario planning to your clients.
- Now! Reduce the cost of doing business. I always tell agencies that the only thing they truly control are their business costs. Look very hard at your P&L and make adjustments fast. Today.
- Obvious: Management should take a pay cut – well, they might have had to do this already but this is a start. Tell your staff that you did it. Show that you give a shit. Don’t do online meetings from your private home gym.
- Obvious: Fire low utilized employees. Harsh, you bet. I have unfortunately fired too many employees due to loss of large clients; pain from the aforementioned dot com bust and the advertising world killer 2007-2009 recession. If you know that you have to let staff go, do it quickly and in a group. You want to reduce internal stress if you can. Don’t leave employees guessing.
- Merge or Buy. There is nothing as sweet as buying cheap assets. Consider buying an agency. I bought a design firm just to get Nike as an agency of record client. Or, consider merging with a compatible, additive agency or even tech firm. or see my posts about how to sell an advertising agency.
- It might be time to buy the smart local PPC agency.
Agency Business Development Planning
Should I Market the agency? Will anyone listen?
You have a big decision. Go quiet or go smart. Quiet is bad. Think through how you will market your agency. I mean think really hard with the future client’s ear in mind.
Note: I am putting a list of essential business development blog posts at the bottom of this “essential” bog post.
Scenario planning. Build and review two alternative one-page agency marketing plans. No, you do not have to spend three weeks doing this. But, just start the process. Today. Tactical ideas follow.
- This is so critical. Be everywhere a client will look for an agency. Some will, sooner or later. Try searching for your agency using the keywords a client would use. Do you know how clients find an advertising agency? Go here to find that out.
- Then go here: Ask if you are your agency is a go-to expert? If not, you better start to figure out what you can really offer clients that will make them want to listen to you.
- Own a client category. Be perceived as a ‘must-read’ expert. Just to get the juices going, here is a growth category – sleep. Do you know the Oura sleep ring? Just saying.
- Really hammer the universe of outbound marketing. Know what clients you should be targeting. But, don’t be stupid – target the right clients. Own Linkedin agency marketing. Test PPC advertising. Leverage your email list. Need a smart PPC agency? I have one for you.
- Make short but sweet agency videos. Sweet. Short. Smart. Compelling. You have the time. if you need it, I have an animation agency for you.
- Become a noted strategic thinker. Be Unignorable. Be top of mind. Deliver smart, valuable insights. Unignorable insights. Think of being perceived as a consultancy vs. agency.
- Do some fast online market research. Think about creating an industry-specific research panel. Impactful, effective research will get attention.
- Show your creativity. Do some crazy stuff like Canada’s John St. (look at their videos).
- Spend, but, spend wisely. You are probably telling your favorite clients that they should not reduce their spending – dramatically. Are you? Spend wisely. Figure out what works. Stop the deer in the headlights action.
- Be efficient! Plan and manage business development programs and costs. Be rational about what clients will need your services. Have a tight process. No plan + poor process = failure.
- Please do not be an idiot. Tough talk? Just imagine the way too many agencies that just went after the Purell account. Y’all think I am kidding? I want to cry about this insanity. If you did that, maybe it is time to shut down.
Once Again – Here Are My Main Points To Help Your Advertising Agency Survive & Prosper.
Your world is now upside down. Many agencies will fail. If you think you will fail, cut bait and split.
Love, hug their best clients.
Adjust their business plans. Note: many ad agencies do not even have an old business plan. It is time to get on it. Here is the main question: how do you make money?
Cut costs now.
Practice the art of scenario planning.
Build a business development plan based on how to market into these headwinds. Do you have a compelling expertise? If not, get it.
Be insight-driven. People will want to hear relevant, sensitive insights. I bet I can have three for your agency in 15 minutes.
Real winners will make being unignorable (and valuable) a primary objective. Especially in these times.
Think about buying or merging. Hmmm, maybe selling.
Go faster than the next-door agency: “If everything seems under control, you’re not going fast enough.” A bit of advice from F1 and Indy champion Mario Andretti.
Some, Just Some, Unignorable Links:
How Small Advertising Agencies Can Win Big Clients. My bet is that a smart, compelling agency can sneak into a big boy right now. But, it takes unignorable big ideas. Not sell, but insights.
The World’s Largest Advertising Agency Blog List. Everything in one place.
That’s It For Now.
Contact me if you want to talk about your growth strategy and the detail in my advertising agency survival guide. I am offering my best of class advice for free. A give back.