New Business Support - An Explosion of Entrants

The marketing agency sector – just like any other - has a continual need for more clients. It has encouraged, even nurtured, its own marketing and new business support industry, which has developed more rapidly in the UK than it has alongside other professional services sectors in order to feed this demand. Today, the new business support industry for marketing agencies is sizeable and as a reflection of its nature, is not afraid to sell its services energetically. As a result, there are few agencies in the UK still unaware of its existence or of the rapidly growing number of start-ups now knocking on their doors.

It is now thirty years (fifty in the US) since companies first started offering new business support services to marketing agencies. The earliest models were consultancy-based; a handful of well-connected individuals brokering relationships between clients and agencies. This evolved into the search and selection sector and others continuing to provide classic business development consultancy: M&A, pitch consultancy, capital raising and management exit strategies etc.

Around fifteen years ago in the UK, a new model was added, which offered telephone–based, lead generation appointment making. Just three or four companies offered an alternative for those agencies that couldn’t find an internal solution to pro-actively shape their own portfolio by making direct contact with the organisations they wanted to work with. Then ten years ago, Rainmaker arrived - the first integrated new business consultancy, offering marketing consultancy, integrated with proactive lead generation programs.

The last five years, however, has seen an explosion of new entrants of all types: search and selection, telephone-based, email marketing, integrated and most recently - and perhaps most excitingly - insight-led prospecting. All of which have thoroughly fragmented the landscape and in places, especially with the telephone-based models, driven a degree of saturation. Some agency new business departments are getting ten calls a day from both established suppliers and hungry new kids on the block. Today, the picture (though fragmented and in part saturated) is not complicated to understand.

The following outlines a balance of opinion: -

 

Search & Selection Intermediaries

In the USA, search consultants (not to be confused with pitch consultants below) are a dominant force with up to 90% of pitches in certain disciplines using them and with the sector led by companies like Select, Agency Assessments & Pile. In the UK, we have for example The AAR (founded and headquartered in the UK), Haystack and Agency Insights - and despite all the changes to the new business support sector, many organisations continue to buy search and selection, impressed by the convenience it proposes.

Some agencies continue to do well by it, but most view it as an intervention that disconnects them in certain cases from direct contact with the decision-makers. To an extent, this makes search and selection an offer they can’t refuse if they want to be in the running. How many times have we heard new business directors describe participation as ‘a necessary evil’ or that they are forced into a ‘game of roulette’? Although welcomed by many clients, especially in the US, where search consultancy is a dominant force accounting for decisions on the majority of major ad pitches, in the UK there have been signs of a backlash, with some high-profile defections – e.g. JWT. We note the AAR stepping up its efforts to increase market share in the USA and diversifying into other new business-related fields away from the core search and selection function.

On balance, search and selection should be viewed as part of the mix, but an investment that should only be countenanced if you are prepared to properly support their activity with the materials they request and to court/remind them frequently about your capabilities. We have heard many reports where agencies feel they are buried and forgotten about while favourites continue to appear on pitch lists. Of course this may just be a lot of griping. Further, if you are a small to medium sized agency with limited reputation awareness, this may not be the avenue for you.

 

Telephone-Marketing Lead Generators

It never ceases to amaze us; the irrational fear people have of speaking to strangers on the phone and then their credulity when it comes to trusting others to do it for them. We heard someone say the other day that there’s a new business development agency that offers to perform cold calls live in front of you to demonstrate their ability. Others (two that we know of) present themselves as “silver-tongued rottweilers” - as if this is a good thing! This attitude is at the heart of the sector and it continues to both limit and confuse the market in terms of what is achievable - and indeed feasible. Some people who use the phone for a living are naturally optimistic. They have a high degree of self-belief and this may colour their objectivity when it comes to well thought-through client solutions.

The first trend indicates a polarisation between the pure-play “silver-tongued rottweilers” – and the integrators that use the telephone as just another tool in the mix. The second trend indicates desire to establish value-add by bolstering telephone-based offers with consulting propositions.

 

Email Marketing

Despite unequivocal evidence from decision-makers concerning the dangers of email marketing for high-value service providers like marketing agencies, there has been an increase in the number of suppliers pushing email. For the companies providing these services, the advantages are that it’s a cheap, no-brainer way to reach out to a large number of potential customers. On the other hand, for the vast majority of decision-makers, it’s untailored spam - and the definition threshold of ‘permission-based’ is generally set way too low. On balance, you might get lucky, but it provokes a largely negative reaction and is far too blunt an instrument for marketing services. For example, one marketing decision-maker gave us this very typical response: "I hate receiving email. I get more than enough internal ones let alone external. It’s just like getting more spam and if I note the name of the agency it certainly puts me right off them.”

 

Pitch and Business Development Consultancy

Each discipline tends to have business development consultancies that specialise in it. In the UK PR sector, for example, there’s Madsen Gornall Ashe or Pembridge Consultants, offering M&A and MBO advice, strategic marketing consultancy and founder exit strategies amongst other things for PR agencies. There is also an increasing number of ex-agency new business directors setting up to provide pitch consultancy, and these compete to an extent with the added-value services at the search and selection intermediaries who also - for obvious reasons - regard themselves as pitch consultants.

 

Integrated

New business suppliers have been providing a degree of integration to their services in the UK for the last ten years, combining marketing consultancy, prospecting services, management consultancy for new business departments, branding and designing communications. During that time, we’ve seen the very best integrators not only advising on but also creating brand positioning for marketing agencies, providing strategic new business programmes that are far more likely to connect agencies with their markets in a comprehensive and meaningful way. The advantage of this approach is that it is more scientific and that it removes to a large degree the elements of risk associated with telephone lead generation alone. The drawback is that it requires long-term and sustained commitment to come to fruition, which is not as easy as it sounds given the 49% churn of new business people within marketing communications agencies last year.

 

Insight-Led

In just the last three years, the tools for the insight-led approach spearheaded by Rainmaker Consulting have become available on a cost-effective basis via the new business intelligence products of Pearlfinders. This enables marketing agencies to understand - for the first time - the intentions of a large number of marketing decision-makers, as reports on their companies and brands are featured in the press. The insight-led method requires ever-improving relevancy and tailoring of the specific demand of individual buying points to the service supply of each agency. It is like proactive search and selection, where if the initial planning process has been robust enough, the pitch process is continually ongoing until you win the business. Increasingly, marketing agencies are realising that clients are not buying them as a ‘type’ or ‘discipline’ (offering ‘integrated’ is just an easy cop-out) but as a specific marketing fix to the precise business challenges they face, no matter how strategic or how tactical they may be. The advantage of this is that resources can be intelligently matched to where they’re most needed, so that cost-effectiveness is markedly improved and agency brand awareness building becomes more scientific. The downside is that agencies will need to react to specific cases with tailored communications - and so some commitment is required. Having said that, if an agency can’t commit to new business then it may have other problems to address first.