David vs. Goliath: A Rallying Cry for Independent Agencies.

There’s no escaping the media coverage relating to the ongoing threat management consultancy firms present to agencies. The direct impact of this is likely to be felt most by the holding companies and larger agencies. However, the added competition will inevitably have a trickle-down effect that permeates the rest of the market place but increased completion isn’t always a bad thing.

Like most businesses, there are things the consultants are good at and there are other areas where they are less competent. For independent agencies, these weaknesses present opportunities. Chances to differentiate and reaffirm their value, which, if anything, is more in demand than ever.

 

So what do management consultancy firms have in their favour?

Firstly, scale and reach - both in terms of geography and expertise.

At the larger end of the market, most firms will have an international reach coupled with a network of experts in most sectors and business areas. Similarly, consultants are typically engaged by the upper echelons of senior management so tend to have the ear of the boardroom. Marketers are increasingly being appointed to board positions but it’s not the norm.

Consulting firms have always used insight as a marketing tool and continue to be better at it than most agencies. Similarly, they have always been able to attract the best talent and this continues to the case. Retaining the best talent continues to be an issue for agencies.

Consultants have always been more comfortable with data than agencies. This is changing but some shops have been slow to react.

 

Where are the gaps?

In terms of weaknesses, larger consulting firms lack the ability to work at speed. The same could be said for big agencies too but consultants suffer worse with a lack of ability to react at pace. Markets evolve at the speed of tweet and companies need advisers that are structured in a way that allows them to keep up.

Similarly, some consultancies lack the flexibility of agencies. Coming at a business issue with a specific consulting toolkit may limit their flexibility when it comes to certain business problems.

This brings us onto the big one. Creativity. I’m not saying that consultancies aren’t creative, far from it. Management consultants have a great deal of scope for creativity but they tend to fall short when it comes to execution. Consultants’ output can lack creativity and they are less well versed in long-term brand building.

Finally, the democratisation of data poses a significant threat to the consultant’s business model. It is now possible for businesses to access a wide range of data on their own. Off the shelf analytics packages allow companies to start generating their own insights from this data. This is by no means easy and requires significant investment for a business to set up in-house but further narrows the potential use cases for consultants.

Taking into consideration the points above, there are some clear opportunities where independent agencies can offer something unique.

 

Nimbleness

Speed and flexibility are two key areas where agencies come up trumps. Modern businesses need advisors that are able to react to the fast changing micro and macroeconomic environment. Smaller agencies are, by their very nature, nimble and able to react more quickly. This is a significant benefit.

 

Positioning as specialists

More than ever, businesses are crying out for experts. I’m seeing more and more independent agencies making the brave positioning decisions required to thrive in an increasingly competitive market. This level of specialisation is impossible for a large consulting business (or a large agency for that matter) so it’s an opportunity smaller agencies should give serious consideration.

Equally, being independent and fleet of foot means it is easy to adapt when things aren’t working. Changing direction for larger businesses is more challenging and takes time – something akin to a supertanker altering its course.

 

Working to a shared goal

Consultants have always been adept at installing personnel at client’s offices and there are some new breed agencies doing just the same in marketing services (think Oliver). The opportunity for smaller shops is around co-creation and working together. Blurring the lines between traditional agency/client roles and responsibilities.

This new way of working has firm links with a shift in the way agencies think about remuneration. The cost plus vs. value-based argument has been discussed at length for the best part of a decade. Agencies are finally starting to make the necessary changes to cost based on outcomes rather than inputs or outputs (i.e. time or services).

Focusing on outcomes requires more honest conversations, increased transparency from both sides and often leads to a more collaborative approach. The client agrees the desired outcome with the agency and together they work out how they are going to achieve the goal. Both parties are invested in the outcome so how they get there is more likely to be a collaborative effort. It is no longer a client/supplier arrangement – it’s a partnership. Big companies can do this but it comes more naturally to smaller businesses.

 

Delivering impact at speed

My final point is about performance. In its definitive CMO tenure report, Winmo found the average tenure for CMOs is 43 months, and the median tenure is 33 months.

Senior marketers are under increasing amounts of pressure to deliver immediately. Short terms sales activation, digital direct response and long term brand building are all deemed equally important but the pressure for immediate impact often means long term activates are neglected. When the short-term activity loses momentum the cycle continues and a new CMO is hired.

The upshot of this is senior marketers need agencies that are hungry and quick to deliver impact. The need for speed and flexibility mentioned earlier plays a big part in this too. Independents are well positioned to cater to this growing requirement.

It’s problematic to compare consultancies and agencies too closely as the raft of acquisitions is bringing the two worlds closer together. The similarities (and differences) in this instance are a useful vehicle to help frame the opportunities for smaller, independent agencies.

I hadn't intended this article to be a rallying cry but that’s how it’s turned out.

I truly believe there has been no better time to run an independent agency.