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June 18, 2021

By Mark Duval - The Duval Partnership

As the post-COVID era becomes a reality, will your agency emerge like a phoenix from the pandemic’s ashes? Or will it struggle its way into 2022, fixated on survival?

Thankfully, it looks like we are finally turning a corner, though many businesses continue to be weighted down with the financial after-effects of a challenging year. Before you get too caught up in the "new now," consider where you will be at the end of Q4. What do you need to do now to be where you want to be then?

Four things on the immediate horizon will shape where your agency sits at the end of 2021. How will you respond to them?

1. Re-establishing client boundaries

The unique circumstances of the past year changed client-agency relationships. Agencies have given more, and clients have become accustomed to 24/7 accessibility and instant responses. The challenge for agencies is how to re-establish boundaries without risking the relationship or the account. As Jennifer Faull observed in The Drum last week, agencies have taken various approaches to this situation, with mixed results.

Lindsay Rittenhouse recently covered a related issue for Business Insider; client expectations for ad agency travel. The takeaway is that even when the client's travel requests are unnecessary and unreasonable, agencies have little power to push back regardless of their preferences. If agencies choose not to travel, they risk the relationship and the account.

The underlying issue is that agencies are undervalued and lack power in client-agency relationships. The more they overpromise and compromise margins to secure business, the greater their vulnerability.

With many of their client accounts remaining question marks amid a rush of reviews, and with pitches being so cost-prohibitive, agencies are incentivized to bend to the breaking point to accommodate clients rather than risk jeopardizing an account. Agency leaders are moved by fear, while agency employees pay the price.

To a great extent, agencies are at the mercy of their clients’ good graces and willingness to respect reasonable boundaries within the agency-client relationship. Agency leadership must prioritize re-establishing power in those relationships.

The risk of not doing so is that they will continue to be stretched beyond reason, continue to be devalued and vulnerable, and they will lose accounts along with overworked employees. Some proposed solutions covered by Faull include starting relationships with mutually written charters and charging clients time-and-a-half for overtime.

2. Overcoming agency burnout

Burnout is a hot topic these days. Though work-life balance has always been a problem in the advertising industry, it’s been exacerbated by disappearing agency-client boundaries, the 24/7 work expectations that arose during the pandemic, and the post-pandemic flood of agency searches.

The big difference now is that employees have options; they have the power. Many of them are leaving holding companies for independent agencies, leaving agencies to go client-side, or leaving the industry altogether. Digiday has dubbed it “The Big Quit.”

The risk to agencies is the actual cost to replace an employee, the potential damage to quality of work and client relationships, the loss of skills and knowledge, and the inability to take advantage of new business opportunities amid employee turnover and burnout.

There are a couple of different ways for agency leaders to alleviate this issue. One is to protect employee work/life balance and offer benefits and perks designed to keep employees happy. That might include work-from-home opportunities, vacation time, higher salaries, bonuses, DE&I measures, and ongoing training and development, to name a few examples.

The other is to be more targeted in the agency's pursuit of new business. The demands of pitching new business take a significant toll on employee well-being and are a major contributor to employee burnout. Don't waste time on unqualified opportunities or new business that you are unlikely to win. Protect your team members by saving your resources for the best opportunities. Finally, think about what you can do to support changes to the pitch process that are more tenable and respectful of agencies.

3. Evolving for changing landscapes

New business efforts suffer when agency leaders are consumed with fighting immediate fires. Those fires may be on client accounts or internal demands, but they are often related to larger issues in the advertising industry. For example, threats posed by consultancies to traditional agencies; or by independent agencies to holding companies; the devaluation of agencies; whether creative is sufficiently tied to business outcomes; changes around DI&E, sexism, ageism, colorism, neurodiversity; and many other issues impacting agencies and agency new business.

There is a lot of noise around issues for agencies and the advertising industry, in general, to "fix" and adjust for. Despite the legitimacy of these issues, the impact can be overwhelming and even paralyzing for agency leadership, particularly with limited bandwidth and resources. Perhaps most discouraging, the same challenges recur and vie for attention seasonally, annually, and even over decades — because they haven't been adequately addressed.

The question for agency leaders is, how can you prioritize issues and allocate limited resources in a way that goes beyond giving superficial attention and which creates meaningful change?

Most importantly, don’t take a head-in-the-sand approach to issues that your agency must deal with. They will not resolve themselves on their own. Many times, facing encroachment on their business (from consultancies or in-house agencies, for example), agency leaders respond with denial, waiting for the “pendulum to swing back,” or for clients to realize their mistake and come back around to traditional agencies.

Years later, after ignoring and dismissing evidence and facts, these leaders may finally accept the reality of the situation, only to find themselves behind the curve and poorly equipped to deal with the underlying client issues.

Instead, agency leaders should focus on practical, concrete solutions that prioritize efficient use of resources for maximum impact. Be deliberate about side-stepping common agency traps like discussing problems ad infinitum without taking meaningful action, and performative gestures designed to benefit the agency more than the cause.

The risks of not evolving your agency in response to changing landscapes include the inability to attract and retain employees, degrading competitiveness, and loss of business opportunities. For agencies who make their living by helping clients connect with audiences, being perceived as out of touch and irrelevant is a major new business inhibitor. Similarly, being non-responsive to what clients say they want from their agency partners will also hurt agency new business.

4. Avoiding a short-sighted outlook on new business

With all of these other competing issues demanding agency leaders' attention, especially amid employee burnout and attrition, it is tempting to push off agency new business efforts. But the worst thing an agency can do is mistake their current opportunities and workload for the opportunities they will have 6-18 months out. It's important to avoid complacency and look at the agency's new business situation with a longer runway.

Most of the agency-client relationships you establish this year will be smaller in scope; therefore, they offer less financial security. Additionally, more accounts are likely to turnover this year as more marketers plan to take their accounts into review. Always plan for the worst — where will you be if you lose your top account? Your top two accounts? Keep that in mind before you pause your internal new business efforts.

The #1 killer of any new business program is a lack of consistency.

Remember that new business outreach is a long game. You have to be making calls and emails on an ongoing basis with a 6-18 month lead time before you can expect results. You must nurture opportunities and be ready to follow up and follow through when they have a need.

If you wait until you lose an account and need the replacement income immediately, that will put you in a desperate position. The risk is that your agency will be forced to take undesirable work and be in a worse place to compete for talent at a time when creative candidates have unprecedented options.
Parting thoughts

How your agency addresses these four things, re-establishing boundaries, employee burnout, evolving for changing landscapes, and keeping a longer view on the new business horizon, will greatly affect where you sit at the end of the year.

Those who are proactive about tackling them head-on can expect to see pay-off within their organizations and through new business opportunities. Those who ignore them can expect to see the same challenges still on their plate next year — plus new ones — and likely with fewer resources to address them and amid greater stress on employee and client relationships.

 

 

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