How To Start, Grow and Sell An Advertising Agency
“How To Start, Grow and Sell An Advertising Agency.” I figure this is a good Google-friendly headline. It is also the core of my advertising agency consultancy. I help agencies do all three.
In fact, I had two interesting conversations yesterday about selling an agency.
One agency owner informed me that he sold his agency to his employees. Everyone wins. Especially since this a profitable agency that the employees now own and run. The owner gets some cash, knows that his baby is in very good hands and he can move on to his true love – commercial real estate.
The other owner of a northeast agency is considering selling after 25 years of building up a profitable agency. We discussed the buyer’s offer, and all of the time-consuming back and forth. The buyer recently hired an agency sales expert who has now, of course, moved from just discussing the financial terms to how to merge and market the “new” agency. All of a sudden, a new to the party consultant is mucking up the works.
After discussing the deal, I brought up the angst associated with selling. There is always an emotional side to selling. In this case, the owner could hang in for a few more years, pocket the earnings and then sell at a lower, price, a price that would be easier to close. He is running the numbers and just might come out ahead by sticking around for another 36 months.
Having run my business development business for six years, I am beginning to see a cyclical pattern.
My advertising agency (that’s many of you) lead gen (which for any of you considering consulting, is fairly steady due to my high-level position on Google and personal brand awareness that comes from sales of my book – buy it!) starts to slow down a bit for six weeks around the beginning of November or start of the summer. I must assume that this is because of the impending holiday/kids+recreation season.
This slowdown is nuts because this is exactly the time to build that kick-ass advertising agency sales program. Plus this is a great time to do some direct marketing because some of your competitors would rather be wrapping gifts or water skiing.
OK, enough pontificating.
Here are the three most important questions that agency managers ask me every week.
- What is the best – most efficient – way to grow my advertising agency?
- What is the best way to start an advertising agency?
- How can I sell my advertising agency?
First, a definition. While I work with digital, PR, hybrid, experiential and other forms of agencies, I use the generic term advertising agency because “advertising” is still the universal term for marketing communications agencies. It is also the term that clients, and other industry people, search (see my post about how clients find agencies to see some research that supports the use of the advertising word).
This is a look at a couple of marketing communications search terms from Google. They are ‘Advertising Agency, ‘Digital Agency’ and ‘PR Agency’. People still dig the universal term.
OK, back to the three questions and what I’ll call topline answers.
What is the best way to grow my advertising agency?
Every advertising agency has to grow. That may sound like a ‘duh’ but, believe me, only 60% or so agencies run, I mean consistently, run a smart business development plan. I’ve written on this before. Here are my main points.
You will eventually lose most of your clients. You have to have more clients coming in the front door than going out the back.
Most agencies do not have a business plan. Simply put, these agencies have not done the hard work of thinking through what they are selling, to whom and how they should price their offer. I see this in action because many agencies will go after any client that raises their hand. Most agencies will pitch whatever comes over their transom. I’m sure you are saying, “Not us.” But, that is probably BS because I’ve seen both large and small agencies rationalize why they should waste their time pitching the wrong clients. A bet: show me the clients you’ve pitched in the past couple of years and I can probably show you that you wasted your time pitching one-third of them. [Read more…] about How To Start, Grow and Sell An Advertising Agency