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. [Read more…] about Advertising Agency Management 101