How agency business growth can necessitate change

Fundamentally the business model has been the same for decades in just about every agency. However, there are the market and industry trends that threaten this tried and tested model to its limits, but don’t panic yet! This does not necessarily mean you have to change your business model entirely, but rather take a more innovative approach adopting an increased openness to form partnerships and collectives.

As marketing becomes more of a priority for C-suite executives, there is evidence of a more holistic approach that includes marketing and consulting. The current merger and acquisitions in our industry reflect the ongoing reshaping of the business landscape and provide a new model for how consultancies and agencies will do business moving forward, whether that’s merged under one roof and brand or via strong collaborative partnerships.

In research with our partners and beyond, we examined some of the current influences that might instigate a future need to adjust or more radically change the traditional marketing agency business model.

If ‘outsourcing’ got the agency industry excited in the nineties, the term ‘in-housing’ is getting them worried now. However, it needn’t be that way. It might mean that agencies have to consider a slightly different way of working with clients, but the principals will remain the same.

In an age where digital and social tools are prominent, SME, and many more sizable enterprise B2B companies are more frustrated than ever because they’re not getting what they want from their agency. B2B marketing agencies are frustrated as well, as their clients often make complex, and often confusing demands of what they want.

Outsourced CMO Eddie Reeves says, “The businesses that will be successful as this confusion grows will be those who proactively build into their structure, function, and culture an overt bias towards multidisciplinary execution. By bringing to bear seasoned professionals from outside their organisations who offer deep levels of proven expertise across a wide expanse of sectors and industries, they can more quickly and efficiently realise significant, profitable growth.”

For the single location owner-managed agency this is a tricky proposition to fulfil.

So rather than seeing ‘in-sourcing’ as a threat, our partners are exploring the opportunities it can bring to get closer to their clients. We hear of clients looking to ‘in-source’ design, which is forcing some partners to look at new models to help get closer to their business, including working from their offices. While bigger organisations like Microsoft are ‘in-housing’ specific marketing activities driving the model to a more consultative approach from pure executions, where there is, in fact, higher profitability.

On the flip side, we hear far more instances of partner-marketing as a complete outsourced service, which could provide substantially increased revenue opportunities for a highly collaborative organisation like BBN.

Some partners believe the business model could change as they move to operate more like a ‘demand centre’ for clients, allowing them to outsource operational marketing tasks over long periods of time.

Our partners are reporting higher demands for alternative ‘ways of working’, there’s a new generation of labour force that puts a higher emphasis on more flexible working conditions including working from home. This, of course, isn’t always practical within some marketing disciplines, but in others, it could provide agencies with a far more cost-effective and attractive solution in a highly competitive employment market.

We’ve taken considerable steps over the past three years toward a more global brand consolidation for BBN. This means that from a business model standpoint, this allows our partners to genuinely and authentically market the global expertise, platforms, resources, case studies, client base, etc. of BBN in their local markets (without having to explain the relationship between their agency and BBN first).

 

Need help managing change as you grow? The consequences of growth can be challenging for the owner-managed agency, Click to download the full whitepaper

If you want to know more about other ways BBN can help your agency, then please contact us.

 

Thanks for the photo  Chris Lawton on Unsplash

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