8 Ways To Grow A Media Agency

Posted on Posted in Innovation, Media, Revenue Models, Strategy

8. Think 'Integrally'

 

'Media' was once an external domain for advertising and PR. Media now integral to all aspects of a business, inside and out. Even SMEs are becoming publishers; owning and managing content and channels. So, truly valuable marketing requires more than a carefully orchestrated campaign via 3rd party media. Media Agencies should reflect this universality in their services.  In the words of the great Professor Kotler: "The marketing organisation will have to redefine its role from managing customer interactions to integrating and managing all the company's customer facing processes."

 

 

 

 

 
 

7. Move from Mediation to Empowerment

Media Agencies first emerged as brokers and intermediaries, offering to deploy their own expertise for buying inventory on behalf of their clients. Today, the line between pure outsourcing and in-house media capabilities is blurring.  Planning and buying your own campaign is easier than ever thanks to SaaS tools that enable businesses to control their advertising, social media and CRM from a £1,000 laptop. It's time for some new revenue models, guys.  Agencies need to think about the value of leasing fishing tackle rather than refining the logistics of buying and selling fish.

6. Help CMOs pitch to CFOs

Like or not, in the kingdom of the beans, the bean counter is king. Woe betide anyone who thinks that finance folks aren't imaginative. However, their creativity is credible because it's underpinned with math(s) worthy of inclusion in a 20-F submission. Bomb-proof financial arguments need to be at the heart of every original idea proposed by a Media Agency. In an intrinsically data-rich industry and with fiendishly clever attribution tools emerging every month, media folks have no excuse to deliver the numbers in every sense. 

 
 

5. Make Stuff

This is an era when almost everyone is a producer. Even college kids are building websites and managing profitable YouTube channels. Media Agencies are hamstrung by the fact that they don't make anything or indeed own anything apart from talented people. Media Agencies can only deliver sustainable growth and strengthen their value in the marketplace if they have some chunky assets.  They need some intellectual property; some proprietary content, tools or networks that they can monetise.

4. Build a Data Farm

In essence, a conventional Media Agency processes and interprets information. Typically, this is derived from third party data. Competitive advantage and consequently growth in margins can be achieved by having proprietary data. This can be established gradually, starting by propagating a few small but valuable home grown datasets or quickly through judicious licensing agreements with partners.

 

As the media landscape changes, two themes prevail; the consolidation of agencies and evolution of the services they provide.

However, there's evidence to suggest that the bigger a media agency gets, the harder it is for them to innovate and consequently deliver real organic growth.

I was recently asked by a client to offer a point of view on the merits of one media agency over another. We compared various features and characteristics such as sector knowledge, efficacy and of course, "creativity"; that ethereal gift for imaginative problem solving.
During our discussion it became clear that the key players are pretty similar.
Agencies are largely differentiated by the reputation of their key people, the clients that they serve and, of course, billings. Certainly, billings are an important measure but if this is the paramount consideration for either the agency management or the undecided client, it's possible to develop a simplistic picture of a business's true health. Moreover, the dogged pursuit of bigger billings above all else can have an impact on the DNA of an agency, pushing it inexorably towards being sales-driven enterprise at the expense of progressive thinking about their core offering. It's possible that this effect is accentuated when agile, independent agencies become subsumed within larger groups.

The most recent, comprehensive figures for UK Media agencies (2013 vs 2012) highlight some interesting facts. Notably, the league table showed that 18 of the Top 20 Media Agencies performed below the sector average of 21.5% growth. Perhaps more significant is that just 4 of the Top 20 delivered any kind of growth in billings during this period. If we consider growth in billings to be a good indicator of an agency's ability to innovate, then the smaller shops look like the real stars. Yet the key advantages they gain from agility and speed apparently diminish as they grow.

 "Just 4 of the Top 20 agencies delivered any kind of growth"

So, a thorny question arises; how do you affect healthy growth that is actually sustainable?

Clearly corporate growth through acquisition is one approach. It can be driven by the rational desire to acquire new talent, skills or capabilities, or to buy into new territories or segments of the market. After a decade of particularly high levels of activity, hard data can show the merits of M&A strategies. Bain & Company found that from 2000 through 2010, for a large sample of publicly traded companies around the world, total shareholder return (TSR) averaged 4.5% per year. Those companies that were undertaking M&A activity were averaging 4.8% - just 0.3% above the mean TSR. Companies that built their growth on M&A—those that acquired frequently and at a material scale—recorded TSR nearly two percentage points higher than the average. In other words, the groups for whom M&A is central to their strategy, those whose core competency is perhaps buying businesses delivered better returns. In agencyland,  WPP has set the standard for this approach, gaining new powers and conquering new territories as it diligently collects companies like Pokemon cards.

But here's the thing... in the marketing sector, WPP seems to be exceptional in achieving long-term positive outcomes from acquisitions. Morover, even apparently successful acquisitions can create as many problems as they solve. Post-acquisition, talk of 'intra-company synergies' and greater aggregated buying power can impress shareholders and clients. Privately, management teams of subsidiaries will admit that the inevitable cultural and operational changes that ensue following acquisition can result in higher levels of bureaucracy and risk aversion. The net result is that the acquired agency finds it tougher to adapt and evolve.

Crucially, adapting and evolving is the only sure way that agencies can differentiate themselves and move away from the relentless war of attrition to deliver growth.  For media agencies specifically, this requirement is particularly acute. Again, the data offer some clues to inform strategy.

UK Government figures show how the various segments of the 'creative economy' performed through the depths of the recession and the subsequent painful recovery. During the period 2008 - 2012,  content producers, software publishers and indeed advertising agencies increased their contribution to the economy by between 30% and 67%.

This diverse array of specialist businesses delivering growth was unified by common characteristics. All had undergone major, fundamental changes in their core offerings. All had developed new distribution channels, new revenue models, technologies or new commercial alliances. In short, they typically had true innovation at the core of their businesses.

During the period analysed, media agencies (Media Representation, SIC 73.12) saw a 15.4% decline in their GVA . Even if the absolute numbers are refutable, the ranking should be a rude awakening for all of us who prize truly progressive thinking in media.

With all this in mind, it is possible to draw up a strategic checklist to drive real, sustainable growth in this vital and once vibrant discipline.
My first draft ran to 23 items but I've edited it down to 8 here...


8. Think 'Integrally'

Think-Integrally

'Media' was once an external domain for advertising and PR. Media now integral to all aspects of a business, inside and out. Even SMEs are becoming publishers; owning and managing content and channels. So, truly valuable marketing requires more than a carefully orchestrated campaign via 3rd party media. Media Agencies should reflect this universality in their services.  In the words of the great Professor Kotler: "The marketing organisation will have to redefine its role from managing customer interactions to integrating and managing all the company's customer facing processes."


7. Move from Mediation to Empowerment

Empower-clientsMedia Agencies first emerged as brokers and intermediaries, offering to deploy their own expertise for buying inventory on behalf of their clients. Today, the line between pure outsourcing and supported in-house capabilities is blurring, not least of all because SaaS tools become commonplace. It's time for new revenue models!  Agencies should consider the value of leasing fishing tackle versus the trade in fish.


6. Help CMOs pitch to CFOs

Convince-the-CFOLike or not, in the kingdom of the beans, the bean counter is king. Woe betide anyone who thinks that finance folks aren't imaginative. However, their creativity is credible because it's underpinned with math(s) worthy of inclusion in a 20-F submission. Bomb-proof financial arguments need to be at the heart of every original idea proposed by a Media Agency. In an intrinsically data-rich industry and with fiendishly clever attribution tools emerging every month, media folks have no excuse to deliver the numbers in every sense. 


5. Make Stuff

Build-stuffIn an era when everyone is a producer, Media Agencies are hamstrung by the fact that they don't make or indeed own anything apart from talented people.  Media Agencies can deliver sustainable  growth and strengthen their position in the marketplace if they can work out what proprietary content, tools or networks they can make and monetize profitably.


4. Build a Proprietary Data Farm

Proprietary-dataIn essence, a conventional Media Agency processes and interprets information. Typically, this is derived from third party data. Competitive advantage and consequently growth in margins can be achieved through proprietary or exclusive numbers. This can be achieved gradually by propagating a few small but valuable home grown datasets or quickly through judicious licensing agreements with partners.


3. Speak a Different Language

Speak-a-different-languageMedia people tend to talk 'meeja'. It's an arcane and often imprecise language that is largely ignored or misunderstood by people in boardrooms. Agencies need use plain English to explain their responses to essential business challenges. Author every proposal, promo and pitch presentation to satisfy the most ardent of marketing sceptics to avoid  vacuous nonsense.


2. Build a Brand

Build-a-BrandStanding out from competitors requires a clear point of difference; an offer of distinct utility, quality or value. How this is expressed by a business and consequently interpreted by its (prospective) clients defines the agency's brand. A strong brand stands up to both rational and emotional scrutiny. It's more than a funky logo and existential strap line.


1. Know your Competitors

IBM-MarketingCoke's enemy is no longer Pepsi. The real competition is not cola but juices, energy drinks, smoothies and waters. Similarly, the successful Media Agency will grow not through pitches against other media agencies. The most serious threats include but are not limited to technologists, management consultants and erstwhile allies, the media owners themselves.

 


Want to to see the full presentation?
Keen to talk through how these recommendations can be implemented?
Feel free to get in touch in strictest confidence.

 

PS. That league table showing 2013 figures in full is available here:  BrandRepublic)