Agency Searches Have Become an Exercise in Risk Mitigation

CMOs are under more pressure than ever before

Research from Korn Ferry shows that the average tenure of Chief Marketing Officers (CMOs) continues to be the lowest among the C-suite, particularly in the consumer & tech industries.

Data and modern tactics have raised expectations for what marketing can accomplish. Everything is now expected to be targeted, measured, and fast. CMOs need to prove immediate results, or they are out.

At the same time, attribution reporting has created a false dichotomy between “performance” and “brand” marketing, which generates even more challenges for marketers. According to Harvard Business Review, senior marketing executives surveyed at the 2022 Cannes Lions International Festival of Creativity about their burning issues voted “managing the tension between brand and performance marketing” twice as many times as any other issue. And agencies aren’t helping, as most of them have not yet figured out how to effectively and efficiently work across the entire customer journey.

An exercise in risk mitigation

It’s no wonder that new CMOs, trying to prove themselves, will often kick-start an account review or directly search for a new agency. They need to know they have the right capabilities and agency team in place when they come aboard and start executing their plan.

In-housing is another significant trend, with Forrester reporting that the number of in-house agencies grew by 7% since 2019. Driven by short-term pressure, modern marketers believe that marketing effectiveness now requires bringing the creatives closer to the data and the product teams. As a result, high-level strategic counsel has shifted from the domain of “lead agencies” to internal departments.

“I’ve always been a proponent of in-house… I’m a firm believer that creativity should be at the table with products, with designers, engineers, marketers, all working from the same insight.” - Hiroki Asai, Head of Global Marketing @ Airbnb

Marketers need creative partners that can deliver from day one and can’t risk hiring an agency that will require time and effort to set up properly. In this context, “relevance” has increasingly become the top filter of criteria for clients when searching for an agency. They are looking for someone they can trust, that they can sell into leadership, and who gives them confidence that they can deliver results within a condensed time horizon.

Agencies’ positioning doesn’t fit the bill

Back in the old days, it made business sense for agencies to maintain a broad positioning which could be adapted to fit any potential account that came through the door. Winning such an account secured the volume of work and financial resources to make this way of doing business worthwhile.

But now large, full-service retainers are not walking through the door as they used to and, even if they do, they are now more vague, less valuable while requiring just as much effort to win. A viable alternative is project-based work which comes with some clear advantages. Many project engagements require significantly less effort to win while allowing an agency to do its best work afterward, which oftentimes leads to better client-agency relationships and healthier business.

However, to be able to respond to such opportunities, agencies need to rethink how they position themselves. This doesn’t mean compromising on creativity, but rather crafting a positioning that is specific and relevant for the needs their clients now have.

Filters of relevance

In a world where all marketing needs to deliver immediate results, agency searches can’t be a risk-taking exercise. The entire process is about identifying the partner most likely to succeed, based on applying specific filters of relevance:

1. Consumer understanding
2. Category experience
3. Specialized expertise
4. Personal relationships
5. Physical location

Let’s go through all these filters and see how they can help us improve our positioning.

Consumer understanding

Is your agency knowledgeable about a certain “consumer type”? It probably is. The best campaigns grow from strong consumer understanding - a deep and nuanced grasp of behaviors, preferences, needs, and pain points. Grouping your past campaigns that addressed similar audiences and connecting the information using systems such as databases allows you to build a good understanding of particular consumer groups.

And there’s more you can put on the table. While brands may possess extensive data on various consumer aspects, they often lack the nuanced understanding of the cultural context in which these consumers are shaped.

A young agency like Seed, presenting itself as being dedicated to connecting brands with youth audiences 'on campus, in culture, and beyond,' has proven its relevance with global companies such as Spotify, Asos, Adobe, and Amazon.

Category experience

A similar approach can be taken to identify the categories you master. Work done for past and existing clients brought rich experience and, by strategically mapping out and presenting this experience, your agency can attract new clients.

An agency that’s done work for Lipton, Dr. Oetker, Surf, and Iams can be trusted around CPG brands.

Specialized expertise

Some agencies have strong expertise in a particular service area, from traditional brand campaigns to eCommerce experiences and applications leveraging generative AI and large language models.

Huge in New York goes one step further with more “productized” offerings, like Huge Moves (where they help brands define new and radical strategies for business), the New Horizon Validator (where they refine and quantify an existing growth idea), or the Category Crasher (identifying new ways to disrupt a category).

Personal relationships

In business, and even more so in client-agency relationships, people trust people. It’s no surprise that some marketers are now introducing clauses in their contracts to safeguard them against serious changes to their agency’s account team. And clients leaving an agency to follow a person or team moving somewhere else, despite limitations such as lower resources, regularly make the news.

In fact, strong relationships weigh so heavily that agencies should start building out from this area before considering any other. And remember: it’s not only about existing clients, it’s about all people your agency has had a good relationship with. That’s why CRMs are so important - because they enable storing and managing all your important relationships.

Physical location

In the past, clients and agencies shared a high-touch relationship. Of course, since COVID-19, many clients now settle for the simple video call, but direct eye contact still matters, especially in critical moments.

Being in the same timezone as your client, and ideally in their backyard, offers the advantage of aligning with their working hours and catering to their needs more seamlessly.

In conclusion

Marketing leaders are now more pressured than ever and need agency partners who can deliver from day one. In this context, agency searches have become an exercise in risk mitigation, looking instead for those agencies who can be trusted to meet specific needs such as consumer understanding, category experience, or specialized expertise, to name a few. And if the client has had a great working relationship with key people on the agency team in the past, expect this to weigh heavily.

Thus, agencies need to rethink their positioning, switching from the broad approach of the past to one that gets them through clients’ filters.

Get past the filters

Sail can help you craft a positioning that resonates with all the common filters of relevance used by clients. Take our free new business assessment today and we can schedule an introduction session to get started.

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Sources

• https://www.kornferry.com/about-us/press/age-and-tenure-in-the-c-suite
• https://www.wsj.com/articles/average-cmo-tenure-holds-steady-at-lowest-level-in-decade-11651744800
• https://hbr.org/2023/05/how-brand-building-and-performance-marketing-can-work-together
• https://www.fastcompany.com/90812024/why-airbnb-sees-in-house-advertising-creative-as-the-key-to-brand-success
• https://adage.com/article/agency-news/inside-brand-agency-relationships-more-account-reviews-expected-2024/2536801
• https://adage.com/article/agency-news/why-agencies-are-quietly-laying-mid-level-and-senior-employees/2539371
• https://adage.com/article/agency-news/aor-over-new-business-pitches-rise-revenue-them-falls/2468911

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