Claiming an area of focus has long been an advertising agency business strategy. For many agencies, areas of focus evolved naturally, with successful work for one industry client leading to referrals or hot prospects in related industries. But in recent years, core competency has become a survival strategy for smaller and mid-sized agencies.
A two-year Bain & Company study concluded that a “narrower focus and concentration of resources on a single core business … proved the most frequent road to sustained, profitable growth.” Many Second Wind members can attest to how well the core competency model works for achieving growth and higher profits. It’s also a wonderful way to explore and serve an agency’s purpose. Purpose has become a cultural need, a recruiting and employee retention tool, and a “fountain of youth” for creativity built around a mission.
Focusing on a core area of expertise allows agencies to:
Develop a higher level of expertise – “best in class” knowledge that is valuable and hard to copy.
Demonstrate that knowledge via thought leadership—videos, white papers, participating in panels at industry conferences, sharing testimonials and references, etc.
Set your prices accordingly… but stay focused on VALUE. If your only point of differentiation is your consulting fee, you revert to being a commodity. Use your expertise as a tool to bypass procurement people and go straight to the “strategic buyer”—the decision maker to whom the procurement people report.
Invest in resources, recruiting, hiring and training that support the core competency.
Attract more and better clients interested in or needing that core competency.
Gain competitive advantage over agencies that spread their focus over too many services and competencies.
Develop strategic partners and collaborators. Your supporting “ecosystem” includes trusted generalists, businesses with complementary skills or in complementary markets, and on occasion, “frenemies” to whom you refer business you deem not suited to your niche focus and abilities.
Target new business prospects identified as needing the core competency, and willing to allow a deep-focus partnership. Refuse clients who claim to want agency services but keep the agency at arm’s length. Always pitch by emphasizing your knowledge and expertise.
Work continually to improve and sharpen your expertise. If you don’t hone your skills, you risk a competitor challenging your niche dominance.
Manage growth through planned development of a narrow focus. This includes careful analysis when tempted to “expand” into related business niches. Some neighbors should stay on nodding terms, and not be invited into your yard.
Having an ad agency core competency is the smart play in an era when general marketing know-how is widely available, clients have taken much lower-level marketing in-house, and a general capabilities pitch is impossible to schedule with appointment-resistant new business prospects. Your niche focus serves to attract clients rather than you having to constantly pursue, begging for work.
Do one or two things exceptionally well. Build the agency brand around those narrow areas of focus. Promote and sell like hell. Count the profits.
