Navigating Agency Trends with Lee McKnight

Drew McLellan:

Hey, everybody. Drew McLellan here from Agency Management Institute. Super excited to bring you another episode of Build a Better Agency today. If you are a regular listener, you are probably very familiar. And even if you’re not a regular listener, you are probably very familiar with the folks at rsw. They help a lot of agencies add new clients to their roster. They have been a huge supporter of ami. They have been at the Build a Better Agency Summit every year since we started and they will be with us again this year in May. And Lee McKnight is usually the person that we, that we talk to on the show. As you know, if you’re familiar with them, they do quite a bit of research. And they just came out with the 2025 Outlook piece of research where they talk to both marketers, people who hire agencies and agencies. And so as soon as I saw that that report was coming out, I knew it was time to get Lee back on the show to kind of dig through the data. Just lots and lots of insights for all of us. And so I’m really excited to drill down into that data with Lee and sort of talk about what they learned and what it means for all of us. So without further ado, I don’t want to, I don’t want to dilly nor dally. Let’s just bring Lee onto the show and get started digging into that data. Lee, welcome back to the podcast. It’s always good to have you.

Lee McKnight:

Thanks for having me. It’s great to be back. Elvis and I are in the building.

Drew McLellan:

I like it. So. And Mickey and I are in the building. For those of you that are just listening by audio, Lee’s got a big photo of or a big painting of Elvis behind him. I, of course, have, as I would, a large Mickey Mouse behind me. And so we are very cool. Our spirit animals are behind us.

Lee McKnight:

That’s true.

Drew McLellan:

So you guys just came out with a new report. Let’s talk a little bit about sort of the basis of that report. How do you gather that data? And then we’ll dig into some of the results.

Lee McKnight:

Yep, it’s, it’s 2024, you know, New Year outlook report, folks can download 2025. It’s 2025. Sorry, we did it in 2024.

Drew McLellan:

Okay. Right. Yeah.

Lee McKnight:

You know what, it’s Valentine’s Day. I’m just, I’m gushing love for everything.

Drew McLellan:

Yeah. For all things in the past 2025 now.

Lee McKnight:

Thank you. We, we put the survey out at the end of 2024.

Drew McLellan:

Yeah.

Lee McKnight:

We’ve been doing this for gosh, I think this is the 13th or 14th year. So we get that year over year data. And so we’re, we’re, we’re sending out this, these surveys, you know, in November, late November, early December to agencies and marketers. Some of our reports we push out are agency only. This is the one where we get both sides, if you will. And that’s always probably, it’s the most downloaded report that we, you know, that we, that we put out there. But probably for that reason.

Drew McLellan:

Yeah.

Lee McKnight:

Because agencies don’t always get other than their clients, of course. But even then maybe don’t always get some of the feedback that you know, we present to agency principals in this report and so just pushed it out about gosh, five weeks ago now and, and it’s still a lot of evergreen stuff in there. So folks, if you haven’t downloaded it, no cost at our site. It’s there and it’s got some good stuff and a lot of it that is optimistic. I know we were just talking before we hit record on kind of where agencies are these days and getting, you know, a good end to last year and seeing good things this year. Knock on wood.

Drew McLellan:

Yeah.

Lee McKnight:

You know, still, still a little nuts. But that’s probably nothing new for agency principals who are listening.

Drew McLellan:

Yeah. All right. So everybody, we will for sure put the link for you to be able to download this in the show notes but you can also just go directly to their site and it’s pretty easy to find. So what was the best news that you think in this report?

Lee McKnight:

We have multiple questions around spending. What do you see in terms of spending in the new year? What are your predictions, if you will, for you know, both investments in things like tech and individuals and then just literally, you know, spending in terms of what marketers are going to be doing and giving to their agencies. Optimism about 62% in terms of marketers. Agencies right there as well. Just I think it was like slightly.

Drew McLellan:

Under thinking that spending will go up.

Lee McKnight:

Yes. Go up. Excuse me. Yes. And you know, it is somewhat rare that probably not going to be shocked to hear this that agencies and marketers are aligned on in this report. But, but strangely this time and it was kind of nice to see, quite frankly.

Drew McLellan:

Well, especially after the last couple years. Right. Where spending has definitely not been up.

Lee McKnight:

Is not. And so that was, that was great to see and we’re going to get in there. There are some, there’s like kind of five key things I want to throw out to folks today beyond that, but, but just generally. And you know, I don’t want to get into Kumbaya. Let’s all hold hands. But sincerely, that was, that was great to see and certainly the one takeaway I’d want any agencies listening to get.

Drew McLellan:

Yeah, you know, you and I were talking, like you said before we hit the record button. 23 was abysmal for most agencies on the new business front. 24 was better but not awesome. But it feels like kind of December, January, early February already we’re seeing. And I’m curious if you are too. A lot of agencies are getting more at bats. Sales are closing faster. We’ve had a lot of agencies land more business in the first quarter already than they historically have done for the last several years. Not just the last two crappy years, but even back further than that.

Lee McKnight:

I think we need a T shirt the crappy years. And we’ll just give it out to everyone. You and I will be millionaires.

Drew McLellan:

We will be.

Lee McKnight:

Yeah, no, I think that that’s very true and actually it’s a nice, if I will, a nice little segue to one of those points. You know, we, we asked marketers how they find agencies, how they get new agencies, how are they introduced to them or find them. And you know, interestingly, here’s not a news flash, referrals. Yet again, number one, referrals are great when they come in regularly and they’re the right fit, which is not, as we’ve talked about even in previous podcasts, not always a thing. They are fantastic and we can control them.

Drew McLellan:

Right. That’s the, that’s the downside of referrals. Yes, of course they’re awesome when you get them, but you have no way to generate them at a volume and to your point, to generate the right ones and avoid generating the wrong ones.

Lee McKnight:

It’s so true.

Drew McLellan:

Yeah.

Lee McKnight:

And you know, I gosh, every new client, probably that comes on with rsw, with us, I’m not being cynical or sarcastic, but it is that same story of yeah, all right, referrals kind of drying up a little bit. We’ve done this for X amount of years. I had one agency that’s thinking about coming on with us. They’re 40 years old as an agency. Crazy. It’s awesome. They have never had anyone doing new business. It has been referrals. I’m like, that is fantastic. What a track record. They’re like, yeah, but let’s talk. So I think what was interesting though is that direct outreach coming in at 52%, right behind referrals that is steadily climbed every year we’ve done this. And it’s good to see. I think agencies, more than ever now, however they’re doing it, are putting some kind of outbound into place along with referrals and then content too. I mean, I’ve seen more and more agencies actually doing something where they’ve talked about it for so many years.

Drew McLellan:

Amen. Finally, it seems like they’re starting to understand that they have to, they have to establish that position of authority and whatever it is that they’re good at, you know, whether it’s a niche or a deliverable or whatever it is. So I agree. It’s nice to see. But it’s also nice to see that it’s starting to pay off. Right? It’s, it’s, it is proof in the pudding that this is something, right?

Lee McKnight:

Totally. Absolutely. And I think that leads into another topic and we’ll talk about AI probably multiple times here. But in terms of business development, it’s interesting because 77% of agencies in our survey said they were confident that they’re staying ahead of trends that’s steadily risen every year. And it’s been about four years that we’ve asked that question. Yeah, but on the marketer side, their confidence level in their own agencies staying on top of those trends has declined every year. Now they’re only at 60. Well, 63% actually, technically, so it’s not a huge drop. But agencies really need to be cognizant of this because you think you’re on top of things. And I get it. Look, clients have to come first. God forbid. New business, of course, has to come in one of those. You can, but stay on top of those trends. I think you don’t have to be the expert, but I think, you know, we get into kind of that order taker mentality. And look, we get it. I mean, Drew, you know better than anybody. I mean, you’ve got to get that work done. But these marketers and these prospects and these clients, they need help. I mean, they are overwhelmed. And you can just reaching out with these current clients that you have and prospects, showing them that. Yeah, you know, we’re Doing some of this homework, it doesn’t mean you have to lay this out in an hour long dissertation, but it’s important. And AI for business development, it’s not there yet. I mean it is by no means the silver bullet, but it can be helpful in agencies if you, if you’re not doing anything along those lines for biz dev, you should get in there and at the very least things like research.

Drew McLellan:

Yeah.

Lee McKnight:

You know, giving yourself new ideas, not writing emails for you. And a lot of these, you know, you see a lot of promises out there that oh my gosh, right, I have yet.

Drew McLellan:

Yeah, they’ll diaper your baby and wash your dog and. Yeah, it’s crazy.

Lee McKnight:

I mean, what, you know, your agencies, do you hear a lot. There’s biz dev in terms of AI, there’s client work.

Drew McLellan:

Yeah.

Lee McKnight:

What, what are you seeing out there?

Drew McLellan:

Yeah. You know, we talk all the time about how in our space, if we’re not learning and growing, we lose relevancy in a hurry. And I think it’s lovely that 70 some percent of agencies think they’re staying ahead of trends. I will tell you that that is not my observation. So I would be on the marketer side of. Yeah, I think you give it lip service, but I don’t really think you’ve got a baked in way of making sure that your team is well informed, experimenting with new technologies, playing with the trends, beta testing trends with clients and projects. I don’t really think we’re as good at that as we think we are. It’s interesting. Like you, you know, we’re out in the field doing research every year and the agent, the 2025, because it is.

Lee McKnight:

2025, Lee, you know, I’m not gonna live that down.

Drew McLellan:

Nope, not for a while. The 2025 agency Edge Research, we’re out in the field right now and it’s all, it’s talking to people who hire agencies. So marketers on their attitudes about AI, their attitudes about agencies using AI, they want to pay for where they’re experimenting because I do think it’s a little bit of the wild, wild west. But I, I will say we have some agencies who are way ahead of it and they’re really leveraging it internally, externally, in lots of ways. We also have a lot of agencies that are still afraid of it or you know, two people on the team have a CHAD GPT account, but they’re not, there’s nothing formalized and there’s certainly not as much sort of a system or a process for weaving those trends. Whatever the trends are, it doesn’t have to just be AI, but weaving those trends through the entire organization. So I do think agencies can and need to do a better job of that. I think your marketers are probably more astute than when we look in the mirror and we go, yeah, we’re doing a pretty good job. I don’t know that I think that’s true.

Lee McKnight:

Unfortunately, I would agree with you. But it is interesting because I was talking with an agency principal a couple of weeks ago who was just gushing about this GPT that he created.

Drew McLellan:

Oh.

Lee McKnight:

To write proposals for him. And. And he says, now what I do is I don’t literally just take that and here’s the proposal.

Drew McLellan:

Right?

Lee McKnight:

But it cut. It has cut my time in half.

Drew McLellan:

Right.

Lee McKnight:

According to him. And he’s like, look, now I have to do the work still, of course.

Drew McLellan:

Right.

Lee McKnight:

But some of these things that. And I’m like, well, yeah, but is it, you know, the thing about those proposals, and we see this with our own clients. How cookie cutter is that?

Drew McLellan:

Right?

Lee McKnight:

And he said, and I’ve not seen one of those. I would love to. In fact, I should probably ask him. He goes, no, it’s doing a lot of the groundwork is what it is.

Drew McLellan:

Yeah.

Lee McKnight:

And the rest, of course, I have to customize. He goes, I’m telling you, he should like sell this thing, you know. But I had never created my own GPT in that manner. I mean, I’ve yet to find, kind of like, how would I embrace that. But he was just. We talk 10 minutes easily about just that. So agencies listening, something to think about. I mean, those are the kind of tasks where I can be very useful.

Drew McLellan:

Right.

Lee McKnight:

And I do get what, you know, I hear you. I talk, talk to small and midsize firms. That’s who we both work with, if not exclusively. They are kind of scared. And I get it because it. But here’s the thing. It’s just read an article the other day. It’s like, you know what, what AI is not AI is there for consistency, repetitiveness. It’s not about, at this point, anyway, real creativity. I guess at some point it will get there maybe, maybe sooner than we’d like.

Drew McLellan:

Right.

Lee McKnight:

But I think they have to embrace it. Otherwise, to your point when you started, they’ll get left behind. And I think that’s what some of these marketers, again, to your point, when we have that percentage that’s lower than agencies, God bless them, I think that’s what it’s about.

Drew McLellan:

Well, and I. And I think the delta of that is either we are doing it and we’re not doing a good job of merchandising it to our clients.

Lee McKnight:

Great point.

Drew McLellan:

Or we’re not really doing it. So earlier this week, so one of our member only benefits is we do this thing called a digital summit where we bring all of the digital folks together from different agencies. So we had about 50 agency.

Lee McKnight:

Oh cool.

Drew McLellan:

PPC, SEO, DEV, AI, all of those folks together on a like eight hour Zoom call. And it was fascinating watching them talk about how they are or aren’t using AI. And really where the ones who are more sophisticated with it are, is in things like research, it’s more data driven things. Some of them are using it in amazing ways for like PPC and SEO, planning, tracking, sort of where’s the puck going next, what’s working, what’s not. So it’s not even so much. I think when it all came out everybody was like, oh, it’s going to write blog posts and it’s going to create visuals and, and, and I do think some agencies are using it for that. But the agencies that have gotten really more sophisticated with it are how do I take this data and have it crunch the data in a way that it would take me three hours to do and it can do it in five minutes and how can it sort of help me anticipate what this data is saying? So I do think agencies are starting to use it, but I would not say ahead of the trend.

Lee McKnight:

Yeah, right. Yeah, Yes, I mean I see the same thing. And that does kind of segue into another question that we asked around RFPs, that angels are singing, everyone loves them. But you know what is interesting is, gosh, it’s probably been eight years we’ve asked that question, you know, and in terms of marketers releasing them and in terms of agencies answering them and, and I love the fact, personally, I love it that that number for agencies, the percentage continues to go down in terms of how often they are answering RFPs, because we all, I mean the blood, sweat and tears that go into those and everyone listening is like sighing or crying.

Drew McLellan:

Right? Yep.

Lee McKnight:

You know, and it’s always been our mindset strategically, you know, it can be helpful some of those and higher ed and things like that, of course you have to answer them.

Drew McLellan:

Right. There are certain niches or industries where if you want to play in that space, you’re going to be in RFP land. But in theory you’re answering those RFPs because you have an unfair advantage in that space. You’re a niched agency. You’ve got 10 years of experience in higher ed or government transportation or whatever it is. So you are one of the front runners. You’re not somebody who’s just searching for RFPs online and answering all of them. So I’m relieved to hear. And we, I’ve noticed it too. I’m relieved to hear that agencies are being more judicious about where they spend their RFP resources and they are accepting the fact that unless it feels like they have an unfair advantage, they probably have a disadvantage. And that’s a huge time suck and resource suck for a very low win rate.

Lee McKnight:

What is mind blowing to me is I just talked to an agency of 15 people last month and they are answering roughly 25 RFPs a year. And I’m like, what are you doing yourself, Mike?

Drew McLellan:

And how many are they winning?

Lee McKnight:

You need counseling. What are you doing?

Drew McLellan:

Right.

Lee McKnight:

And that’s why they were talking to us. But it just, I’m like, why? And they aren’t playing in the higher ed or CBB space. It’s where you have to do it. It’s just no, you know, and we’ve, I think they said last year they answered that many, got two of them. No, like, let’s talk ratios here and the percentages. How do you still have a team?

Drew McLellan:

Right.

Lee McKnight:

How would you have 15 people there? So I think for small midsize firms, I, I, I’m, I’m just flabbergasted.

Drew McLellan:

So if clients are issuing fewer RFPs, how are they then seeking and hiring agencies?

Lee McKnight:

Well, that’s a great question. And I would like to go back to some of these marketers because I think they’re saying that they’re releasing less and I wonder if really that I don’t know what marketers are saying in terms of how they are finding new agencies in that flip side. The first one we talked about, a lot of it is still they is the networking piece, is the referral piece. But I’ll tell you what, a lot of them, it’s content. Yeah, I think that came in third, I believe, and that’s grown every year. And it’s interesting when you get kind of the younger and younger. I think I just saw like 40 new CMO positions this year on some of these bigger brands, which that’s nothing new. I mean those flip a lot, you know, and that’s always a cause for consternation. But agencies shouldn’t look at it that way though, because it’s also a chance for you to get in there.

Drew McLellan:

Right. Fresh blood, eat Fresh blood. Yeah.

Lee McKnight:

And show them your chops. But as they do get younger, and I’m still young, by the way, of course.

Drew McLellan:

Yes.

Lee McKnight:

Yeah. Right.

Drew McLellan:

I mean, you and Elvis both. Right.

Lee McKnight:

I think that that content piece, you know, agencies, like we said in the beginning as well, I mean, they’re, they are getting better and that, again, I can help you there. But I think what a lot of them are seeing is I don’t necessarily have to have a blog on the site, even though many do, and that’s fantastic. You don’t even have to have a substack, but a lot do. But I think it’s just take LinkedIn for example. I think agencies, their LinkedIn game has gotten exponentially better and they’re realizing that not only do I need to create this content, but hey, by the way, you need to be following these people on LinkedIn as well and connecting with them because it’s the field of dreams. Kevin Costner. It’s like build it and they will not come.

Drew McLellan:

Right.

Lee McKnight:

You, you’ve got to get it in front of them. Agencies are getting better at that. But I think just, I, I’m saying that now to any of you listening. I mean, it’s a good reminder and it should be a daily reminder that you’ve got to get it in front of them.

Drew McLellan:

Yeah. I have to say, when I read the report, you know, selfishly, I was super excited to see that statistic because obviously, you know, we’ve been beating that drum for a long time with the whole, our whole attitude about how do you sell from a position of authority? And so it’s good to see that now there’s data that’s showing this is working. I, you know, we have lots of antidotes around how it works, but it’s, it’s always nice to have some data, too. So again, to your point, content doesn’t mean a blog. It could mean, you know, interacting on LinkedIn. It could be having a podcast. It could be doing a piece of research every year. There are lots of ways for agencies to create thought leadership content and share it, and it doesn’t even, it, you know, again, it doesn’t have to be written. It could be oral, like a podcast. So lots of ways for agency owners and leaders to lean into that. And it’s nice to see that it’s starting to resonate with, with the folks that hire us, for sure.

Lee McKnight:

Absolutely. Yeah. And I think there’s two other things I wanted to, to bring up. I mean, one of them, and it’s, it’s, it’s interesting to me again came up in a conversation with the principal at an agency talking about in house agencies.

Drew McLellan:

So that’s been a painful truth. So you know, we talk about that sort of a pendulum that swings. Right. It seems like it’s on about a 10 year cycle of, you know, everything comes in house and then slowly over a decade everything goes out of house and then back and forth. And I, it’s certainly, I think you can tie to the economy. But the last few years a lot of the nos that agencies were getting and a lot of the losses that they were getting from existing clients was because clients were taking work in house. For sure.

Lee McKnight:

Yes. So what we saw was 54% of marketers and it’s steadily creeped up.

Drew McLellan:

Yep.

Lee McKnight:

Saying that yes, we do a majority of our work in house. But it’s interesting to me, I just wrote a blog post about it. Two of the biggest objections out of the gate that like that our new business directors get. It has been that way for our almost 20 years of existence. And that is we’re already working with another agency or we do that in house.

Drew McLellan:

Yeah.

Lee McKnight:

Or we have an in house team. Two of the objections that are non stop always get. And those are not objections to us because we are so used to that. And agencies need to get used to it too. If they’re doing it in house. And they’re both similar in terms of how you respond to it. If hey, we have an agency. Okay. And we know to your point it is cyclical, you will get like I need specialists, I need two or three agencies, or I need all in one. I’m tired of dealing with, you know, and that goes every other year, I feel like. And it’s like how agencies just beating your head against the wall. But you know, the answer to that objection is always yeah, well that’s how we get. That’s how we work with almost all of our clients.

Drew McLellan:

Right.

Lee McKnight:

We play well in the sandbox.

Drew McLellan:

Right. We don’t have to be the only game in town. Right.

Lee McKnight:

We totally get it. Absolutely. But, but is your agency doing what we do? And I’m saying that in a very blanket way.

Drew McLellan:

Right.

Lee McKnight:

But that, that’s the answer to that objection. I mean all the time. But the in house piece is similar and it’s because agencies don’t let that be a barrier. Now to your, to your point, when you already have a current client and something gets taken away, I mean that’s hard to swallow. It’s hard to. I mean at that point, what I’m saying Doesn’t help you quite frankly. But from a biz dev standpoint you can’t let that stop you because it’s the same kind of answer, it’s same kind of response. And that is yeah, but their in house team does not do what you do. Agency, principal. They cannot do it unless it’s a giant brand which probably most of the folks we work with aren’t necessarily going after the Cokes of the world necessarily.

Drew McLellan:

Right.

Lee McKnight:

But most of the folks like the mid tier was still good budgets. They might have one or two people in the house, maybe a bit more, but they still don’t know what you know. And obviously you’re not going to go in there and say that guns blazing because then you look like a jerk. But you know that that’s one of the responses. And to me also we’re already working with another agency. I just talked to a principal the other day who said that himself. He’s like, I just don’t know how to respond to that. And I’m like look, let’s just out of the gate say you want them to tell you that because if they don’t work with agencies now you’ve got a whole nother.

Drew McLellan:

Now you have to be their first agency which is never your first agency.

Lee McKnight:

They don’t know the value of what you do. They don’t know how price. Some agencies kind of like that because they like pain I guess.

Drew McLellan:

Right, right.

Lee McKnight:

Like if that’s happening to you, you’re not going big enough. You need to up your game in terms of the revenue of companies you’re going after.

Drew McLellan:

Yeah, agreed. And you know the interesting thing about the in house objection is this gets back to what we were talking about earlier which is the truth of the matter is I don’t care how big of an in house team they have or how good they are. Yeah, we bring a different perspective. We bring that outside perspective. We understand your business but we aren’t caught up in the day to day of it. And therefore we bring a fresh perspective when we marry that with we actually are keeping up with the trends. We actually can talk to you about what’s happening out in the outer world and what other brands are doing and things like that. Now I bring a value that your in house will work with your in house team but I think we can bring something of value. And so I don’t disagree with you that there’s always a conversation to be had even if they have an in house team. However, it is good news to hear that the, the pendulum swing According to your data, is that we’re not going to see a lot of growth of in house teams in 2025.

Lee McKnight:

Yeah. And that is a great point to make because it is more that the percentages at least of the marketers that we surveyed. It’s more that it’s stabilizing versus there’s not growth in that percentage over the last three and four and five years. And you’re right. I mean, that should be heartening to agencies out there. And again, you couldn’t be more right. And that’s where, you know, you marry that in terms of the content also that we talked about, I mean, getting out there and making sure that these folks know these prospects or clients, quite frankly. Absolutely. We are the experts here, right? We are the experts. We are living this every day. And they can’t do what you do and they don’t know what you know to your point. And again, you have to present that in a, in a way that the way I’m saying it obviously is not the way you’re presenting it. But I think that’s why an ongoing content in some form and it doesn’t have to be every day, but it’s gotta be a thing.

Drew McLellan:

Yeah.

Lee McKnight:

For your agency in this year that we live in. Which I believe is 2025 according to you.

Drew McLellan:

Yes, according to me. All right, let’s take a quick break. Cause I want to come back to this in house thing for a second when we come back and I want to talk about how I think part of dealing with in house is understanding that mostly what they do in house is execution. And so if we are thinking more strategically, more trends, more bigger picture, that’s one of the ways we can plug into House. But let’s take a break, then we’ll come back and chat about that and then some more of the data coming out of the study. Hey everybody, thanks for listening today. Before I get back to the interview, I just want to remind you that we are always offering some really amazing workshops. And you can see the whole schedule@agencymanagementinstitute.com on the navigation head to how we help. Scroll down and you’ll see workshops and you can see the whole list there with descriptions of each workshop. They are all in Denver and we’ve got them throughout the year for agency owners, account Execs, agency leaders, CFOs. We have a little something for everybody. No matter what it is that you’re struggling with, people, new business, money, all of those things we’ve got covered. So check them out and Come join us. All right, let’s get back to the show. All right, we are back with our friend from RSW, Lee McKnight, a regular visitor. We’re back, we’re back. We are back. It’s a brand new year and here we are. So before the break, we were talking about sort of the banging our heads against the brick wall of in house. And so it’s interesting, we just did a client satisfaction survey for a client. And for us that’s a mix of online surveys and interviewing their clients. And one of the things we heard their clients say in a lot of the in person interviews was, my goal is to bring more of the work. We love the agency, but my goal is to bring more of the work they do in house because we can do it deeper. And when we drill down into that, it’s really the low level execution stuff. It’s, it is the commodity work. And so I think for agencies too, if we hold ourselves up as subject matter experts and we are the trend watchers and the trend trackers and we are the strategic partners, there is a place for us at the table with a client that has a robust in house team. It may just be that we have to get paid for our thinking rather than our doing.

Lee McKnight:

I love that. You’re very right. And I think, yeah, that execution piece is absolutely what those in house teams are doing. I was going to say more often than not, but no, but I mean, that is what they’re doing. And I think it also lends itself and gosh, agencies are going to roll their eyes because they hear from you and I from the rooftops, talk about differentiation and specialization. And again, specialization doesn’t have to mean that you are a pharma agency or you are a CPG agency. It doesn’t have to be that. I still, you know, it’s crazy to me today that agencies still kind of can’t wrap their heads around it in so many ways. And I continually will tell them, I’m like, it doesn’t have to be one one way and that’s the only way.

Drew McLellan:

Right.

Lee McKnight:

But I do get that they’re so close to it that it does get hard. And I know that’s so much of how you help your agencies. Right. And that’s how we start with ours too. And I just can’t stress enough. And I know agencies get tired of hearing about it, but they’re not listening sometimes, you know, in terms of like, they just shut off. And like, let me tell you, during the pandemic, if I had been Solely focused on tourism, we would have been done. And, well, it’s hard for me to argue with that.

Drew McLellan:

Right.

Lee McKnight:

To be sure. But again, I always have to respond with, I get it. But again, you don’t have to just be the tourism agency.

Drew McLellan:

Yeah. Although I will say two things. Number one, that we, you know, we see the financials of hundreds of agencies, and without exception, the agencies that are dropping either no profit or the lowest percentage of profit are the generalist agencies. They. They’re struggling to not be a commodity. And. And so if you’re not a specialist in something, then you have to compete on price. And that’s a killer in our market today with offshore talent and, you know, freelancers and all the other things. And the second thing is that tourism is the perfect example. I have had so many people say, well, if I had been at tourism agency, and I will say to them, I can point to three ami agencies that specialize in tourism. And they had. They were so good at their niche that they were some of the agencies that bounced back the fastest because when tourism came back, those clients wanted a specialist and they had. They had to get money in the door now because they had had no money for so long. And those agencies today have deeper pockets and we’re thriving. And they came out of COVID stronger and faster than a lot of other agencies. Yeah. Did they struggle for that? For that year, that nine months? Absolutely. But those that stayed true to it, that kept helping and teaching and being a resource to the tourism prospects who weren’t spending any money but still needed help. Man, did those people come back with wallets open when people started traveling again. So to your point, you don’t have to be an industry specialist, but you do have to be a specialist in something. You do.

Lee McKnight:

You do. And that’s what marketers consistently tell us year over year is that’s what we’re looking for.

Drew McLellan:

Right.

Lee McKnight:

And I know we could have a whole episode just about that, but I really want to hear your opinion and what you’re hearing out there. We had Tim Williams of Ignition Consulting, and Tim’s great. He does a lot of things that we don’t touch on as often. That is, in terms of pricing and in terms of productization.

Drew McLellan:

Yeah.

Lee McKnight:

Tough to say that word over and over again, by the way. So what we saw here, 52% of agencies saying they sometimes productize their services versus, and this is where it gets a little, like, frustrating, 65% of marketers saying, well, they still prefer customized services.

Drew McLellan:

Right.

Lee McKnight:

It’s interesting because I actually had an agency principal ask me just recently, like, what do you mean what Productization, what does that mean in our world? You know, SEO firms, for example, have been doing this or always in terms of bundling services.

Drew McLellan:

For example, packet, the silver, gold and platinum package.

Lee McKnight:

Exactly, exactly.

Drew McLellan:

Yeah.

Lee McKnight:

And I do understand for like creative firms, that gets tough. Like how do I. In fact, that’s a dirty word almost, right? It’s like, no, I’m productizing my creative output. That’s crap. You know, and what do you. What are you seeing out there? I mean, it seems like it’s becoming. I’m hearing about it more and more. Just like saying that generally, like in our world, what do you like AMI agencies? Do you see a lot of that? You know, it’s bandied about.

Drew McLellan:

It’s interesting. So we see more talk about productization when agencies have been through a dry spell and they feel like if they had interesting. If I have, if I can hold an apple up and I can say, don’t you want this juicy apple? I have something that’s easier to sell than the etherware that we sell, which is strategy and ideas and market share growth and all of those. So I think agencies gravitate to productization when they want to simplify their sales process. But the reality is, I also will say that we do have some agencies that are creating product, but it’s truly product. Like it’s a reporting tool or a new way of dashboarding or measuring. But in terms of the strategy and work we do, even if we’ve packaged it in some way, so we, you know, we give it a cute acronym because we acronym everything in agencies.

Lee McKnight:

Right.

Drew McLellan:

The reality is when a client buys it, they un. They want you to unbundle it because it’s not quite right. And so I find it fascinating that we lean into this idea of kind of dumbing down what we do that like everybody needs the apple. Well, actually I want a green apple and I want it cored and I want it in a pie is different than I want an apple. And so I see agencies leaning into it out of frustration or a dry spell more than an insight that clients actually want to buy a product. Now, there are certain kind of agencies like you say, ppc, SEO, E Commerce, where part of what they do, they know, is, look, this is a repetitive game and there are certain things that we have to do in the channels that we work to deliver success. Again, that. But I think the minute you productize the strategy or the whatever, I think you’re right. I think you’re I think your data is correct, that clients are like, no, my business is unlike any other business on the planet. I need the special snowflake of deliverables for my clients or my team or whatever. True or not, I think that’s how everybody views their business. And if we want to be charging a couple hundred dollars an hour as a specialist, it’s hard to do that and be the Walgreens that just gives flu shots and everybody gets the same flu shot.

Lee McKnight:

Yeah, for me, what you just said is like the golden takeaway. And I’m kicking myself because I wrote a post last week around this, the longest post I’ve ever written. And I was like, man, this is awesome. And that one point you just made is not in that post. I’m not going to update it. And I probably will give you credit or not. We’ll see. But sincerely though, I have heard that myself and I did not think about that fact. Agencies do that. They do do that. And I got, I literally had this conversation not that long ago with this principal who’s like, you know what, we’re really thinking about productizing some new services because man, last year was rough. We feel like this is going to be it. Like this is what’s going to turn the tide, literally. You said that and you’re so right. And that now that I’m thinking about it, I’ve heard that multiple times when it comes to trying to say it, productization, especially for small mid sized firms. And I think to take it a step further for agencies to think about that, it’s got to be a balance. And don’t just dive into it thinking that, well, I keep hearing about it, gosh, we need to do this. But do you. It can certainly work. But I think you made such a good point, a salient point, that don’t just jump into it thinking that, well, this is the way the industry is going because I see a lot of that out there. I’m sure you do as well. Like you need to be doing this as an agency or you’re going to be left behind. And I’m like, well let’s, let’s talk about that. Right? Let’s have a deeper conversation around it.

Drew McLellan:

Think about the other subject matter experts that we hire. Would you hire a tax strategist who goes, look, you can have the apple, the orange or the pear tax strategy. Which one do you want? Or, or an architect that says, look, we have the ranch plan, the two story plan or the split level, we will make no change to it. Which one do you want.

Lee McKnight:

Yeah, right.

Drew McLellan:

Anybody who’s a real subject matter expert, who’s doing something at a high price point, we want it to be custom to us. So why would we think our clients would want anything less from us or would not devalue what we do if it literally is, look, it’s the ranch, the split level or the two story take what we got, no customization. Well, I don’t want the bathroom there. Sorry. That’s where the bathroom is. Right. We wouldn’t hire them. It just doesn’t make sense to me. I, I get that it feels easier, but it, I think it diminishes the value of what we actually bring to the party.

Lee McKnight:

That is a great point. Yeah. Another question kind of in a similar vein, and this is where I, you are much more in the know on this, but I thought it was interesting that 53, I’m going to just read it directly. 53% of clients now prefer paying for specific deliverables, up from just 5% in 2016. So highlighting the growing demand for tangible results over time based billing, which, you.

Drew McLellan:

Know, is interesting because for years and years and years we’ve talked about value pricing, right? And the true definition of value pricing, where you and I sit down together and I go, lee, I know you want a website. So if the website did everything you wanted it to do, what would be the roi? And you go, oh, that could put a million dollars to the bottom line for us. And I go, great, so if I only charge you a half a million dollars, wouldn’t that be a bargain? That we think a client would go absolutely is insane. But I do think being able to demonstrate value and ROI and be able to claim a premium price because we hit ROI or because we hit KPIs is absolutely the way we should be setting pricing. Our clients don’t care how long it takes us to do anything. They’re not buying five hours. They’re buying a landing page or they’re buying a sales uptick or they’re buying whatever. So I think that’s actually a great opportunity for us to justify our pricing if we’re good at what we do. And this is the scary part for agencies, right? We’re working with an agency and I had the owner say to me, I’m not outselling as hard as I should because we’ve lost some key people and I don’t have a lot of confidence that we can actually deliver what I say that I’m selling. Well, if that’s, if that’s the position you’re in, then this new model of pricing, not going to be awesome for you. Right, Right, Totally. If you’re good at what you do and you are confident in that, then yay. That means you get to raise your prices because you can prove that for every dollar they give you, what, you know, we call it countable work. When I, when I can say to somebody, look, you give me $10,000 and I will give you at least $20,000 in leads and sales. Who’s not going to keep giving me more money? Right. As opposed to, I’m going to give you a landing page and it’s going to be beautiful.

Lee McKnight:

Interesting. We’ve never asked questions around pricing. That’s not necessarily our forte.

Drew McLellan:

Sure.

Lee McKnight:

But learning more and what you just said, I mean, I would agree. And you know, it’ll be interesting to see moving forward where that goes. And it also kind of leads into the next piece that I want to throw out to you and how often AMI agencies are getting into this. But that is asking marketers about search consultants.

Drew McLellan:

Yeah.

Lee McKnight:

And it’s interesting. They were, gosh, I think it’s been four years now and this year it was. Marketers are split on hiring consultants. It was 48% yes. 52% no. The NOS have increased slightly over every year we’ve asked it.

Drew McLellan:

Interesting.

Lee McKnight:

It is interesting. And how much of that. And I know as these, you know, as we get into bigger and bigger companies and brands that are. Absolutely. That’s, that’s their go to. How much of that do you all talk about at ami?

Drew McLellan:

We do. And you know, as you know, we have a great relationship with Mercer Island Group. And yes, absolutely. Some of the other search firms and what we’re hearing from them is smaller and smaller brands are starting to turn to them. So it used to be that was only the big brands and it was mostly consumer packaged goods and that, you know, kind of thing.

Lee McKnight:

Right.

Drew McLellan:

Luxury brands. And they’re finding more and more it’s media, only or PR only or smaller spends. But a, it’s not inexpensive to do. I mean, they have a depth of expertise and it’s a, it’s a process. So I can see why a brand’s like, maybe not. And I think too, as agencies become easier to find and learn more about, maybe they’re thinking that they can do some of that, some of that search on their own. I think brands have to have a certain level of spend to make a search firm make sense. And so what we see is for our agencies, smaller and smaller agencies are being invited into Searches being run by the search firms. Because as the brands are coming down, as their budgets are coming down, search firms are saying, oh, this is not 100 person agency job, this is a 25 person agency job. So more and more agencies are being invited to that. But it’s sort of like the RFP thing, right?

Lee McKnight:

Yes.

Drew McLellan:

If you get invited to a search firm, search, that is not a small ask. They are asking you to bring your A game and your A team and there’s going to be multiple asks with an RFI to an RFP to an in person presentation. So just like you should be judicious, I think about the RFPs you respond to. It’s flattering, super flattering to be invited by a search firm to participate. But if you, but if you look at the brand or you look at the category and go, I’m not really sure why I’m in this pitch, why I would be included in this, or I’m the smallest one in, in the shootout, you know, then I think you have to think about whether or not that’s a worthwhile investment of your time.

Lee McKnight:

Yes. It’s kind of fascinating to me that world, because I think you bring up Mercer, you know, I mean, and they are particularly, they’re very smart, you know, and I’m on there, I’m not getting paid, I should let me reach out. But, but sincerely, I mean, they, I’m on that mailing list and I see.

Drew McLellan:

They’Re the best of the best. I think for sure they’re quite good.

Lee McKnight:

And like I would be if I was a marketer. I would like. Okay, yeah, speaking of content.

Drew McLellan:

Right.

Lee McKnight:

And getting that out in front of people, like, okay, I would feel good about using them. Whereas I, especially the bigger ones who, you know, not that I have intimate, you know, knowledge, but I see it too. And I think quite frankly, a lot of them just take it for granted that we’re the big dog on the block, if you will.

Drew McLellan:

Right.

Lee McKnight:

I don’t know how otherwise some of these marketers would ever find agencies. And we talk, we’re kind of going back to the beginning, right. Where it’s like, how do they find them? Referrals, networking and that direct outreach piece, getting more. It’s always been important. So it’s interesting how it’s kind of split and it hasn’t changed a ton year over year of us asking that question.

Drew McLellan:

Yeah.

Lee McKnight:

So I think part of it is just like again, getting your name out there and like they do and they have a certain amount of knowledge and expertise that it’s going to be tough for you to do that on your own. So.

Drew McLellan:

Well. And I think two agencies, you know, we’re always saying, look, you got to know who the search firms are that would work with an agency or size and get to know them and let them get to know you. I mean, just like it’s hard for a brand to find you, it may be hard for a search firm to find you. So, you know, the good ones welcome that sort of outreach from agencies because it builds out their Rolodex of potential agencies to put in front of prospects. And I do think when you think about it from the marketer’s point of view, the risk they take in hiring an agency is so huge. If they get it wrong and the agency sucks, they’re going to lose their job. Or if they’re the owner of the company, they’re going to lose their, like, it’s. It is no small risk for them. So I get why some of them would want to hedge their bet and use a search firm because these are subject matter experts who are going to help me find, who are going to ask questions I wouldn’t even know to ask to help me find that right fit. So I get it. I mean, I, I think sometimes we’re cavalier as agency folks. Like, we get so frustrated that clients take a long time to decide or don’t decide or ask, you know, put up more hoops for us to jump through. But I think sometimes we’re very cavalier about the risk that they are taking with the company’s money when they go all in with one of us.

Lee McKnight:

That’s interesting. Yeah, we’re.

Drew McLellan:

If we’re not good at what we do, you know, we’re great marketers, so we can blow smoke up skirts all day long. Right. But if they’re not a sophisticated buyer, if they can’t tell the difference between good and great or pretty good and great, and that’s going to be a swing in terms of their ROI that could cost them their job. I totally get why they take their freaking time to make a decision and why it’s scary for them. And I think the agencies that are thoughtful about that and sort of coddle the buyer along to help them and even give them permission to take their time. Yeah, I think if I was a buyer of agency services, I would find that heartening. Like, oh, they get how big a deal this is for me. They do understand my world, which would make me lean into that agency a little deeper because I would feel like already they have empathy for my Situation.

Lee McKnight:

That mindset can be tough, right though?

Drew McLellan:

Oh God, yeah. Right? Months and months and months and months and months and months and months.

Lee McKnight:

That is how I operate when I’m like, part of my job at RSW is to bring new agencies on board. I have had, thank God it doesn’t always take this long, but I literally have had agencies where it has been eight and nine years.

Drew McLellan:

Oh, yep.

Lee McKnight:

And they, they will absolutely. When they do come on board, tell me, like, you have been really good about this. Like you never, I’m not trying to buy a horn, but it’s like you, but you never, it was never a hard press. Like you, you know, you, you stuck with me, but it wasn’t banging your door down every day.

Drew McLellan:

Yep.

Lee McKnight:

And not having junk. But instead it’s like, man, it’s, it’s, it is a cliche out out the wazoo, but it is a marathon. But, but I totally understand for small mid sized firms, man, to have that mindset is, is you gotta be right.

Drew McLellan:

And it gets back to, there’s gotta be enough going on in the pipeline that you can have, that, you can have that graciousness in your sales process. So we have the same thing. Someone will say, well, I’ve been listening to your podcast for 10 years and I’ve been getting your newsletter and blah, blah, blah. But what I say to agencies, and it’s true for our business and your business too, is there’s no group on to hire us. There’s no President’s day sale, like until they’re ready to hire us. And same thing for agencies. Until they need the agency, there’s nothing we can do to speed the process. So all we can do is be present, which gets back to the content piece. If we can keep being helpful and we can demonstrate how smart we are and be gracious about having conversations that don’t lead to a sale immediately. And we don’t push for that. We just are present to the extent that we can be. And I’m not saying giving give away the farm. I’m not saying do a strategy for free. That’s what we’re saying. But I do think you have to just know that there you have to generate enough activity that you can live with everybody else’s timetable because you honestly have no choice. You don’t, you don’t get to speed up.

Lee McKnight:

Exactly.

Drew McLellan:

Right.

Lee McKnight:

Yeah. And think about, I mean, this year, 1996, think about what be like, like 2025, for example.

Drew McLellan:

Yeah. That’ll be as we look into the future. Yes.

Lee McKnight:

Yeah, yeah. It’ll be really. Yeah, yeah.

Drew McLellan:

So as we wrap this up, what are three action items that you think the report suggests for agencies this coming year? What are three? Like, I need to do this based on this data.

Lee McKnight:

Great question. I think one of the one that we haven’t talked about and I’ll, I’ll make this brief, but one of the things that we saw in terms of what marketers were saying that they were paying attention to is short form video in terms of content. It’s never been easier for an agency. And that’s, you know, what they want more now is more. And God forbid, I’m not on TikTok, I’m way too old. But that’s what, that’s what these folks want, these prospects want. It’s never been easier for an agency to use their phone and have a minute and yet to be good at it. It’s, it’s an art in many ways. But I think number one is, is think about short form content, think about video. Yeah, I know that can be hard for some folks. Like, I do not want to do that, but you probably have someone in your firm that would be good, that maybe could, you know, help it and do that. I think number two, I’ll just reiterate what we said and that is in terms of differentiation, just making sure, you know, you’ve got to take a step back and look at again. You don’t have to specialize in one vertical, but you really do need to look at. Start with your elevator pitch, for example. Let’s get old school. But I mean, if you can’t do it in one or two sentences, you need to get back to the drawing board and figure out what is it about you. And look, yes, you’re going to look like other firms that you’re an agency.

Drew McLellan:

You’re not going to be the only one on the planet.

Lee McKnight:

That’s okay. I just had an agency recently, well, last week, even this exact same thing. And just, just, just agonizing over it. I’m like, look, at the end of the day, you’re an agency. That’s what you are. That’s okay, right? And you’re going to look like other agencies in some ways. But just by differentiating yourself and having that place of expertise and value is going to set you apart from so many other firms that, number one, probably aren’t doing anything from a business development standpoint. And if they are, a lot of times they’re throwing out the generic stuff.

Drew McLellan:

Right. Pantone Color of the year.

Lee McKnight:

Totally. And I think the Third thing is, look, AI is not going to go away.

Drew McLellan:

Right.

Lee McKnight:

We’re sick of hearing about it, quite frankly. I know I. But I just the other day got on this sub stack and, and looking at some of these prompts where I thought I was kind of decent at those, and I’m realizing, oh, my Lord, I am not very good at look. What. What is this? I think you’ve got to make sure that you’re not just that order taker, that you are staying on top of some of these trends. And it doesn’t mean you have to be knee deep and the expert in all things, but you, you got to. Not only. Here’s the nice part about it is when you do that and then you figure out a way to get that in front of your clients, you get those in front of your prospects, too. So it’s work that can be done on both sides.

Drew McLellan:

Yep.

Lee McKnight:

And so I think it’s something that you, you, you can’t sleep on this. It doesn’t mean again that we’ll see how it goes. But I think you’ve got to be in the know at the very least in terms of kind of where things are going and staying on top of those trends.

Drew McLellan:

Yeah. Yeah. Really great advice as, as always, you know, you and everybody at RSW continue to just be of such amazing service to agencies. And I think that I know that lots of our agency folks are, are very committed to a working with you, but also be just following your content and learning from you. And so I’m, I’m always grateful to have you on the show and being able to pick your brain on behalf of, of the audience because I think you guys think you guys do it well and right. And I think the industry benefits greatly from all the things you do, but this kind of research is just so invaluable. So thanks for being on the show and thanks for taking good care of agencies like you guys do.

Lee McKnight:

Oh, thank you for having me back. I love it. And thank you, by the way, because what you’re doing just from a content perspective alone, I am, I am an avid watcher and reader and appreciate it. So thanks for having me.

Drew McLellan:

You bet. You bet. All right, you guys, so Lee gave you three or four action points at the end, but really we’ve been serving up action points and things for you to think about throughout the entire episode. So this is a great episode to listen to with your entire new business team, your entire agency. This is stuff everybody needs to understand about what’s happening this year and in as we look forward. What’s on the radar screen of the people that hire us and what do they care about? And how can we show up in a way that is, that resonates with them, that makes them feel like we would be good partners? And some of that was good news and some of it’s a little bit of a bitter pill to swallow, but it’s the truth and we have to start with the truth. So this is an episode that should absolutely have some action items coming out of it for you, and I would love to hear what you’re doing with it. Lee and crew, of course, will be with us at the summit again. So if you want to pick these forward to it. He’ll be there live for you to chat with for a couple of days. So, and of course, we’ll have all of the contact information so you can talk to Lee and his team at RSW in the show notes. We’ll also have a download link for you to be able to look at this report because we just scratched the surface of the report. There’s a ton of great data in there and so you, you really owe it to yourself to grab it and all the content they do, but grab this piece of research and, and really study it. And you know there are going to be some of it depending on what you do that doesn’t pertain to you, but a lot of it is going to be right. It’s going to be about you, your prospects, your clients. So make sure you make sure you study it well. All right, I’ll be back next week with another guest to get you thinking a little bit differently about your agency. And of course, speaking of the summit, huge shout out to our friends at White Label iq, presenting sponsor of the podcast and the Summit for many, many years. We’re so grateful for them. But as you know, they come alongside agencies and they do white label design, dev and ppc. So whether it’s an app, you need to build a website, a landing page, PPC for your clients. They crush it for agencies and they get how you price. They get how to make clients happy because they’re born from an agency, so they understand your world because they’re a part of it. So head over to white labeliq.com ami to learn more about them. And also if you bump into them or if you talk to them or you see them on LinkedIn, do me a favor and send them a note and say thank you. Thank you for supporting the podcast. Thank you for helping us be able to go to the summit. They make it possible for us to bring these things to you. So I would be very grateful if you showed that you are grateful because that reminds them that the work they’re doing is important and appreciated. All right, and we’ll see you next week. Thanks for listening.