Many agency principals and new business strategists are now reconsidering agency specialization. In a diverse marketplace, identifying and leveraging agency strengths can help you grow your agency business. The pressure to specialize has never been greater. AI has given clients a credible reason to believe they can handle more work themselves, and it has commoditized a lot of executional work that agencies used to own. The agencies that are surviving and growing in this environment share one thing: they have something AI cannot replicate. Genuine category expertise. Earned relationships. Institutional knowledge of a specific industry or buyer. Specialization is no longer just a positioning strategy. It is a survival strategy.
It is increasingly clear that in order to succeed in today's market you cannot be a generalist agency anymore. This is difficult to say, because many agencies built strong businesses as generalists. But that was then and this is now. Your agency may not possess the in-depth consumer and end-user knowledge of the biggest players in your category, but you do need to find a way to put forth a core competency that convinces prospects and clients that you have a set of skills and things to offer that others don't. Including the algorithm.
Identifying and building on core competencies to position an agency is a well-established practice. But there are many ways to specialize.
Specializing by Capability
Core competencies built on capabilities focus on what you do rather than whom you do it for. Some examples of this include:
- Brand Development
- Content Strategy and Creation
- Customer Loyalty and Retention
- Digital Experience and UX
- Performance Marketing
- Retail and Shopper Marketing
Specializing by Industry or Activity Type
Traditional areas served by specialized agencies include pharmaceuticals, investment and other financial services, travel, hospitality and tourism, theatrical and entertainment, recruitment, and the legal and medical professions. More recently, agencies have built strong positions in categories like technology, sustainability, healthcare marketing, and financial services for emerging markets.
Many agencies already have enough experience in an industry to qualify as having a core competency without fully realizing it. An agency that has served fifteen or twenty clients in the same vertical over the years is not a generalist in that space. They are an expert. Even if the rest of the client roster is diverse, that depth of experience in one category is something worth claiming. A prospect in that industry will respond to it. A generalist cannot compete with it.
Deep industry knowledge gives your agency a specific technical edge that cannot be faked. You know the regulatory environment. You know the buyer. You know what has been tried and what has failed. That knowledge is worth real money to a prospect.
A Methods-Based Approach
If your agency lacks expertise in a category or capability, consider whether your secret ingredient is the very way you solve problems. Your agency's creative approach may be your best claim to positioning. Other agency methodologies may offer core ways to develop solutions for your clients:
Topline: Does your agency have the research abilities to dig into clients' areas of need? Can you canvass an existing panel of industry experts and customers to generate insights?
Bottom Line: Do you approach assignments with a clear understanding of clients' P&L and financial statement implications?
Order Flow: If you want to really understand a business, ask them to explain how an order moves through the company from entry to sales completion and delivery. Knowing the client's method provides an inside view to innovating for efficiency and improved customer focus.
Purchase and User Experience: Has your agency helped clients solve important customer service, satisfaction, and retention issues? Many clients need expert help in providing a satisfactory post-sale experience.
Put Specialization to Work for Your Agency
Here are some simple steps to get started:
Identify Areas of Interest and Experience. Be aware of your staff's previous employment, education and avocations. Network through your staff to friends and family with experience and insight in specific industries or activities. Work with local merchants to develop insights.
Leverage Local Experts. Access the knowledge and talents of professional and academic connections: authors, documentary and broadcast producers, college faculty members. They can offer consulting assistance or join your team when needed.
Get Involved in the Channel. Consider working with local distributors and merchants to gain an understanding of how products and services reach their markets and ultimate users. Develop program templates for innovative programs you might offer industry wide.
Pick Your Passion. Focus on subjects with strong innate appeal to agency staffers. Does someone on your staff obsess about food? Do you have a frustrated lawyer, doctor or nurse practitioner on your staff? Can any non-profits you volunteer for be springboards to opportunity?
If the Shoe Fits
Specialization is the ultimate positioning tool. In essence, your agency stops trying to make the shoe fit and only seeks shoes that come in the right size and style. Of course, you give up some options in exchange. First, category and agency stability may be affected if the industry falters or the quality of your work is called into question. It's a small world when you don't have the comfort of diversity to buffer you. Second, giving up a broader client list may reduce perspective, cutting-edge thought and your objective, third-party point of view. Third, recruiting and retaining staff with desired industry knowledge becomes more difficult and expensive. And finally, you may have to selectively pass on business from otherwise desirable clients.
On the other hand, you'll gain a number of benefits. You'll develop closer bonds with key industry figures and clients, focus and concentrate your resources, and acquire deeper industry knowledge. This knowledge gives your agency an insider's leg up in competing for new business within the industry. It also helps you hit the ground running on any new assignments or pitches.
The decision to specialize, whether through key staff experience, organic agency growth serving a particular vertical, or standout success with one particular client, has paid off for many Second Wind member agencies. Take a hard look at your agency. Can you claim a core competency that will reposition your agency for increased opportunity and future growth? AI can execute. It cannot expertise.
