Busadmin 780 - Media Agencies - Changing our growth priorities PDF

Preview

Summary

Summary essay on how media agencies pursue growth and opportunities to diversify from the current business model...

Description

Media Agencies: Changing our growth priorities Matthew Vogts

Transformation is a common theme in our industry. Digital disruption, fragmentation of capabilities and the growing complexity of work all encourage a significant change to our business model. However, through all of this, we have one clear priority: we need to take a more holistic approach to growth and how our businesses deliver it. Simply put, we need to shift our focus from chasing more, to making more of what we have. How do media agencies grow now? As an industry we tend to talk a lot about “product” and that’s reflected in the way we like to scale our businesses. Simply put, we need to shift our focus from chasing more, to making more of what we have. Our focus is on selling what we have (our products) to new clients. Yes, we’re making new products and then we try and sell these to as many clients as possible too. This product-centric approach means that revenue growth comes from chasing market share. We measure this in billings and new-business win ratios. More clients means more product sales. While this approach has definitely worked, it’s also driven an industry dynamic which has done us no favours: the competitive pitch. When we’re all looking to grow through acquisition we prioritise these events creating a few shared problems: • • •

it limits our differentiation as businesses: we’re all responding to a set RFP at a set moment in time. wins and losses come with high acquisition costs: we’ve got resource burning midnight oil. • reduces the overall client lifetime value, thanks to competitive negotiations focused on costs.

What’s the alternative? Relooking at our growth priorities If we placed more of an emphasis on profit, over revenue, we’d end up with list of priorities that looked something like this: • • •

• Organic growth: how do we expand on the services we offer existing clients? • Retention: how do we keep our clients for longer? • Horizontality: how do we integrate with other marketing service providers?

•

• Then, finally, acquisition – how do we win new clients?

Prioritising organic growth means working with clients to create bespoke products and services that meet their individual needs. It’s less about our products and more about their problems. As Lindsay Pattison, CEO of Maxus has often called it: we need to focus on what we have and act like a business partner and not a supplier. This can be a difficult thing to do but it creates deeper, more profitable relationships and overall, reduces acquisition-led growth pressure points. How do we do more of this? We can start by getting clear on the clients to focus on and then asking them what their biggest problems are. ‘Simple in theory but difficult in practice’ is the learning from management and technology consultancies attempts at this (IBM, Accenture, Epsilon). However, it has also elevated them into leadership positions as the largest digital marketing providers (Adage, 2016). That’s because organic growth won’t come from all clients. In fact, it needs laser-like focus on the clients that matter because, like most industries there are a few high-value growth clients that will deliver a majority of the profit here. But based on what we learn and the untapped problems we identify, we can work on ways our agencies and our partners can deliver to these needs creating more depth and opportunity in our existing relationships....