As the trend of clients in-housing their marketing continues, it is important that ad agencies remember that change also presents opportunities.
It is a strange deal, but sure enough, one small agency helped their very valuable client to structure and build an in-house agency. The client had already decided to do this when they informed their agency that, over the next nine months, the agency would be losing much of the client’s billings.
“We are much more empowered to do this now than ever before,” said the client. “We need greater control over our data-based marketing efforts. We feel that by eliminating your media commissions and what we pay you to create our ads, we can staff an in-house facility.” (These costs amounted to over $600,000.)
As you may imagine, the agency principal swallowed hard and thought about how much they would lose. But a strange thing happened. Over the course of the next two months, the client asked the agency so many questions about how to do the conversion—software, personnel qualifications, even decor—the agency finally put together a full conversion plan for them and presented it. Guess what? The client accepted the agency’s plan just as they would have from a consultant, and the agency made about $55,000 in pure fees just to help the client make the conversion.
After the conversion was completed, the client decided there was too much to comprehend in one year, so they kept the agency on retainer to help them further. We’d wager that this agency keeps consulting with this client for a long time.
What are the lessons here?
Customer-data and marketing technology are increasingly being pulled in-house by clients. Clients are more empowered than ever. They generally don’t like the old full-service agency relationships. They like to à la carte outsourced projects.
Strategic agencies know they can always proactively propose a plan. They don't need to wait to be asked.
Consultancies can charge more than a mere ad agency. Learn to sell the higher value of a consulting relationship.
Recognize that clients are trying to transform their marketing to stay competitive. Agencies’s job is to help clients be competitive. The bigger a help you are, the more likely you can retain the client relationship.
As your agency rolls with the in-housing trend, recognize where your own weaknesses may be influencing client marketing relationships. Agencies tend to claim to be better at data-based marketing than they actually are. If you have a weakness in this area, either get better at it, or find a great partner who excels with the tech-stack clients need.
Don’t get mad or even sad when one of your clients decides to go in-house. Hang in there. Chances are there is a new opportunity for you. Maintain the relationship, but at a higher level than your old one.
Learn how to be a consultant and sell consulting services. Clients just love to hire consultants.