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How Ad Agencies Must Protect Their Turf By Using A More Consultative Approach

This past week I saw an article on AdAge.com discussing how consultancies have begun offering more and more services that have been traditionally performed by ad agencies. That article can be accessed below.

The Race Is On! by E.J. Schultz

As a smaller agency, it's easy to read that article and assume that this shift in the industry is only likely to affect the monster agencies like Ogilvy, BBDO, Chiat Day, and others. That assumption, however, would be naive.

Consultancies have the advantage of getting involved in all aspects of a business, including much more than marketing and advertising. When a consultant is involved in a company's accounting, revenue model, customer service, and other departments, that person has already gained the company's trust to make suggestions that begin to bleed into marketing. Most ad agencies get limited visibility into the inner workings of their clients. These agencies' only points of contact are within the marketing department and don't get to see how their efforts (or lack thereof) affect every facet of the business. This puts the consultancy at a major advantage.

Now that many of the major consultancies are offering services like strategy, creative services, branding, and other marketing support, that trend is likely to continue to trickle down to even the smallest of businesses and the ad agencies that support them.

My opinion is that this shift in the industry is actually very good for advertising in general. Every ad agency hears the feedback that clients want us to be more proactive. We are hired for our expertise, yet for some reason, the natural tendency for an agency is to be reactive. It would be easy to point fingers at the clients and say that most agencies are doing the best they can with the limited access they are given to the inner workings of the business. Unfortunately, there are usually two reasons this happens, and for both the blame rests solely on the shoulders of the ad agency:

  1. Ad agencies are just simply not asking the questions. It's uncomfortable to ask a client about the exact process that the sales team goes through when it receives a lead. Agencies are afraid that this will feel like they are blaming the sales team for the lack of ROI on the advertising dollars being spent.
  2. Ad agencies are afraid of the answers to the questions. One danger of being proactive is finding out that what you're doing isn't working. However, when an agency falls into the trap of being afraid of the answers, all that thought process does is delay the inevitable. The answers will be found. The question is whether the ad agency showed initiative to uncover it or if it just hoped to ride the gravy train until the client found out. Either way, fear of diving deeper into a client's processes and understanding ROI is inexcusable.

For ad agencies to survive, we have to be more proactive, which means asking for exposure to multiple facets of a client's business. While not directly marketing related, the following questions are imperative for an agency to continue to add value and deeply integrate into a client's business.

  1. How long are customers staying with a company? Why? Can we make them stay longer?
  2. How exactly are leads being handled when they come in the door? (phone calls, email leads, ecommerce purchases, etc)
  3. What is the on boarding process like? Can it be improved?
  4. What is the lifetime value of a customer?
  5. How much is it costing to acquire a customer by channel?
  6. How could the product be applied to different markets? Could the B2C product perform well as a B2B product or vice versa?

There are dozens of other questions and answers that can help an agency integrate more into the processes of clients. Because consultancies aren't afraid to ask these questions and make relevant suggestions, they have been able to expand onto agencies' turf. If agencies are afraid to do the same, even the smallest of agencies will be in big trouble as the industry continues to shift. Here at our agency, we're actively working to install processes in each department to become more proactive and consultative in our servicing of each client.