Mike Fromowitz
Mar 28, 2013

Growing an ad agency is not as easy as it used to be

The best way to get to a prospect client is networking.

Growing an ad agency is not as easy as it used to be

The way we used to go after new business no longer holds water in this digital age with the plethora of ad agencies that exist today. Some need to change to survive. The challenge is how best to go after new business.

Most advertising and marketing firms have to work hard at finding new clients. On top of that we face some brutal facts about our industry: advertising is now viewed as a commodity, too many agencies are going after a smaller number of prospect client (thanks to the economy), most agencies are now treated as vendors, and prospects see few differences between agencies. These trends won’t change or improve for our industry in the next 10-20 years.

I remember when clients stayed with their agency for 5, 10, 20 years or more. Today, with over 50% of client relationships lasting less than two years, the role of new business at many agencies is more important and a bigger focus than ever.

To the uninitiated, running after new business seems so simple. But it isn’t.  Without sales a company can not grow. Unfortunately most agencies spend too much time doing client business and forget to focus on developing new business. And that attitude can get an agency into serious trouble in this fast-changing marketing-communications environment.

According to a recent CMO survey, 80% of decision makers said they found the vendor, not the other way around. According to Marketing Sherpa, 80-90% of business to business transactions begin with a search on the web. SEO is now a critical part of new business strategy.

You need a growth strategy

Today, most agencies fail to gain additional revenues because they don’t have a growth strategy. Thinking that the work should speak for itself is not enough. Every opportunity takes thoughtful consideration regarding the prospect’s needs, your agency capabilities and how your agency can help the client grow their business.

Winning new business has always been hard. But today, it seems harder than ever. The big agencies used to turn up their nose at smaller accounts and below the line projects, but now they chase everything. The small agencies have lower overhead, so they can under cut you on price almost every time. All of that means you can’t afford to make mistakes, or you lose.

The following outlines some of the most common mistakes agencies make in prospecting for new business.

1. They chase after the wrong accounts.
You’re not going to win new business if you haven’t made an objective evaluation of your agency’s strengths and weaknesses and how you relate to the prospect’s needs. Too many agencies waste a lot of time, effort and resources chasing business that they have little to no chance of winning. It could be that they don’t have a great selling story for that particular prospect.  Or, in some cases, they don’t understand that most marketing managers are fearful of making a wrong decision, so they take the safe route and eliminate any agency that isn’t a natural fit. To potential prospects, most agencies look similar to a certain degree, and this is another reason marketers will eliminate an agency from the review.

If you don’t have category experience, you’re going to be fighting an uphill battle. The same evaluation is often made if you don’t have the right personnel, the right location, the right reputation, or whatever they think they want from an agency. My advice is to find out what the prospect thinks they need, and then evaluate your strengths against their needs. If they are not in alignment, you could be wasting your time, effort and resources.

2. Positioning is the foundation of an ad agency’s new business program.

The common failing among new business-seeking agencies is their inability to position themselves and name what they stand for. Most agencies, surprisingly, don’t have a unique characteristic or capability that will separate them in the prospect’s mind. To win new business, you have to carefully study client prospects and have a good awareness of who they are, what they do, and what their needs might be before you make any attempt to contact them.

A recent Forbes magazine survey concluded that agencies could have a better overall approach to new business, if they were to, “create a differentiated agency brand.”  Very few agencies actually do have a differentiated brand. Most believe that by being all things to all people they will be able to attract new business, but it seems that the opposite is true. Clearly the agencies should practice what they preach to their clients day in and day out, and seek to differentiate themselves.

3. Most clients don’t have an awareness of agencies.

Marketers may know one or two top agencies that get a lot press ow win awards, but they generally don’t have a clue about the majority of agencies or what they do. To find an agency, their first move is generally to do a web search. So it’s important that your website presents a point of view for what you stand for as an agency. There are scores of agencies out there fighting for the same prospect’s attention. The mega agencies seem to be chasing just about every thing on the planet no matter the size. So if your agency doesn’t stand for something, you will get lost in a crowd of sameness.

Conventional thinking has always been that the most important factor in new business is your creative product, and it is certainly one of the biggest decision making components. The big famous brand agencies like O&M, TBWA, BBDO, DDB, Leo Burnett and others are almost automatic inclusions for larger accounts based on their creative reputations.

But creative isn’t the only thing you can win with. I think that clients are just as impressed with innovative uses of new media and creative thinking outside the box, not just the creative ads they come up with. Clients are hungry for new ideas, but not every agency can have a killer creative reputation. But if they have a great marketing reputation or some other unique characteristic or capability offering such as expertise in technology (hardware & software), or content creation, they can still compete effectively. And if you have some great success stories that give the prospect permission to believe that you can help them do the same for their business, you still have a shot at getting invited to the party.

4. Agencies don’t have a realistic target prospect list.

The two most obvious barriers that most prospects will use to eliminate an agency from consideration are size and experience. Size becomes an easy reason to say no. Most prospects don’t want to be the largest, but they want to be important enough to feel like they will get top management attention. But they certainly don’t want to be the smallest for fear of being treated as a second class citizen.

Category experience has always been an issue with clients, so if you don’t have experience in their category you will have a difficult time winning the business. I believe that the days of the generalist agency are totally gone. For years, the agencies that specialize in a certain business or audience category have had better success than the agencies who tout their general experience. My advice is to develop a prospect list that takes the client’s preconceptions and need for category experience into account. Today the niche players now outrank the big guys. The niche players are more profitable in the long run, so find your niche and develop it.

5. No one’s going to call you if they’ve never heard of you.

The big agencies and the creative powerhouses can rely on prospects to call them. But for most agencies, if you don’t have a good proactive prospecting effort, you will be unable to sustain growth. One of the most important methods of growing new business is to gain awareness among the prospect community that you exist. To that end, I believe one of the most powerful but underutilized tactics is a proactive publicity effort. I’m a great believer in the power of PR, so when my agencies created great work, we let the press know all about it. The same held true when we won new business. If a particular client doesn’t know anything about you before they sit down to make out that first list of agencies they want to interview, your chances of getting in the door are nill. It simply won’t happen.

I recommend that you start a company blog and keep it relevant to your target audience. An agency blog is a necessary component for marketing your agency. As necessary as it was for an agency to have a Website, it is now as relevant for them to have a blog. It becomes the gateway to the agency and puts a face to it. Thought leadership blogs or articles and editorials in the business section of the local newspaper or national trade publications are another good tactic for getting noticed and building some awareness of your professional expertise.

6. Many new business efforts are a total waste of time. 

I have had some clients in the past that see opportunities everywhere. Many of them were a waste of their time. But we have all been there.  I have to admit that on occasion I am guilty as charged. Because people see opportunity, they can often be mislead by too much personal passion. It is a fine line to walk. When planning for New Business,  there are two two sides of the coin to take into consideration. Probability and Possibility.  The best metric is probability but many agencies with short runways chase possibility and that is the wrong strategy. Chasing possibility is something you do when the kitchen cabinet is full and the agency is not in a needy situation. Needy agencies often lose their radar.

It use to be that clients had more time and would take a telephone call with somebody who had a solution for them. This would usually be followed by a meeting.  In today’s fast paced digital world,  nobody answers the phone from a number they don’t know.  If you get lucky and get them on the phone by calling at 7.30 AM or 6.00 PM they are less likely to want to meet with you. You are selling solutions looking for a problem. So what’s the best way to get to a prospect client? Networking.

7. Agency presentation teams are not well-rehearsed.

Too many agencies make the mistake of taking the department head and putting him of her on the new business pitch because they feel obligated to do so. If your presenters have a major flaw in their presentation style, or simply aren’t likeable personalities, they can doom the agency to failure in a pitch presentation.

In my experience, most Creative Director’s can make or break the pitch. Not all of them are very good in new business. They can come across as too arrogant, or too kooky, or not kooky enough, and none of those are good when a client is making a decision that he is fearful of to begin with. Besides, many Creative Directors are terrible at rehearsing. It’s not in their nature; their right brain doesn’t track well with that kind of behavior. I have also seen a lot of bad media presentations. Perhaps this is due to media becoming so complicated and fragmented. Too many Media Directors think that numbers are what clients want to see. I disagree. Clients want ideas and insights they can believe in.

8. Agencies need to empower their new business director.

The New Business Director needs the clout and resources to get what they need from the agency for the pitch.  He or she is, after all, the primary contact person for this new and most important client. Their projects are not to be put on the back burner when the agency gets busy. And they must be allowed the proper time, resources and realistic expectations to build a consistent new business pipeline.

One of the most common, and dumbest, mistakes agencies make in their new business efforts is in not anointing the New Business Director with the power to make the final decisions. The lack of authority is especially damaging when making the final decisions on what to include in the credentials pitch. Creative Directors always want to show their best (i.e. most creative, off-the-wall, cutting-edge, expensive) work on the presentation reel. And I certainly agree that you should only show excellent work on the reel. But what you show should be dictated by the client and his needs, not by your creative ego.

For some clients, they want to see work that is directly relevant to their category, or to their target audience. I’ve also seen too many cases where the spec creative ideas were completely wrong for the prospect, but the creative director insisted they be shown. The New Business Director needs to have the power to overrule their decision if it is not right for the prospect.

9. “Chemistry” as the key factor for winning new business.

I was out at the local Starbucks for coffee the other day with a friend of mine who runs a marketing consultancy. He shared an interesting thought with me: he believes most young account service people today don’t really get to know their clients “They don’t know how to build relationships,” he said, blaming it on the way agencies communicate with clients today. “We are getting far too comfortable sending emails instead of connecting in person”. I agree with him. You learn much more about people by talking to them and meeting with them in person. If your agency’s primary contact with clients is email, does that build relationships?

96 percent of all the consultants sampled in a Forbes magazine survey on ad agency new business pointed to “chemistry” as the key factor for winning new business. More specifically, 61 percent say that winning agencies have a “confident, articulate team”.  39 percent believe that “demonstrating passion for the client’s business” also helps in winning new business. Another winning ingredient is having “a seamless link between strategy and creative”.  Surprisingly, the report also concluded that only about a third of the consultants believe that brilliant creative work by itself wins pitches, and half of those believe that a brilliant strategy wins pitches.

Fact is, unless you have a good relationship with a prospect, your chances of winning the business goes down dramatically. Client’s don’t want to make a risky decision. Most will make the safe decision, no matter whether it is the best one for the company or not.

When I look back over the years at all of new business pitches my agencies made, the one constant when we didn’t succeed was because we had not developed a deep rapport or relationship with the prospect prior to the pitch. I believe you win new business before the pitch, not during the pitch. In Sun Tzu’s the ‘Art of War’ he recommends that the best way to win at war is to win without a battle. In other words, take the right steps early on so that a battle isn’t necessary. That means you should be meeting with the prospect, talking with the prospect, sharing ideas with the prospect, building a relationship with the prospect before the pitch. 

Winning an account before the pitch is much easier than winning the account in a formal review. It takes less money. It takes less energy. And there’s no competition. Besides, people hire people they know and trust before they hire people that may not be in sync with their thinking.

The best way to start is by connecting with prospects through a steady outreach program that initiates a relationship and builds awareness of your agency. You can begin connecting with prospects by using relationship tools like  Linkedin, Twitter, Facebook, Phone, or Email.

Its awareness that says the agency exists and the agency is really interested in the account. It’s a fact that over 35% of all clients who have agencies will invite competitive agencies in for a quiet visit. That means big opportunities for agencies that know how to handle these quiet-visit opportunities the right way.

Let me leave you with this final thought.

At this very moment, you can bet that some other agency is trying to build a relationship with one or more of your clients. And if you are like most agencies, 25-30% of your business will leave after two years, no matter how good you think the work is or how good your people are.

By all accounts, next year is going to be an even tougher year for agencies with little to no growth in some major markets. Clients are retrenching and the holding companies are demanding profit targets from their agencies. The pressure to win new business will intensify exponentially.

The role of the new business director, and the importance of a smart growth strategy, will be indispensable. And as I noted above—and must say it again—the best way to get to a prospect client is Networking.

Mike Fromowitz




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