Throughout the entire process of building your agency, you have a lot on your plate. Depending on where you’re at in the life of your agency, you may be struggling to eat something other than ramen noodles or on the flip side of the spectrum, you’re spending all your time servicing your clients and trying to keep up with the demand. Ideally, you are working towards being able to step away from the day to day and focus on big picture of working on your agency. You may have aspirations to sell your agency some day and really reap the reward of all your hard work. No matter where you are at, my podcast guest Mitch Joel can probably relate.  

He has taken his Toronto based agency from a small three-man shop to a global juggernaut by doing all the things that AMI preaches to agency owners every day. He quickly moved his agency to specializing in a niche, he focused on what it took to be acquired – growth and margin, he found his sweet spot client filter, and on top of it all, he kept on learning and growing and gave his team the time and space to do the same.  

Try to keep up as Mitch and I take you through all of these phases of agency life by showing you:

  • Mirum’s unique structure
  • Generalists vs specialists: the philosophical and financial reasons agencies should specialize instead of generalizing
  • Building your agency so that it is sustainably specialized
  • How to figure out if a client is a good fit for your agency
  • Mad Men vs. Math Men: how to blend creative and data
  • Why it’s more important than ever to stay hungry and keep learning everything you can
  • Do your homework: how to balance learning time with time spent on client work
  • “Algorhythm”: Mitch’s upcoming book
  • Tools Mitch uses for consistent learning

When Google wants to explain innovation and marketing to the top brands in the world, they bring Mitch Joel to the Googleplex in Mountain View, California. Marketing Magazine dubbed him the “Rockstar of Digital Marketing” and called him, “one of North America’s leading digital visionaries.” Mitch Joel is President of Mirum – a global digital marketing agency operating in 20 countries with over 2500 employees (although he prefers the title, Media Hacker). He has been named one of the top 100 online marketers in the world and was awarded the highly prestigious Canada’s Top 40 Under 40.

To listen – you can visit the Build A Better Agency site (https://agencymanagementinstitute.com/mitch-joel/) and grab either the iTunes or Stitcher files or just listen to it from the web.  

If you’d rather just read the conversation, the transcript is below:

Table of Contents (Jump Straight to It!)

I.       Agency Structure

II.     Generalists vs. Specialists in the Agency Space

III.    Mad Men vs. Math Men: The Ever-Changing Agency Landscape

IV.    Lifelong Learning is Vital to Building Your Agency

V.     The Tools You Need to Build a Sustainable Agency

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Build a Better Agency where we show you how to build an agency that can scale and grow with better clients, invested employees and best of all, more money to the bottom line. Bringing his 25 plus years of expertise as both an agency owner and agency consultant to you, please welcome your host Drew McLellan.  

Drew: Hey, everybody. Drew McLellan here with another episode of Build a Better Agency. As you know, this weekly podcast is all about helping you be smarter about the way you approach business so that your agency can serve clients better, be more profitable for you and, hopefully, along the way, be more fun. So I think you are really going to enjoy this week’s guest.

So when Google wants to explain innovation and marketing to top brands of the world, they call Mitch Joel to Googleplex in Mountain View, California and have him do it for them. Marketing Magazine has called him the rockstar of digital marketing and one of North America’s leading digital visionaries. Mitch Joel is the president of Mirum, which is a global digital marketing agency operating in 20 countries with over 2,500 employees. We’ll have him explain a little bit about the structure of that as well because I think you’ll find that fascinating. He also is an author of many books. I suspect many of you have read “Six Pixels of Separation” or “CTRL ALT Delete” and he’s got a new book coming out, which we will ask him about as well.

So Mitch, welcome to the podcast. Thanks for joining us.

Mitch: Drew, thank you for having me.

 

Agency Structure

Drew: Yeah, it’s great having you. So give everybody a little bit of understanding about how your agency is structured because it seems like each office, if you will, or maybe by country, I was trying to figure that out, is run almost independently but that you guys are all interwoven together. So tell us a little bit about that structure you created when building your agency.

Mitch: Well, I have to walk it back a little bit so there’s some clarity around what it is because Mirum, as a brand and entity, is still so super new. It’s only been about a year. There was a bunch…I’ll tell you our story and you’ll see how it ladders up into Mirum. We started a digital marketing agency called Twist Image in 2000 and I say we because we are four or we’re four business partners. We built this agency to become one of the largest digital marketing agencies independent in Canada about a hundred plus people, offices in Montreal and Toronto, and when I say national, it’s because in Canada, we have two languages, French and English. So it was fully operational in both languages, which was really unique at the time.

And we grew that for about, I’d say, ‘til about two years ago. At that point, we got acquired by WPP, the largest holding network in the world for marketing and communications and the way WPP works is you don’t really report into WPP directly. You choose one of the larger corporations that have grown within the WPP network. So you would report in through maybe the Young and Rubicam, kinda the Y & R angle, you might do Ogilvy one, you might do the JWT, J. Walter Thompson one, and we definitely had a champion with J. Walter Thomson Corporation in terms of their chief financial officer. A good, strong relationship with a real, great sponsor and thinker and enjoyed conversations with us and we went in that direction.

And, you know, part of the reason we wanted to be acquired was because we really wanted to grow. We wanted to add in different products and services, scale more beyond the borders of Canada and just North America and that was one of the promises of being a part of one of these larger networks.  And what it turned out had been happening tangentially is that the J. Walter Thomson corporation had been acquiring shops like us but geographically different throughout the years. Shops like Digitaria, Activark, Caza, XM. All of these shops all over the world.

And so, we had decided together, as a unit, to bring all of these shops together under a new banner called Mirum. All of us changed our name. All of us became a part of a new corporation beneath the J. Walter Thomson Corporation. So now J. Walter Thomson Corporation owns Mirum and it owns JWT, the advertising agency that people know because it’s one of the oldest ones in the world.

Drew: Yeah.

Mitch: So, go on.

Drew: Yeah, I’m just agreeing with you. Yeah, they’re big and well-known.

Mitch: Yeah, and the structure really is…what I love about it is it’s…we call it a village model where you’re absolutely right. Every office can operate independently because that’s how they were created by entrepreneurs like you and I, and running their own offices but where the values is actually how we have this global leadership structure and how we work together.  And so we’re able to pitch and win global clients and have a massive global reach because, as you said, it’s 25 plus countries, 48 plus offices around the world. And it also allows us to work very, very local and I think when you look at the dynamics of what we call, today, a digital agency, that is really, extremely powerful. So suddenly we’re able to work across the national brands that we’ve always worked on when we were Twist Image and now as Mirum in Canada. I can and have one North American business that I can run out of our offices here and bolt on geographic offices or teams as needed and then I can scale up and do global.

And what’s interesting about global is I can work on global brands, literally stuff in platforms that rollout globally or I can also work with global brands locally because we have a knowledge specifically for us up here in Canada. So, it really did allow us to have the scale and size that we wanted while still being able to be entrepreneurial as we’re owned now versus being the entrepreneurs when you own your own business.

Drew: So day in and day out, you now run…your village is how big?

Mitch: Well, it’s a big village. I mean, we’re still responsible because of where we’re at in the contract from our acquisition of making sure that the offices we have, the Montreal and Toronto offices, are successful as they can be but they really can’t be as successful as everybody wants them to be without the components of the North American global avenues of it.

My personal role hasn’t changed at all. I mean, you know, I have a title of president, which is very sweet and nice, but the truth is, I still do what I always did which is I go out, I speak, I write, I write books, I blog, I podcast, I network, I connect with people and I try to create some energy around what it is we’re trying to do. Before I did that, obviously, to add value to what was Twist Image and now I’m just doing it with Mirum. And it’s super challenging because it’s a big entity but it’s still so new. People have no idea what it is. So it’s a fascinating challenge and that’s the work that I personally do day in and day out.

Drew: So you have the job that many agency presidents covet, which is the rainmaker job. You’re out creating thought leadership and you are speaking and creating content in a plethora of ways and the listeners need to make sure that they go to the show notes and track down all the different things. Your podcast is, I think, one of the best podcasts out there so they certainly need to be listening to that.

But back in the day, when you started building your agency, was that always your role or were you more day to day involved in client business at some point?

Mitch: No, for sure. I mean, at day one, it’s “What do you need?” Your business card, you need a logo, you need a…you’re just trying to stop eating peanut butter sandwiches is what you’re trying to do. You’re trying to stop being in debt.  You’re trying to stop all of the reasons why you started a business and try to grow it and a very, very real and financially driven. They’re success driven in terms of work and output. They’re client driven with what you want to do.

So early days of the agency at Twist Image, we were three or four people. It was all about not just hunting the work but it was about doing it.  And then there was times where I was doing copywriting and positioning and all that sort of stuff that I, for sure, had a passion for and an interest in because I wanted us to be successful and I wanted our clients to be successful.

But early days, I also realized I didn’t want to be the traveling salesman. I didn’t want to be the person driving down the highway, pulling into every single major corporation and saying, “Do you need a website? Do you know what the drill is?”

And so I fell…I knew I had this exhaust valve of blogging and writing and publishing because my previous world before that, many iterations before that, was working as a writer, a journalist and I actually even published magazines pre-internet. So, I always had that ability to want to communicate and build a brand off of real content versus just positioning and portfolio. And I think that that was the big thing and it seems obvious to talk about now in 2016, but if you go back to 2002, this idea of building not just off of the portfolio, excuse me, and the clients that you have was seen as very, very different. And positioning where it was just like you’re just a brand tag and whatever.

But this real depth of content was not something that everybody was doing at all and I think it really was part of the rocket fuel at the time for Twist Image.  And I do think that it continues to be, to this day, something that is acknowledged by people like you and others, this platform of Six Pixels of Separation, which is the name of the blog podcast for its book, but it’s the container for our content and how we think about it. It continues to be, I think, a very valuable asset.

Drew: Absolutely. So I think a lot of agency owners aspire to get out of the trenches of the work and do the kind of thought leadership development that you’re doing. Is that a conscious decision on your part? And how did you make it possible for you to step out of that, as you say, traveling salesmen role and the day to day serving client role, so that you were free to do the very important bigger picture work that you do today?

Mitch: When you say it like that, it sounds like there is this sort of mechanical, tactical, plotted strategy and you’re saying it as if that’s what I wanted to do. I’m not sure that any of that is actually true. I think that while I love to write and I love to create, it was a journey. It wasn’t a sort of tactical, stay really focused on this. I think that it became a factor of circumstance where it started working and I had to suddenly become comfortable with that role and position. I don’t think I was there 100% in terms of what we wanted it to do.

And then it was also just based off of the team I was surrounded with. I was surrounded by amazing business partners and amazing players on our team that were just better at things than I was. And I think sometimes you assume the role and I think sometimes you go after a role. And I think, in this case, I very much assumed a role that worked. And it was unique because once you start getting paid to speak and paid to write and you see revenue and this revenue is offsetting what is typically an investment of business development, which is very significant to the service based level and the agency based level, it was very unique to us. We’re making all of this money speaking and writing and putting thought leadership out there and it’s offsetting what we’re paying to invest to potentially win clients.  And so it became based onto itself and again, you fast-forward now, 15 years later, I’m in a position where I don’t know what else to do.

 

Generalists vs. Specialists in the Agency Space

Drew: Right, right, yeah. So, one of the things that you talk about is the whole idea of agencies and the notion of generalists versus specialists. Talk a little bit about your philosophy around that concept.

Mitch: Well, generalist and specialists, it sort of falls into two areas. And one is financial and I think one is philosophical. And so let’s start off with the philosophy. The philosophy of a generalist versus a specialist in the agency world, to me, is…you have a lot of businesses right now that say, “We want fully-integrated solutions.” And so what they’re doing is they’re going to their traditional ad agency or network and, of course, the ad agency and networks do everything. They’re so great at everything and that’s what they’re selling, and in the US, it hasn’t worked as well as it has in Canada. In Canada, it’s been extremely successful for these fully-integrated solutions and it boggles my mind because if you speak to the best of the best in the States and what I mean by the best of the best are the real pro-search consultants, people who really get BD. What they’re talking about on a business development level is they’re talking about agencies of record. How do we help this brand and surround it with the best people and team so they can get the best results? And it’s a bit of a reverse in Canada where brands are doing fully integrated pitches that have a huge digital component that I can’t pitch against because I don’t have the other mass skills or portfolio to win properly against it.

So it’s a bit of a precarious situation concerning how small North America is but it’s there. The philosophy part of it is…I always say to people, “If you suddenly were going out for a jog and you blew out your knee, would you want to go see your general practitioner or would you want to go see the person in your city who just works on these knees and does it for all the professional sports teams and just knows, does this all the time?” To me, the answer is pretty obvious. I want to go to that specialist and I want to get in as soon as possible. I think that’s the value of what a real specialist agency can do. I think that’s the value of what Mirum brings to the table.  

On the financial side of building your agency, because I’m sure in terms of this conversation, it’s people who are building a business, trying to figure out what the values of the business, they might want to sell it, they might just want to better understand the value. What I’ve learned in the process of both being acquired and just generally being what I call an agency nerd, I’m fascinated with this stuff, I’m fascinated with holding companies and I’m fascinated when it comes to acquire agencies and build teams inside.  And I’m fascinated with consulting firms like Accenture and Deloitte that are building out these multibillion dollar digital components to them, is there’s a fact and the fact is that if you are looking at all at an exit strategy for your agency and you want it to be acquired, I do say that the metric by which acquisition should be gauged is by who does it the best. And in our industry right now, it is still the holding companies. It is your WPPs, your Publicises, your IPGs, etc., etc., your Densus, you know, down the list.

And I know, not because I did this, but because it’s a fact, that a fully integrated or a general agency gets a much lower multiple than a specialist, a digital agency. So had I made the choice six or seven years ago to say, “Wow, I see this whole fully-integrated thing is really taking off in Canada and I should sell TV commercials and I should sell promotional items and I should do experiential.” That whether we decided to be sold or just was a matter of circumstance, my multiple would’ve been significantly less.

And by staying focused on that specialty of digital, not just because digital is hot, but it is, it does. It demands a better multiple and it’s true of anything, not just digital but that sort of specialist world. So, for me, based off of who I was and what I wanted to accomplish…and people say, “Did you want a big shop, did you want a small shop?” I mean, it was ultimately a small shop in terms of what it is. It’s public, it’s on ad week and when we’re acquired, it’s a $15 million a year shop.

We very much were focused on staying specialist because that’s, to us, was creating a unique set of value and it was value both in the philosophical side that I explained and the financial side as well which, again, for us was important. We wanted to run a fiscally-responsible business that was moving at the pace of which these holding companies or other potential acquirers benchmarking it. It’s not because we were looking to be acquired because we weren’t, but because if that’s what the best of the best is looking at, we should benchmark ourselves in the same way. And for us, it was. It was the two things they look at, right. It was growth, year on year growth, net growth and it was margins. And that’s a reality and it was specialty too.

Drew: Yeah, yeah. Yeah, I think it’s a conundrum for a lot of agencies trying to sort that out. A lot of agencies that were very traditional and generalist are now competing against specialists and, as you say, especially in the States, that’s really a challenge for them. So I think it’s going to continue to be something that agency owners need to wrestle with and probably think both short term and long term in terms of why am I doing this? At the end of the day, what do I want to get out of it and that wealth and sort of thing through this structure that they need to have?

Hey, one of the things that you guys have done a really spectacular job in over the course of your agency’s history is aligning with great clients and then keeping them for a really long time, which I know is tied to the good work that you do. But in the client procurement process, because I think agencies beg for work rather than being as choosy as clients are choosy, how do you ferret out if somebody’s going to be a good client? What do you look for when you and your team are prospecting that tells you, “These guys would be a good fit for us. We can serve them well and they will appreciate the work that we do.”?

Mitch: Ah, so this is a greater conversation, Drew. In terms of the client fit, we actually look to see if the client actually hits the requirements of what our real positioning is. So let me talk a little bit about my positioning and if I wander too much and you want to draw me back to this, stop me and tell me.

Drew: Sounds good.

Mitch: When we started the company in 2000, it started in 2000, I joined in 2002, at the time it was my two business partners and one employee so super small, closet like office. What we did say is, “We want to work with large, national or multinational brands.” We started there. So, I mean, literally, the day I walked in we actually won this innovation award at this local big interactive awards for a thing we’ve done for Bombardier for their Ski-Doos because they had this thing featured in the James Bond movie at the time and we did this virtual 3D game thing. It was a very, very, very sort of new tech on the web back then, and it won the BIG Innovation Award. I thought, “This is a good first day at the office, take home an award like that.”

But it really did set the pace for the types of clients we wanted to work with. So we were always looking to work with large national and multinational brands. As the years progressed, we felt the commoditization of our industry. We felt the competition and everything else, and we thought, “Okay, what are we going to tell people?” We have better creative, we’ve better technology, we’ve better strategy. It’s a one thing to say that, and I think we do have that and we believe that, but the truth also is that it’s, you know, you’re taking people from another agency. As other agency people are coming here, what does that mean? They came from another agency. What? They weren’t good there? Of course they were good. They’re good people.

But it showed me that there was a commoditization happening in terms of creativity, technology and strategy and so we realized, we started to think, “So what is it? Why would somebody come to us as Mirum?” And we realized that it was, yes, large national and multinational brands. Because for 10 years those are types of businesses we always wanted to work on, but there was something else, and we honed it all around this idea that we call the Big Delta. And the Big Delta, for us, is our ability to work with these large national, multinational brands that they are typically very, very complex and have a lot of internal things because that’s what large and multinational has, and our ability to take them from where they’re nascent in the components of digital or all of digital to being a powerhouse within the organization.

So that became the positioning and then that positioning becomes the filter by which we know if we’re going to work with a client that’s going to be good for us. So, a startup will come to us and say, “I’ve got this amazing idea and this and that.” And we’d look at him and go, “Look, you’re not a large or multinational brand. There is no Big Delta here because you weren’t anywhere before and now you need to go somewhere. And because of your structure, you want it to be nimble and work side by side. It’s not, you know, because you’re not large and not multinational.” We work with client service teams and these client service teams cost money and not that it’s a waste of money. It’s just they work with other marketing managers and marketing directors to build these programs. And so just structurally we can tell in the early days what it is. Also, because of the nature of that, when a client comes to us, we say things like, “Well, what’s your budget?” “Well, my budget is…well, what’s it going to cost?” And you start getting into these weird conversations where we know that budget and having an understanding of your budget is actually a very, very good indicator as to the level of sophistication and our ability to be a good partner to them. I’m not holding them to that budget. I just want to know rails and if they have no idea or it’s the “Sky’s the limit. What do you guys think?” I can tell that there’s a lack of sophistication in terms of working with an agency like us.

So our filter, because of that, is unique and it’s troubling. It’s unique in the sense of it allows us to really focus and work on it. It’s troubling because budgets like that and opportunities like that aren’t like, “Give me a 20K project. Let me build and build and build.” And that it’s harder for us to do that. We do that. We do a lot of that still but it’s harder versus, “We have a mandate and we want to see if you guys are the ones for that mandate,” which we do better with I think.

Drew: Yeah. What you’re professing is exactly what I am always preaching and asking agency owners to do, which is to have a little swagger about your work and be really clear and confident about what you deliver to clients and then build out, it sounds like you’ve done this, what I call the sweet spot client filter, which is, “Here’s the criteria that makes somebody a great client.” And if they don’t hit at least 80% or better of those criteria, we need to just walk away rather than waste our time chasing after a client who, at the end of the day, even if we win the business, isn’t going to be good for our business.

Mitch: Yeah, I mean, the only thing that I would…I think there’s another filter on that because it’s a bit of a platitude, Drew, and I’m not demeaning what you say. It’s just it’s a bit of a platitude because at the end of the day you’re hungry and you need…

Drew: Yeah, you’ve still got to pay rent, right? Yeah.

Mitch: And so I’m always like, “Listen, all things being unequal and you’re running this business and it’s hard …two metrics. Manage your growth. Make sure you’re growing 8%, 10%, 5%, minimum 5% every year, net, and watch those margins and get those margins up to a nice, sweet spot.” Typically, for me, I like to tell people well over 20% because if 9%, 10%, 11%, 12% is the network sort of standard, I don’t know if it is anymore, I’m not sure. You know, being double, triple that is … you can’t make margins like that. Trust me. No one’s going to say it publicly but they are. There are margins like that and it’s not because you’re manipulating the client. It’s just the nature of being a specialized business with a very, very good quality product and then it does. It commands those types of, I think, better margins.

So I think you’re right, but none of my positioning in Big Delta works unless I can get margins.

Drew: Absolutely. At AMI, what we talk about is always shooting for at least a 20% profit margin but also recognizing that…I think all consultants and, in this case, that would be the role that I am serving, talk ideal world and that you also have to have real world implications. And so I think you shoot for what you shoot for but sometimes you have to make compromises to make sure you can pay the rent and all that. I don’t disagree with that but if you don’t have any standards and you don’t have any metrics by which you push yourself to get better and to work with clients who are really going to serve your business, then you become beholden to those clients rather than it being a partnership. And so, I don’t disagree with you. I think the real world always forces us sometimes to compromise. I think you have to have some rules of engagement to begin with. Otherwise, you’re going to lose the game every time, right?

Mitch: Yeah, it’s a harder slog when you’re in the early phases or struggling phase. So when you start breaking out of that gap of year on year margins and growth, and everyone has their troubling years. Certainly, the service market is not easy. We’re victims of the market. We’re victims of clients’ changing needs. It’s a tough business. I’m not here to make it sound like …this is a tough, tough business like any other business. Your choices change and the desperation is normal. I’m demonstrating more of a perfect world scenario which very rarely exists.

 

Mad Men vs. Math Men: The Ever-Changing Agency Landscape

Drew: Yeah, agreed. One of the things that you write about a lot and talk about a lot is the whole evolution of the word creative and big creative and big idea and one of the blog posts that you wrote that I loved was the whole idea about Mad Men versus Math Men. Talk to us a little bit about your viewpoint on that whole changing landscape.

Mitch: Yeah, I’m not an advertising guy. I’m a marketing guy and advertising to me has fundamentally been the 800-pound gorilla in the marketing sphere of getting the message out there but I think that what digital did and continues to do is to change that paradigm.  I think. Where marketing becomes more about marketing and advertising becomes back to what it was, a subset of that. And it’s hard for people to think of because the real output, I think, in most people’s brains is the brand or the ads that the brand pushes out in to the world.

Because I’m not an ad guy and because I started blogging and podcasting and getting into digital so early and being so influenced by people like Seth Godin and Tom Peters and the Hughtrain Manifesto, my excitement over marketing was in the fact that suddenly you really can’t have real interactions between real human beings.  And if you’re going to go down that avenue and believe that that is true and that is the  direction, I think it is to this day, you then have to understand that you can’t just do the model of before of, “Here’s the big idea and here’s how the big idea works on TV and in newspapers and in radio and billboard and on the internet.” And that is what was happening and, by the way, I still believe it’s continuing. What’s happening, in fact, I see it almost more than ever even on places now like Facebook and Snapchat, which blows my mind. I want to invert that and I want people to go, “Yeah, we have a brand platform.” We’re going to take this brand platform, though, and adjust it and make each channel have its own “Big Idea.” And so it’s not a one big idea that’s rolled across but rather multiple big ideas within each platform to make it all work and it ties up to a brand that’s cohesive.

So, the example that I use is we did work for many years and continue to work, one of our big clients is TD, the bank. And up here in Canada, the TD ads were these two grumpy old men and the whole story is they’re all curmudgeon-y but when they realize TD has later hours and all this stuff, it’s like, “Oh, TD, it’s great.” And a lot of it had to do with comfort and the whole comfort idea was brought up and pressed. And that’s big, the brand is green, the colors that they use. It was this big company chair and it was comfort. And I was like, “Well, yeah, two grumpy old men and a comfy couch. That’s going to play well on the internet.”

It just didn’t work.  But if you could do platforms that revolved around comfort and creating more comfort, you can win. And so while some of the creative may have had the chair sort of zip in on a banner ad at the end, or whatever it might be, the actual execution was more in the realm of just making sure you’re still playing in the world of comfort. So, it was multiple ideas, big ideas that all connected pieces well. So then it’s more the connection model, which I like very much. And again, that’s just my own personal opinion.  

The Mad Men versus Math Men concept for building your agency was just more about me having a visceral reaction to this idea that either you’re super creative or you’re super data driven, and they don’t work together. And, obviously, since I wrote that blog post, which was a while back, I think that that ideology has become more pervasive in agencies where they do understand that it’s not just about the data.  Because it’s what you can do to take that data and turn it into real, actionable insights as my friend, Avinash Kaushik, at Google would say. And it’s not just about having a great idea and having a gut or test group say yes because you can take that great idea, plop it on YouTube