2022 Marketing trends (PART 2) with Drew McLellan

Speaker 1:

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Agency Management Institute’s Build a Better Agency Podcast, presented by White Label IQ. Tune in every week for insights on how small to midsize agencies are surviving and thriving in today’s market. We’ll show you how to make more money and keep more of what you make. We want to help you build an agency that is sustainable, scalable, and if you want down the road, sellable. With 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey, everybody. Drew McLellan here from Agency Management Institute. Welcome back to the podcast. This is one of my solocasts. So if you’re a regular listener, last month, you heard me talk about half of the trends that we’re seeing happening in agency life in 2022. And in this solocast, I’m going to wrap up that series by telling you about the rest of the trends that we’re talking about inside our peer groups and other places.

So before I jump into that, I just want to remind you that we have some great AE bootcamps coming up. In June, we have the advanced AE bootcamp, and in August, we have the entry-level AE bootcamp. So the advanced one, that’s for people who are five or six years of experience. We have people coming with 20 and 30 years of experience who say that they learned a lot. So I feel good about that. And then the entry-level one are for people who are just starting their career, first few years, account coordinator, project manager, junior AE, whatever title you may give them. I would say somebody who’s probably four years or less into the business. So we would love to see them there. Both workshops are in Chicago, and we’re ready to teach if they are ready to come and learn.

All right, so let’s talk about some of the other trends. So in the episode that I did a month ago or so, we covered money, and we covered clients and biz dev. And so now, what we’re going to do is we’re going to talk a little bit about owners and some trends I’m seeing with them, with employees, and then some tactics that agencies seem to be having great success with.

But before I do that, remember every solocast, we give away a seat to one of our workshops. So you can attend one of our workshops live, or you can have a seat in one of our on-demand workshops. And the way you get into the drawing to win one of these, and remember the workshops are two grand plus, so it’s a pretty good prize for doing something for three minutes, all you have to do is leave this podcast a rating or review wherever you download your podcast, and then take a screenshot of it, so I know that it’s you.

So email me the… And you can say mean things, [inaudible 00:02:58] my feelings, but you can, if you want to, or you can say good things. So you’re not being judged on the quality or the number of stars in your review. All, anybody who leaves a review will go into the drawing, and you stay in the drawing until you win. So sooner or later, odds are pretty good for you that you’re going to have a free seat at one of our workshops. So just email me the screenshot of your review and you go in the drawing, that’s it.

So this month, Leslie Osborne is our winner. So Leslie, I’ll be reaching out to you to see which workshop you would like to attend, or if you’d like to take one of the on-demand courses. So congratulations to you, and thanks for the kind review. So it was a good one. So it was nice.

Anyway, let’s get to the trends. So on the owner front, here are some of the things that we’re seeing. First of all, all of you are tired. And if you are in the day-to-day, if you’ve gotten sucked back into client work and all the things that you had escaped from as you were actually doing your job, the agency owner job, but if you’re really burning the candle at both ends, you are exhausted. All of you, whether you are back in the client work or not, all of you are tired, and a lot of that is because for the last two years, we’ve been reacting. We have been on guard waiting for the other shoe to drop, and we’re exhausted from (a) being constantly on alert, (b) from having to react and pivot very quickly.

But honestly, I think the biggest thing is we’re tired of being afraid. When COVID started, we were afraid of COVID and figuring out how to work from home, and the clients were leaving, and we were watching our revenue go down the drain. And then as we got back kind of up on our knees, then we were worried about profitability and sustainability. And then we sort of felt like, okay, things are getting a little better, and then the employees started leaving, and it was hard to find new employees.

And we chose this business because we like the unpredictability. We like the energy and the endorphins at fire when we have to solve problems, but not every day and not at such a heightened level. And so the reality is we have been tense and on guard for two years, and we’re tired. So many of the decisions we’ve made have been either in reaction or based in fear, like, you know what, somebody’s asked me for a big raise. I don’t want to give them the big raise, but I’m afraid if I let them leave, it’s going to start a whole cavalcade of people leaving. Or I have a good employee, but they’re demanding that they work from home five days a week, and that’s not our policy, but they’re a really good copywriter and they’re hard to find. So these are the kind of decisions we’re making in fear, and it’s just exhausting for all of us.

So that’s a big trend I’m seeing. I want to acknowledge that you’re all feeling it. And the roller coaster is very real. So everything you’re feeling is not in your head. It’s not that you aren’t strong enough to do this. It is real reaction and real emotion to the last two years and the craziness that we’ve endured. And the unpredictability is exhausting. Now, we got into the business knowing that it was unpredictable, but not at this level and not as a constant. So in our world normally, pre-COVID, yes, there was some unpredictability, but it wasn’t all of the time. And for the last two years, it’s felt like it was all of the time.

But the good news is I think the highs are more frequent. I think a lot of you are back on your feet and feeling strong again. I think you’ve sort of defined what new normal looks like for you and your team and your clients, and you’re sort of settling into that. And so all of those things I think are really good. And so I guess what I’m saying to you is I know you’re tired, but there is a light at the end of the tunnel and it is not a train. So take some time off, take some time to breathe, catch your breath, recalibrate, and recommit to doing the work and to running your agency the way you want to run your agency, as opposed to out of fear, and kind of take back control, and I think that’s going to feel good too.

So another trend that’s happening is everybody, when I see agency owners, they always say, “Who’s making money out there? What are agencies doing that’s making money? What’s the new thing?” And I’ll tell you what the new thing is. It’s not new, but it’s super important. It’s heightened importance. The new thing is clients need us to be able to prove how their spend with us is delivering leads in sales. We have got to be able to connect the dollars spent with the outcomes, and the outcomes have to be really tangible leads in sales. And so if we can’t do that and our clients can’t take that up to the C-suite, that’s when, all of a sudden, they start looking for a new agency, which was a trend we talked about in the last episode, in the last solocast.

So it’s not new. We’ve known for a long time that clients needed us to be able to connect the dots between the dollars that I give you a dollar and I get what in return. And for us to be able to say, look, for every dollar you give us, you get two leads or a sale or a trial or a test drive or whatever it is, but we need to be able to show tangible results. And so if you are not able to do that, you’ve got to figure out ways to do that because our clients are demanding it at a much more aggressive tone than ever before.

So another thing kind of that is inside the agency owner’s world is everybody’s asking me sort of what agencies doing in terms of work from home, or is everybody back in the office, and I will say this. There’s a wide range. So I have some agencies in our world that never went home. They lived in states where it was not mandated that they not come to the office, and so they kept going to the office. They’ve never broken that stride. They’ve worked five days a week in the office forever, and they did that through COVID. On the flip side, I have agencies who were in brick-and-mortar locations and, during COVID, decided to go virtual, and now, they’ve decided they’re not going back to a brick-and-mortar. So this pendulum is swinging on both ends.

But for the vast majority of you are in some version of hybrid schedules. And so what that means is it’s a two day in the office, three days at home, or three days in the office, two days at home. Or some of you, a lot of you are doing work from home Wednesdays, so you’re in the office Monday, Tuesday, Thursday, and Friday, but you’re working from home on Wednesday. Most of you are in some sort of hybrid situation. For some of you, it’s temporary, and for others, you’ve decided it’s in the, air quotes, permanent, or at least permanent for now.

I’ll tell you where that’s working and not working. So if what you say to your employees is, look, you have to be in the office two days a week, but we don’t care which days, that is not working. When everybody has to be in the office on the same day, so you have that sense of comradery and collaboration and everybody is together, what that’s doing is that is contributing to culture and connection, and it is absolutely contributing to retention.

So the agencies that are mostly virtual or where everybody comes and goes as they want, they’re around a much harder time keeping their employees than agencies who are either in the office all of the time or agencies, and this is the vast majority of you, agencies who are in the office on the same days of the week, even if it’s not five days a week. So again, still seeing a wide range, but most of you are settling somewhere in the middle, and most of you are most successful when everybody is in the office on the set day, or they’re all working from home on the set day.

Another interesting thing that’s happening to agency owners, there is more M&A interest than ever, both internal and external sales. And as you know, at AMI, we do a lot of work with succession planning and helping agencies facilitate the sale between an internal buyer, so an employee from the owner. We’re doing a ton of that work. So we know that that’s happening and that it’s very real, but there’s also this phenomena out there, and I wrote about it a few months ago in the newsletter, where a lot of agencies are getting bamboozled. And so the email or the phone call goes something like this.

“Hey, Drew. I want you to know that we have been watching your agency, and I got to tell you, we’re pretty impressed. You are doing something really special with your agency, and it’s not something that everybody else is doing, and we would like a part of it. Actually, we would like to buy your agency, and we would like to buy it for a ridiculous multiplier of your gross revenue or your AGI,” that as the owner, in your head, you’re thinking that’s insane, but it also is a lot of money and you get enamored with this idea. And so they go on and on about how great you are and how they want to buy it, and the terms are going to be really reasonable, and you won’t have to stay. You can just go right away, and you’re going to get all the money up front, and they make it sound amazing.

And then what happens is you agree to do a mutual… When you don’t tell each other about the non-disclosure. That’s not right. You know what I’m talking about? The confidentiality agreement. It maybe is a non-disclosure. Anyway, I’m not going to keep rattling on about this in the podcast, but basically, you sign the agreement that you can share numbers with each other, and nobody’s going to tell anybody. I don’t know why my brain went blank, but it did.

So then what happens is they start to do their due diligence, and you, as the agency owner, start incurring costs: CPA costs, lawyer costs, things like that. And what happens is the whole time they’re talking to you about how great your agency is and how much money they want to give you for it, they start discovering little things. They go, “Oh, well, maybe it won’t be a 12 times multiplier. It’ll only be 11,” or whatever. So they keep whittling down the offer basically as they go through the due diligence, and pretty soon, it’s down to one or one and a half times your AGI, which is sort of the normal price of agencies these days.

And in the meantime, you have incurred 40 or $50,000 of lawyer fees and CPA fees, and what they’re doing is they’re actually trying to take advantage of the fact that you’re a little weary, you’re tired, maybe haven’t been making as much money the last couple years, and they know that if you get deep enough into the dream, and you’re thinking about going to the Fiji island, and you’re thinking about driving a Lamborghini, and you’re thinking about all the things, and you’re sitting on a $50,000 bill, that you’re much more likely to give into the sale because (a) you want the cash, you’ve bought into the dream, and it’ll pay off the loan, and you don’t want to be sitting there with that kind of a… Not the loan, the CPA or the lawyer bill, and you don’t want to be sitting there with that bill and have nothing for it. So then what they’re really doing is they’re taking advantage of agency owners.

So here’s my message to you. This is definitely a seller beware moment. So you need to be very careful. Do your due diligence. I’m not saying that everybody who reaches out to you is smarmy or taking advantage of you. There are certainly legitimate M&A firms and legitimate M&A deals out there happening, but a lot of them are blowing smoke up everybody’s skirt, because they know you’re in a disadvantaged position, and they want to take advantage of it. So be very careful.

All right. So the next section of trends are about the employees. As you know and as they know, employees have never been more expensive, and now, I’m not talking about hiring somebody new. I’m talking about the people you already have. They know that you are having to pay a premium for new employees. They want to get their cut. And so they’re coming and asking for raises, and they’re not afraid or ashamed to ask for big, big raises. You also have people who are being poached, and they come to you and they say, “Look, I have a job offer, and I want to stay, but I need another $30,000 or $40,000 or $12,000,” whatever it is. And so many of you are having to really pay a premium for not only new employees, but the employees that you already have.

And honestly, the employees really believe right now that they’re in the driver’s seat. They’re super demanding about everything from salaries to working from home, to all of the perks and privileges that COVID brought to them or that they think they’re now entitled to, that they want to be able to… I’ve had a lot of agency owners say to me, “I had an employee walk in today and say, ‘Oh, by the way, I’m moving across the country, and I’m leaving next week,’” without talking to them, assuming they could keep their job. So right now, the employees are behaving in a very entitled way.

But the pendulum will swing back, and we’re starting to see that a little bit. I mentioned this in the podcast last month, that in the first couple quarters of 2022, the candidates, the number of candidates, how qualified they were, and also the money that they want is all getting more reasonable. So we’re seeing better candidates, more qualified candidates, and they’re being more reasonable with their asks. So that’s good news. I think the ship will right itself in terms of the employee being super demanding, but I think it’s going to take at least another quarter or two before we really see the depth of that kind of falling back into the middle.

So in last year’s podcast, one of the things we talked about was how your employees were really putting a lot of pressure on you and pushing for agency owners and agencies to take a stand on social issues. In particular, this was sort of heightened after the George Floyd murder and the whole Black Lives Matter movement. But it wasn’t just about diversity, and it wasn’t just about inclusion. It was about a lot of other topics. And your employees were really expressing that they wanted the agency to take a stand, to have a position, and to really try and influence social and civil responsibility and liberties.

Well, interestingly, fast forward a year from that, so now, in the summer of 2022, what I will tell you is your employees don’t care about any of that stuff right now. Now, I’m not saying they don’t care about it personally, but what I’m saying is there’s no more demand for the book clubs or the diversity committees or any of the other things. Your employees have shifted their focus very much to be caring about themselves and their own lives and are much less invested in what the agency does or doesn’t do when it comes to social concerns.

So I’m not saying that we shouldn’t have opinions, and I’m not saying we shouldn’t take on social issues in our community as business owners and leaders, but what I’m saying is you’re not feeling the pressure from the employees to do it anymore. And part of that I think is because just right now, they are all sort of out fighting for themselves and for what they want, whether it’s work from home every day or a bigger salary or whatever it may be. They’re just stretch too thin to be ready to kind of dig in on that kind of an issue. They really are asking you. If they’re going to get your attention, it’s going to be about something they need personally, as opposed to some change they want to see in the world.

All right. So the last section of the topics of the trend report are what tactics are agencies selling and selling well, making a great profit, where does there seem to be a lot of demand. So I’m going to tell you about that in a minute, but first, let’s take a quick break.

Hey, everybody. I promise I would not keep you more than a minute, but I want to make sure you know that, at AMI, one of the things that we offer are virtual peer groups. So think of it as a Vistage group or an EO group, only everybody around the table, figuratively in this case, is an agency owner. So you have to be an agency owner to belong. The virtual peer groups meet every month for 90 minutes on Zoom. This was not a COVID creation. It was pre-COVID. You see the same people in your cohort every time. So you get to create relationships with them. And it is facilitated by AMI staffer Craig Barnes, who has owned his own agency for 25 or 30 years. So plenty of great experience both from Craig, but also learning from each other. So if you have any interest in learning more about how that works, head over to the AMI website, and under memberships, you will find the virtual peer group, and you can get all the information there. All right? Okay. Let’s get back to the show.

All right. We are back, and I have one more section of trends to talk to you about, and that’s the tactics that agencies are having great luck selling, making good money on, where clients seem to be demanding these particular services. So I will tell you AMI’s PPP, SEO, and Amazon marketplace shops are crushing it. They are practically printing money. And again, remember what I talked about, which was that clients want to know for every dollar I spend, what do I get back? And they want us to be able to prove it. And so for the PPC, SEO and marketplace, Amazon marketplace folks, that’s easier for them to do. So that’s one of the reasons why that’s in high demand.

Another tactic that a lot of agencies are selling and making really great money at is influencer programs, but particularly micro-influencers. Those are in really high demand. And remember, a micro-influencer is somebody who does not make their living by being an influencer. So they are not a YouTuber that goes around the country and just stays in different hotels and reviews them. They are somebody who has a job and who has a subject matter expertise. So they might be a doctor or a professor or somebody else who has a day job that is not being an influencer, but because they are such experts in whatever it is that they do, they have created a community around them that follows their social media, that follows their content, and that is very bought in to what that influencer says.

So think of it as the amateur version of an influencer. So again, somebody who’s not going to be overly slick, overly produced. They’re not going to have a big media kit and all of that. These are really micro-influencers, small people, not small people, but people who have a small following, but a very devoted following. So they’re going to have a few thousand followers or 25 or 30,000 followers, as opposed to millions and millions of follow followers, like a true influencer has. But nonetheless, agencies are having great luck negotiating sponsorship deals and endorsement deals, and things like that, for their clients, with the micro-influencers. So you might think about that.

Another thing that agencies are doing a lot of and making great money at is creating what I call walled gardens. So think of it as a private member environment, where they can invite prospects and their customers to hang out. In some cases, it’s a private Facebook group. In other cases, it might be on proprietary software, but these are great retainer or recurring revenue generators, because you have to keep the community up. Obviously, you have to keep sitting questions. You have to monitor the commentary and the conversations. So there’s a lot of money to be add in building and maintaining these walled gardens.

And then the last one is intent monitoring. So agencies are doing a lot more work on client’s websites to ascertain the intention of the web visitor. So are they coming to buy? Are they coming to browse? Are they coming from a search engine just to learn something? What are they coming to do, and how can we move them further along the sales funnel when they come to the website into the consideration stage, where they’re really thinking about making a purchase?

So most agencies are using a third-party software to do the intent monitoring, but again, this leads to great retainer revenue because it’s ongoing insight. So not only are you monitoring what’s happening on the website, but you’re making recommendations. You’re making modifications to the website to try and create a more clear path for the visitor. You are trying to move everybody down the funnels. There might be other tactics involved with that on the web. So great revenue generator for agencies.

All right. That wraps up the trends that we’re seeing in 2022. If you missed the first episode, go on back about a month ago, and you will find that that one there in May. I think it aired for the first time on May 16th. And then you can follow up with this one as well. So I hope this was useful for you, and I will be back next week with another guest.

So before I let you go, huge thanks to our friends at White Label IQ. That’s whitelabeliq.com/ami. They’ve got a free offer for you. They’re the presenting sponsor of the podcast. So they make it possible for me to hang out with you every week, which I love them for. And if you go to that web URL that I gave you, you will find a code so that you get some free hours on your first project with them. So great folks, lots of AMI agencies swear by them, good, good human beings that I have known for a very long time, and consider them clients and friends, and really do save the day for a lot of AMI agencies.

Other than that, I’m glad to be back in the saddle. As you know, I had the summit, and then I was in Scotland for a week. So it feels good to be kind of back at it, but it also felt really good to take a break. So that’s probably a good reminder for you. Remember the owner trends we were talking about earlier in the show, you’ve got to take a break. You’ve got to unplug and really unplug for a few days, and you have to give your brain and your head and your heart a break. Okay? So please do that for me. Take some time this summer, relax, enjoy your family, your friends, solitude, if that’s your thing, whatever it is, but refill your bucket. Okay? All right. I’ll be back next week. Until then, have a great week, and I will talk to you soon. Thanks for listening.

That’s all for this episode of AMI’s Build a Better Agency Podcast. Be sure to visit agencymanagementinstitute.com to learn more about our workshops, online courses, and other ways we serve small to mid-sized agencies. Don’t forget to subscribe today, so you don’t miss an episode.