Agency Edge Research Results 2019 with Susan Baier

Speaker 1:

It doesn’t matter what kind of an agency you run. Traditional, digital, media buying, web dev, PR, whatever your focus, you still need to run a profitable business. The Build a Better Agency podcast, presented by White Label IQ, will show you how to make more money and keep more of what you make. Let us help you build an agency that is sustainable, scalable, and if you want, down the road sellable. Bringing his 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey, everybody. Welcome to another episode of Build a Better Agency. Thank you for coming back if you are a regular, and welcome if you have just found us. Super happy to have you. I am super excited about our topic today. Before I get into that, just a reminder, I am super excited. Currently, I’m super everything today. I’m super excited to have launched the Build a Better Agency Summit. That is the very first conference that is specifically built for small to mid sized agencies. And when I say small to mid sized, I mean whether you have two people or 10 people or 100 people, maybe a couple hundred people, this is the conference for you. Unlike all the other agency conferences out there that define small as being 300 or 400 people, I know what a small and midsize agency looks like and we have built a conference just for you.

This is all about making your agency stronger, more scalable, more sustainable. And if you want to, more sellable down the road, but certainly more profitable. That’s all of the topics we’re going to be talking about are going to be about how do you actually build a stronger, better, more sustainable, more profitable agency. That event is in May of 2020, which is only a couple hundred days away. And right now, we are at early bird pricing. I would love to have you there. Because of the space we’ve reserved, we only have room for so many people. And we’re about 30% or 35% sold out right now. So please don’t wait too long. I know it feels like May as a long ways away. But you know what, in a blink, it will be the holidays, and then it will be New Year’s. And before you know it, I’ll be talking about spring showers. And hopefully, we will all be hanging out in Chicago together at the Build a Better Agency summit.

If you head over to the Agency Management Institute website, so agencymanagementinstitute.com, the very first button on the upper hav is BABA Summit for the Build a Better Agency Summit. And you can learn all about it there. You can see who the speakers are, some of the sponsors. We’re still adding folks for sponsorship so that will keep changing, and some amazing, amazing folks who are going to be sharing their expertise and knowledge with us. And of course, you’re going to be hanging out with other agency owners and other agency leaders. So you’re going to learn a lot from the speakers, absolutely. But you can also learn a lot from the people you sit next to at breakfast, at lunch.

So I’m very excited about it. I want you to be there, likely to share in this inaugural event. So head over, grab your ticket now while we’re at early bird pricing, and I will see you in Chicago.

All right, so for today’s topic, we are welcoming back Susan Baier from Audience Audit. As many of you know, Susan and I for the last five years have partnered on what we have defined as the Agency Edge Research Series. And so every year we go out into the field and we do primary research, talking to clients who hire agencies. So we only talk to people who are actively in relationships with agencies and we delve into some aspect of that agency relationship. In the past, we’ve talked about bizdev. In the past, we’ve talked about how they feel about AEs. Last year, we asked them about outsourcing and how they decided when to outsource and when to bring it in house.

And this year, we did a really interesting thing. We we went back to our original study in 2014, and we decided to revisit that same topic, which is how clients view their agency relationship, and what they’re looking for in an agency partner, what matters to them. So we repeated many of the same questions because what we wanted to see is in five years, what had changed and what had held true. And then we also added some new topics that we had not covered in the 2014 study. In addition, we expanded the audience, both in terms of budget size and also geography, and so we’ll get into all of that, but I’m super excited to tell you about it.

We are doing a webinar. If you’re listening to this real time, Susan and I will be doing a live webinar on November 12, 2019. So just in case you’re listening to this in 2020 or 2021. Anyway, we’re doing a live webinar where we will sort of dig through the data with you on a webinar so you can ask questions, and we can slice and dice the data based on your questions and show you different things like how did women respond to that or how did the over 40 crowd respond to that, whatever that may be. So you’re welcome to do that as well. And we’ll give you the details inside the podcast of how to get that. If you’re not listening to this real time, we will certainly post the webinar, so you can watch it after the fact. So do not fear. You are not going to be left out. So without further ado, let’s jump in and talk about this research because I think you’re going to find it fascinating. All right, Susan, welcome back to the podcast, always fun to have you on the show.

Susan Baier:

Thank you. It’s always fun to be here, for sure.

Drew McLellan:

So in the intro, as you know, I was telling our audience that we’ve been at this for five years now and how we decided to come back and and look at some of the same questions, but also augment the questions that we asked in 2014, with some different questions, and that we broaden the audience quite a bit. So can you talk a little bit about the differences between the 2014 study and the 2019 study?

Susan Baier:

Yeah, you bet. I mean I was really excited about this opportunity, because we don’t always get a chance to go back and look again, and see what’s happened in the intervening years. And I feel like we’ve learned a lot, you and I from talking with agency clients and hearing their feedback. And so there was some things that we wanted to add to this study that we didn’t know to have in the 2014 version. So I was excited about this from the get go. One of the advantages we had was that we talked to many more agency clients in the study that we did in 2014. We had 271 of them five years ago, and this study had 1,060. So a really strong group. We also had folks from outside the U.S. So while 62% of our agency clients were U.S. based, we also had clients in the UK and Canada and Australia, so we’ve got an opportunity to see with some statistical reliability the extent to which what we were seeing in the U.S. was consistent in terms of agency attitudes outside of the country, in places where we know clients are operating and working with U.S. based agencies or whatever. So that was really interesting.

The other thing that changed is that back in 2014, we were really focused on sort of the smaller client. So for that study, all of them had a marketing budget of $1 million or less. For this study, we went all the way over 10 million, I think we went up to 20 million or 25 million, and including that group of larger budgets really gave us some insight that we didn’t get in 2014, which I found particularly interesting, and we’ll talk about that as we go through. And then as you said, we had some additional attitudes that we wanted to explore that had come up over and over again in the intervening years, and some different things we wanted to check on. But really, we kept the core of the attitudinal questions that we were asking the same, because we really wanted to see if the segments that we saw five years ago in 2014 were still there. We don’t predetermine these buckets, so it wasn’t a question of, we’re assuming we have the same buckets as last time, let’s see what their size is. We really didn’t know if underlying attitudes might have changed, and we would see a different landscape five years later. So that was really interesting for me going into this project. And of course, we didn’t know what we were going to find. But I think there’s a lot to chew on.

Drew McLellan:

Yeah. So one point I want to make is, although the sample size was much bigger in 2019, even the 2014 study was statistically valid.

Susan Baier:

It was.

Drew McLellan:

Yeah, okay, I just want to make sure people go, “Oh well, maybe that 2014 study wasn’t as-”

Susan Baier:

Oh, no, it was good. No, it was fine. What we did in this study is really broadened that group that we were exposing to, bigger clients, clients outside the U.S. And so we basically got a wider lens, but yeah, no, the 2014 study was good and strong. And so the question was, was that still going to apply and is it going to apply in a broader context?

Drew McLellan:

So as we discovered, what was interesting is that the attitudinal segments stayed the same. So for listeners who perhaps are not familiar with that methodology of research, can you explain what attitudinal segments are all about and how that work is done? And then we can talk about the segments in 2014 versus what we found out in 2019.

Susan Baier:

Yeah, you bet. So, a lot of your listeners are probably familiar with segmentation of one kind or another. It’s basically just grouping respondents or customers or prospects or whatever, into sort of understandable groups that are defined by particular characteristics. And so what a lot of organizations are looking at is their customers or their prospects by age, income, gender generation, millennials, whatever, or are looking at them based on sort of the actions they’ve taken. These folks have purchased in the last three years, these folks have bought more than $500 worth of industry on the B2B side, et cetera.

Attitudinal segmentation is instead looking at how they feel about a category, how buyers and prospective buyers sort of look at walking into a purchase decision process, what place this particular product or service has for them, how important it is for them, how invested they are in this decision, how knowledgeable they feel about making a good choice for their organization.

So it’s really what’s behind the ears, as opposed to sort of how you can look at folks or companies on paper. And we do it, it’s online survey research. And we do it by putting in front of these respondents anywhere from 35 to 45 of these attitudinal statements, and everybody who takes the survey has to rate each one of these and say, “I disagree with that. I agree with that to a greater or lesser degree.”

And then while we ask them a lot of other information in the survey about what they’re doing and what they’ve done in the past, and what they think we’re going to do in the future, the segmentation itself is just based on the ratings on those attitudinal questions. And we don’t go into it assuming we know what the segments are going to be. A lot of times, clients or even agencies have a very specific idea about, “Oh, I already know what the customer base looks like, and how it kind of lays out.” And that doesn’t go into the decision process for the segments. The segmentation itself is just math. It’s purely mathematical. So we kind of don’t know, until we do that analysis. For me, it’s like Christmas, I get to open up the box and see what’s inside. So going into this process, we had a lot of the same attitudinal questions in that group of 35 to 45 statements, but we didn’t have the buckets pre determined. So that was an interesting process to go through.

Drew McLellan:

Yeah. So in my layman’s terms, when I explain to people this kind of research, what I say is you walk into a room. And because we’re used to doing everything by demographics, and that sort of psychographics, you walk into a room with 100 people, and they all look exactly the same. They’re all middle aged women of a certain socioeconomic status, blah, blah, blah. And you can’t really tell the difference between them. But what your work does is it’s like thought bubbles appear over their head, and you can hear what they’re thinking and what they believe. So now you can begin to group them based on things that you cannot see, just with the data that’s easy to access about the average Joe today.

Susan Baier:

Yeah. And as you know, I mean in most of our studies, the things that we would normally assume cluster people together, like age or income or company size, don’t end up being part of this story at all. So yeah, so I didn’t know what we were going to find, honestly. I was hopeful that we would have some echoes of what we saw in 2014. But what we saw, I think, was really fascinating. And that was, we saw the same segments at play in this population in 2019 as we saw in 2014. So five years ago, we found three very distinct sort of attitudinal groups within agency clients. We found this group that we call looking for love, which are people who really want that very close advisory partnership, a collaboration with an agency who becomes more than just a vendor, and even more than just a marketing partner in many cases is really sort of helping them figure out the path ahead, and that’s a very sort of closely held relationship, a longer term relationship, and that’s what that type of buyer is looking for.

Drew McLellan:

Right. And some of the other things we saw in that group is they want an agency to lead them, and they want an agency that offers a lot of a wide variety of products and services, because that agency is going to sit at the strategy table, at the decision making table, at the C suite table. They’re looking for that. So in agency language, we always talk about, we want to be a strategic partner to our clients. This segment is looking for that kind of partnership.

Susan Baier:

That’s right. That’s these folks. That’s what they want. So that was the first group. But then we found this other group, we call them playing the field. And they view the agency relationship very differently. These folks use agencies a great deal, and they outsource to agencies a lot. So I don’t want anybody thinking that they are anti agency. They are not at all. But they are less likely to see this kind of partnership as valuable. In fact, they sort of see agencies as kind of a necessary evil for doing the work that they need to do. And these folks honestly believe that their best work comes from changing agencies periodically. Even if an agency is doing a good job, they don’t want to get in a rut with a specific sort of path of thinking. So they like changing agencies out. They like working with multiple agencies. And so that relationship, and what they’re looking for is very different than what it was for the first group. What have you got going that’s going to help us today? And two or three years from now, even though we like you, and you’ve done a great job, we may go in a different direction.

Drew McLellan:

Yeah, and one of the things that was true of this group in 2014, was a couple of things that a lot of agency folks found a little disturbing, one which was small agencies were better because they could be a big fish in that little pond. And two, that when they looked at the agency roster of employees, what they were really looking for was sort of youth and enthusiasm, as opposed to age and experience. So all of the gray haired agency owners in the room, were not loving that stat five years ago.

Susan Baier:

No, yeah, that’s absolutely true. And it parallels what we see with these folks in some ways with respect to the age of the folks managing some of these big client accounts are not the gray hairs like you and I. They’re the younger folks.

Drew McLellan:

You speak for yourself. And then the third segment, we found, we named single and satisfied, and what was interesting about these guys is that they honestly, they kind of have their act together. So they are a group of clients who have a strong strategy, or they believe they have a strong strategy anyway. They already have a clear marketing plan by their own definition, and they want to place an order. And so they are often looking for agencies that have a very specialized skill set that they don’t have in house, and they’re looking for someone to help them execute on the client’s already developed marketing plan or strategy.

Susan Baier:

Yeah, and in 2014, this group in particular said that agencies could be a valuable source of new ideas, fresh thinking. But in a lot of cases, the company, the client could execute on those. So they were sort of, agencies were either filling a very specialized function for this group that was too complex or too specialized or whatever for the client to do themselves. Or they were generating ideas that the client could handle from a tactical standpoint and incorporate into what was already pretty robust strategic and marketing operation.

Drew McLellan:

Yeah. And so what was interesting though, too, was so five years later, fast forward now, while we, I don’t know about you, but I was kind of surprised that all three segments held true. But there were some changes in each of the segments.

Susan Baier:

There were some minor changes. So when we look at the attitudinal characteristics that group together for each one of these groups of clients, we did see some tweets. So in 2019, that looking for love group, that real like, I want a partner group, one of the things that popped up new for them on the attitudinal front was their belief that today’s marketing requires a lot of technical expertise. So whereas back in 2014, advice was really good, strategy was helpful, having a good sense of things in general. This is a new thing they’re looking for, which is this belief that whoever they’re working with can’t just have strategic chops. They really have to have it down in terms of technical execution, because that’s what today’s marketing requires.

Drew McLellan:

Given the changes that we’ve seen in marketing in the last five years, that makes perfect sense, right?

Susan Baier:

It absolutely does, yeah. And then the other thing is, it’s this group, it’s looking for love in 2019 that now says it’s the smaller agencies who are more focused on their needs. Where five years ago, that was that sort of playing the field kind of folks, now this group has really become the big fans of the smaller agencies, which I think is good for the smaller agencies that we’ve presented to already, that that’s a positive move for folks who want this kind of a client and are in a smaller agency, because they clearly believe that.

Drew McLellan:

Yeah, the playing the field folks also had some changes, which I think were interesting.

Susan Baier:

They did. So one of the interesting things about the playing the field folks was that they were outspoken this year about their own shortcomings, which we didn’t see to the same degree in 2014. So they say their organizations don’t always know what they’re doing with marketing. The respondents admit that even if they do, their organizations don’t really consider marketing a high priority, and this is the group and this is one of the new things we added based on some previous studies that we’ve done for the Agency Edge, we added this attitude about outside marketing help costing more than it should. And this is the group that believes that is true. So the fundamentals of this group haven’t really changed in terms of the kind of relationships that they want, but they are less likely to say they really know what they’re doing or are doing a good job at it. And they’re also really placing less of a value on marketing help in general, more likely to say, as they did before, it’s kind of a necessary evil. But now they’re also saying-

Drew McLellan:

It’s an expensive, necessary evil,

Susan Baier:

I feel like that’s costing more than I should have to pay for this kind of, so I think an additional sort of corrosion of the value perception in some ways for this group on what we as agency folks traditionally think of as agency value.

Drew McLellan:

Yeah, I wonder, and I know the data wouldn’t answer this question. But I wonder if you work for an organization that doesn’t value marketing, and you have to justify your budget all of the time, the constant fighting for money, and you’re sort of the conduit, and you’re stuck between the rock and a hard place of the agency and whoever controls the budget, over time, I can see how that would wear away your attitude of the costs of agency services, because you’re having to defend them all the time.

Susan Baier:

Yeah, absolutely. And I’ve been in that situation on the client side, and so that’s hard. And I think these folks really do sort of have that sense. Even if it’s not their personal opinion, it is clearly what their organization has come to believe that they are reflecting, because that’s their job in terms of making buying decisions. And then the single unsatisfied folks, the ones who were doing well, are still there. And they’re still saying the same kinds of things. This time, they’re even more confident in reflecting on the capabilities of their in house resources and their abilities. And they’re actually less likely now to say that agencies are that sort of font of creative new ideas. I mean, if anything, these folks have more confidence than they did five years ago in their organization’s own abilities to do things. They don’t bad mouth agencies. They just don’t feel the need to the same degree.

Drew McLellan:

Well, and when you think about the trend of people taking work in house and building up internal departments and all of that over the last five years, you can see the correlation between that reality in our marketplace. And it would make sense that folks who have a big robust internal team would absolutely have this attitude.

Susan Baier:

Yeah, absolutely. And I think it’s worth sort of reminding our listeners that all of these folks are agency clients. Many of them have more than one agency that they’re working with. So they’re not agency naysayers. They are just within the context of agency clients really feeling different about how that relationship needs to work for their organization, and what implications that has on who they’re looking for and when they’re looking for them.

Drew McLellan:

Yeah. So I think one of the most interesting shifts from 2014 to 2019 was the percentages. So in 2014, the looking for love was 29% of the respondents, and that dropped down to 25%. And on the other side of the spectrum, the single unsatisfied were at 33%. That also dropped down, it dropped down to 30, which means that the playing the field group is the group that showed the growth, and so 2014, it was 38%. And in 2019, almost half, at 45%. So that’s a huge shift.

Susan Baier:

It’s a huge shift. And I think it’s because of what we saw happening between that group that was included in both years, the budget of a million or less, versus this expanded budget size that we included in the 2019 study. When we look at the million or less folks, the good news for the agencies who really want that looking for love relationship is that that group has grown substantially among clients with a budget of a million or less. 29% in 2014, now up to 20, now up to 40%, in 2019. So the good news is for the folks who are targeting that size of client, and what that kind of long, tight, collaborative relationship, the numbers are only going in the right direction. Higher percentage, 40% of the clients of that size, are in that looking for love segment.

But here’s the problem. When you look at the biggest clients in our study, $10 million or more, what’s happened is a dramatic shift away from what was the primary segment at 40%. For 10 million or less, 40% of those folks are looking for love for. The over 10 million, it’s only 15%. And where have those people gone? They have gone to playing the field, which is now 54% of the clients who have budgets over $10 million. So that’s where we’re seeing this dramatic shift. And in fact, that sort of growth, it’s hard to say growth, because we didn’t have that size of client in 2014. But that disparate distribution that we see among bigger clients is consistent in every country that we looked at this year. So the U.S., the UK, Canada, Australia, in all of them, that playing the field group is at least 40% of the market, substantially bigger than we see either of the other two segments. So that is something that we didn’t see in 2014, because we didn’t have the bigger folks in there. And now that we do, they just paint a very different picture, I think for agencies of what they’re facing, if they’re going for the folks with the bigger budgets.

Drew McLellan:

Right. And this is probably a good time to sort of point out, we’re not making a judgment on any of these segments. They are what they are. And we’re not asking you as agency folks to make a judgment. What we’re really trying to do is show you what’s out in the marketplace, because while none of these clients or these client segments are good or bad, certainly they are all good or bad for your agency. And so certainly part of what we’re trying to do is help you understand when you know that you are a person agency and a small market, and you really want to have this collaborative relationship with your clients and your clients are all within a driving distance because you like to have that face time, then you need to be paying attention to the looking for love segment.

Susan Baier:

Right. You have to understand them. Because that’s got to be the basis of your new business development work and your client retention work.

Drew McLellan:

Right, yeah, so none of these are good or bad. But hoping that what happens throughout this conversation, and this is probably a great time to mention, if you’re listening to this in real time, meaning that it is in October of 2019, Susan and I are going to be doing a webinar where we will literally walk you through. There’s no way for us to go through all of the data in an hour long podcast. And honestly, I know it’s hard when you can’t see the graphs and all of that sort of stuff. So anyway, on November 12, we are going to be doing a free webinar. You can go to the AMI site, and I think it’s on the Audience Audit site as well.

On the AMI site, if you go under Tools, you’ll see the Agency Edge Research Series. And if you click on Agency Edge 2019, you can download the executive summary but you can also sign up for the free webinars. So we’re going to literally walk you through every question we asked. And you’re going to be able to say, “Well, how did women answer that question?” Or, “What did the big budget people say?” So Susan will be able to click on some things inside Tableau and show you so kind of be able to thin slice the data for you. So we’ll be doing that live on the 12th. You’re welcome to join us if you really, really want to dig into this.

Susan Baier:

Sure. And you know, Drew to your point about being good or bad, I would argue that all of these are good. I mean, all these folks are working with agencies. Some of the segments that you may think are the most difficult are actually spending more money than anybody else in the agency world. They’re all outsourcing. We asked them about outsourcing and specifically with respect to outsourcing content marketing, and they’re all doing it at very, very high rates. So there really isn’t a bad choice in here. The implications are just sort of what you want, what your team can handle, what kind of agency you want to be with your clients and what you want your new business development activity to look like, because it’s going to be very different depending on sort of which of these you’re going to go for.

Drew McLellan:

Yeah. So I want to drop a little bomb on all of you, and then we’re going to take a quick break, and then we’ll come back and dig into that. So, one of the most telling, and sort of horrifying, quite honestly, as a man in his mid 50s, one of the most horrifying things that we learned is that the respondents who are managing the largest budgets are under 40. So 73% of the folks who are managing the 10 million to 20 million were under 40. 68% at a million to 10 million, and then it just gets smaller. So 49 at a 250,000 to 1 million and 24% at the under 250,000. So basically, if you want to go for a million to 10 million, if that’s the goal for your agency is to have clients with that sort of budget, understand that odds are your clients is going to be under 40.

Susan Baier:

Yeah, so those decision makers, then if you’ve been listening to Drew and I blather on for any amount of time in the last five years, you’ve heard this pop up in previous studies. And now we’ve got even more confirmation that that’s really where decision making is sitting in larger clients. So you just have to be ready for that.

Drew McLellan:

And if that doesn’t make you just smile or grimace, then let me give you this and then we are going to take a break. Also, the clients with bigger budgets, and this should not be new to you, we have seen this in every study we’ve done since 2014, the larger budget clients are not loyal to one agency. So at the 1 million to 10 million mark, 77% of those clients have more than one agency and at the 10 million to 20 million, 79% have more than one agency and even at the 250,000 to 1 million, it’s 64%. So odds are no matter what size you are, unless you’re going to go for clients and have under a $250,000 budget, because that drops way down to 28%.

Odds are for most of you, you are going to have to share these clients with other agencies. So the decision makers are under 40, you’re going to have to have more foxes in your henhouse. So on those happy notes, let’s take a quick break. And then we will come back and tell you some better news. Okay?

I want to take just a quick second and remind you that if you head over to the agencymanagementinstitute.com website, one of the things you’ll find there in our effort to support agency owners is some on demand training. We know that many of you want to attend our live workshops, but for some reason, that doesn’t work out, maybe you’re outside of the U.S., or maybe you have little kids and it’s tough to travel. Or it may just be that our calendar and your calendar do not align. And so what we’ve done is we now have three courses that we either regularly or occasionally offer as a live workshop. And now we’ve got them in an on demand training version. So you can now find bizdev workshop, our agency new business blueprint course, you can also find our AE boot camp, and our most recent addition is the money matters workshop.

So all of those are available. If you head over to the website and you go under training, you will see on demand training under that tab and you can check out all three of those courses. And obviously, those are courses that you can take at your leisure. You can get through the whole thing in a weekend, which I don’t recommend, or you can space it out over time, you can do it individually, you can do it with your leadership team. Whatever serves your agency best, we just want to make sure that you know that they are there and available for you. All right, let’s get back to the episode.

All right, we are back with Susan Baier from Audience Audit and we are talking about our 2019 Agency Edge study. So All right, so right before the break, we broke the bad news that clients with big budgets are kids. Again, speaking for my 55 or 50, I guess I’m 56 so you know ho old I am, anyway I’m so old that I can’t remember my own age. Speaking from my mid 50-ish position, these are younger clients. And I think many of you are seeing this now where your clients are under 40 and that they are going to work with multiple agencies. But there is some good news. There’s good news about how much they outsource and the opportunities that that presents for you.

Susan Baier:

Yeah, I mean outsourcing, as we said before the break when we’re talking about content marketing specifically, but outsourcing in general is just big for everybody we talked to in this study. So the bigger the client is, the bigger their budget is, the bigger they’re outsourcing. So I think sometimes we sort of get lulled into believing that if they have a big marketing operation, they’re more likely to keep stuff in house because they have resource. And we actually see the opposite to be true. The bigger their operation and the budget, they’re more, they’re marketing their outsourcing. So that 10 million to 20 million group, 85% of them said they outsource more than a quarter of their marketing. And for the under 250,000 group, the smallest folks in our study, it’s still 53% who are outsourcing more than a quarter of it.

And a lot of those folks, especially by segment, are really outsourcing a lot. Those playing the field folks are the most likely to be outsourcing higher percentages of their budget than anybody else. Even if they have bigger budgets, they’re sending more of it out. And again, it speaks to sort of how they want marketing to be handled for them and their ability to change things up. And outsourcing gives them that flexibility to do that. So yeah, so there’s a lot of work being pushed out into the marketplace. And we did a study a couple years ago that specifically talked about outsourcing. And a lot of the things we saw on that study, we saw again here.

Drew McLellan:

That was 2018. How, when, what and why clients outsource to agencies and what they take in house? So and again, on both Susan’s site and the AMI site, you can download the executive summaries of all of the research. So you can go all the way back to 2014 if you want. One of the things we wanted, that we added to the 2019 study was we wanted to look at the idea of geographic proximity to the agency. So we probed into the idea of are the agencies that you work with in market or are they out of market? And if you choose to work with someone who is not in your in your backyard, why would you make that choice?

Susan Baier:

Yeah, and this was fascinating to me. Because I mean, you talk to a lot of agencies every day. And I do too, but I don’t talk to clients about this decision with regard to their agencies. And I did not expect to see what we saw, which is very high percentages of clients saying they’re using agencies more than 200 miles away from them. Even the smallest folks, the budgets under 250,000, 23% of them say they’re doing it, but when you get up to a million or more, it’s 63%, 64%. That’s two thirds of them saying they’re working with an agency that is not close, that is somewhere more than 200 miles.

Drew McLellan:

And I will say this statistic actually didn’t surprise me.

Susan Baier:

Yeah, I’m not surprised about that in retrospect.

Drew McLellan:

You’re not surprised that I’m not surprised?

Susan Baier:

I’m not surprised you’re not surprised. That’s exactly right. It’s hard to surprise you Drew when it comes to what’s going on with the agencies.

Drew McLellan:

And here’s why I wasn’t surprised is that I have been standing at the pulpit preaching the idea that agencies need to specialize, that it’s very difficult to be a generalist in today’s market and still win clients. But that when you specialize, geography becomes a non issue. When you are a subject matter expert, if you get super sick, and you have the means to go anywhere you want to go, you’ll get on a plane and go to Mayo Clinic. You will fly over all kinds of general practitioners to get to the specialist that you believe is best suited to help you and I think that I’m seeing that exact same thing happening in agencies. So that’s why this this statistic was not a surprise to me. It just validates what I’ve been nagging at my agencies about for years.

Susan Baier:

One of the things that was really interesting, though on this was looking at the difference between the segments in terms of the percentage saying they’re doing this. And probably, again when you think about it, you may say, “Oh, yeah, that makes sense.” But when we look at the looking for love segment, that close partnership, only 19% of them saying they’re working with an agency that’s more than 200 miles away, whereas 54% of that playing the field group, more than half of them say they’re doing that, and it’s 27% on the single and satisfied. So really, what’s driving a lot of this is that center group, that playing the field, that we’re changing things up, we’re looking for acumen that we don’t have or the ability to handle projects of a complexity that we’re not comfortable with, or whatever that are churning a lot of this work to agencies outside of their immediate market area. So I thought that was pretty interesting.

Drew McLellan:

They’re also the ones managing the larger budget. So it makes sense that they can go shopping anywhere they want to.

Susan Baier:

Yep, the other thing that really interested me about the findings on sort of the outer market agencies was why clients are saying they’re doing it, because I have a lot of agencies talking to me about sort of specializing in particular skill sets, technological capabilities, SEO or research or branding or whatever. The thing that was the number one reason that people said they’re working with an agency out of market was actually expertise in a particular geography. So we understand the market out here, we understand the consumer out here. That was second.

Drew McLellan:

So if you want to bring your products to Montana, we’re your guys. Montana businesses, if you want to take your products out to the world, go do that.

Susan Baier:

That’s right. You want to market in California, we’re your folks or whatever. 66% of our respondents said that was why they had gone out of market for an agency. Expertise in a particular industry or a particular consumer profile, 43%. So that’s the whole, that’s either like I’m an expert in the cannabis industry, or we do healthcare or whatever or we get California consumers or we get sort of northeastern or Midwestern. We have agencies who specialize.

Drew McLellan:

We understand millennial moms, or we understand married couples that don’t have children, luxury travelers.

Susan Baier:

Right. Right. Language was up there, 32%.

Drew McLellan:

Which makes sense.

Susan Baier:

Yeah, we have a smaller percentage of agencies who say they’re actually working, clients who say they’re working with agencies in different countries as opposed to sort of in their same country, a different state, but language is up there. Expertise and a type of marketing was relatively low at 18%. And one of the lowest percentages we saw was affordability. And it really upended sort of this, I think, is what we’ve proven is kind of a myth, that that’s why somebody would go outside their market area, because it’s cheaper, because we are just not seeing that in the data.

Drew McLellan:

Yeah. And I know, you said that you were sort of expected to see that we’re a branding agency, or we’re an SEO agency or whatever, higher, but the reality is a couple of things. Number one, there are a lot of agents, I don’t care what the deliverable are, there are a lot of agencies that claim that expertise, and there are a lot of generalist agencies that claim that expertise. So from the consumer’s point of view, while it’s nice that you know how to do that, it actually doesn’t make you a specialist. It just makes you good at that part of your craft.

And again, I think the data, proves out this really, here’s what we all know, and every one of you know this when you listen to your clients, every one of them thinks that their business is unlike any other business on the planet. And if you don’t have a depth of expertise in their category or with their consumer, or whatever it may be that you can’t possibly, even though you have 40 years of marketing experience, you’ve owned your agency for 30 years, you have a Ph.D. in psychology, whatever it is, you can’t possibly understand their unique business. And you can talk until you’re blue in the face, but the reality is, that’s what they believe. And clearly, this statistic proves that they will go shopping to find someone that they believe has a better shot at actually understanding their business.

Susan Baier:

Yeah, or how their business can manifest in a new area, in a new marketplace, in a new industry, whatever. Yeah, so that was interesting, I thought. I mean the concerns about working with an out of market agency are not terribly surprising, like are we going to be able to have meetings? Is our relationship going to work as well if they’re further away? How’s communication going to work? And we actually do have almost a third of these folks saying, “I would love to support local agencies in my area, if I could.”, but clearly, these concerns are not enough to overcome the drive to find the right agency for what they’re looking for, even if it means they’re going out of town.

Drew McLellan:

Yeah, I think what they’re saying is, if exactly what I was looking for was local, I’m all for it. I’m not willing to risk my job to be a local shopper when there’s somebody who has a depth of expertise that I need further away in the state or in another part of the country or even another part of the world, because at the end of the day, I’m protecting my own key store here by getting the best specialist I can in to help me accomplish the goals that I’m being held responsible for.

Susan Baier:

Yeah, and it’s not about the price. So I thought that was interesting.

Drew McLellan:

Yeah. So one of the other things that I wanted specifically to add into this year study, which we did not talk about in 2014 is I spend a lot of time talking to agency owners about how they should be spending their time, and I am always preaching that if you’re doing work that someone else can do, like you’re the daily point of contact for a client, then what that means is the work that is uniquely yours, that no one but you can do, gets undone stays undone. And so I’m constantly pushing on agency owners to be really judicious about how they spend their time with clients. And so I asked for us to add some questions to talk to these clients. And again, to reiterate what Susan has said, all of these people are active buyers of agency services. So we’re not talking to anybody about theory, or we’re asking them about their actual practice. But we wanted to ask them about, where does the agency owner show up in their relationship? And where would they want the agency owner to show up in their relationship?

Susan Baier:

Exactly. So we started with that question of where are you seeing the owner now? And we saw, probably not too surprising. A lot of them, almost half of them said the owner has been present in some kind of a strategy meeting with us. 37% say the owner, the agency owner was there during our sort of initial onboarding. And about the same, about a third, 36% said, “Yeah, the owner was there during the pitch, when we got pitched to hire the agency.” So that wasn’t terribly surprising me. I think those are places where you might expect to see the owner.

But when we asked respondents, if they thought the owner should be more involved in their business, a fair number of them did. 38% of the looking for love, 35% of that single and satisfied group, and over half of the playing field respondents said that the owner should be more involved. And the interesting thing about that is that when you dig down into sort of the size of the budget of these folks, the little guys, the under 250,000 budget, their expectations are lower. Only 24% of them say the owner should be more involved in their account than they have been in the past. It’s the bigger folks, the bigger budgets, 49% of those with 1 million to 10 million and 51% over 10 million say, “Yeah, I need to see the owner more.”, like that should be happening.

Drew McLellan:

Well, and again logic suggests, if I’m giving you $10 million, I’d like to see the owner every once in a while. That totally makes sense. And some of the smaller clients know that they’re smaller, and probably feel like maybe that’s not something that it’s fair for them to expect.

Susan Baier:

And maybe and this is something I’ve heard in the agency world from smaller clients is what am I paying to have the owner there compared to sort of the cost benefit ratio of me having the people that are actually doing the work? Is that a better spend for me than paying for the big ticket? So I don’t know. But one of the things we did see with regard to having the owner involved, and we’ll go into this in the webinar, too, because it’s really interesting, they really believe that it can make the work better, that it will make the partnership stronger. So it’s not just a social engagement. They really believe it has an impact on the quality of the work that the client and the agency do together if the owner’s involved.

Drew McLellan:

Yeah, some of the strategic points for sure. But I do think it was interesting that there was a pretty good chunk of them. And again, mostly the playing field folks who said, “Yeah, I kind of want to be wined and dined a little bit. So I’m giving you a big chunk of money, so you need to suck up to me a little bit.”

Susan Baier:

That’s right. And we saw a small percentage that said, “I’m not sure that kind of a outside of work, social kind of relationship is appropriate given our roles.”, whatever it means to the buyer, but it was pretty small. I mean, there was definitely some interest in getting together, doing something social, checking in a few times a year, outside of their official sort of business opportunities to get together.

Drew McLellan:

So we’ll dig even deeper into some of the implications of this in the webinar. And we’ve done some of that in the executive summary that you can download for free as well. But a couple things as we wrap up this episode that I just want to kind of tie a bow on this in terms of kind of what Susan and I think this means. Number one, what we’re seeing is that clients are being much more surgical, if you will, in how they are selecting agencies that they are feeling incredible pressure to do this right. And so they will go to the hinterlands if they have to, to find the right partner. So you’ve got to be really clear about the value proposition that you offer, because they’re willing to go to great lengths to find the right partner.

Susan Baier:

Yeah, and even those who really want the sort of close, bear hug kind of relationship have shown us this year that you can’t discount the importance of having technical expertise. They know that that’s required these days for marketing. So being able to sort of impress them with a great story and inspire with strategy is fine. But you have to actually be able to execute believably in a very complex marketing environment.

Drew McLellan:

Yeah. And continuing the trend that we’ve really seen since the very beginning, this idea that I think for us, as agency owners or leaders, we hunger for, we want to be the be all and end all for our clients. We really want them to give us all of their budget, and we want them, we want to be at the C suite table, helping them make big strategic decisions. Unfortunately, that’s not how they look at us. And so this idea of being the partner for all things continues to lose favor and be something that a smaller and smaller percentage of clients, I remember, mostly clients with small budgets are willing to even consider.

Susan Baier:

Yep. And then this question of specialization is really interesting. I mean, we’ve seen in study after study that there’s just a cost of entry to having a broad general range of capabilities, like they expect their agencies to be able to handle a bunch of stuff regardless of who they are. But this specialization and not just specialization with a specific technical capability, but specialization in an audience, in a place, in an industry, we really continue to see as a prevalent rationale for making an agency choice.

Drew McLellan:

Yeah. And as we just discussed, they do want to see the agency on it, but in very specific places. So in strategic meetings, in things like quarterly discussions, where you’re sort of setting the course for the next quarter, and as we said, a subsegment of them really wants to be wined and dined. And so you need to be exploring all of those with your clients to see which one sort of trips your trigger. So again, we’ll dig into all of this with much greater detail, and you’ll have it in front of you visually, which I think makes a huge difference.

But before we wrap up, I also want to tell you that we’re already thinking about our 2020 study. And in fact, we’re going to, normally we go out into the field in the summer, and then we pull all the data together in the late summer, because we’re going to unveil the research as we have in the last couple of years at content marketing world. But this year, we’re actually going to go out early, because we know that a lot of, I hang out with new people every day. And if there’s one question that I get asked much more now than I did 18 months ago, it is when is the shoe going to drop. And what that is all about is the economy.

And so this pending potential recession, correction, whatever you want to call it, has a lot of you very anxious about what your clients are going to do. So our 2020 study is going to actually dig into that. We are going to go and talk to clients. And again, we’re going to do it soon, so we get you the data soon-

Susan Baier:

Already now, it will be in field this winter.

Drew McLellan:

Yeah, we’re working on the on the questions right now. But asking clients how they’re feeling about the economy, and what their game plan is. What are they thinking about doing? When are they going to do it? How are they going to do it? How’s it going to impact the relationship they have with their agency? You fill in the blank. That’s what we’re going to ask. If you hear this podcast in real time, and you have questions around that topic that you want us to consider putting into the question set, then feel free to email Susan or I, and both of our emails will be in the show notes. But they’re pretty easy. It’s [email protected] and [email protected] Feel free to email us and post questions that you want us to consider so we’re happy to have you participate. But if you’re listening to this in December or January, because you’re a little behind on the podcast, which I totally get, then odds are we will already have wrapped up the instrument but you are welcome to join us if you’re listening to this real time. It’s going to be fascinating. We’re excited about it.

Susan Baier:

Yep. That would be a good study. I think it will be really interesting. I’m particularly curious to ask folks who were around during the last recession what their organizations did, how that worked for them and how that’s affecting sort of the decisions that they might make if there is a downturn and what they’re getting ready. And really, our goal is just to give our agencies as much information as possible so that they can start to work to immunize as much as possible from any impact of an economic downturn should it come. So we’ll see. It’s going to be fun.

Drew McLellan:

It will be fascinating, that’s for sure. Susan, this as always, it is a pleasure to have you on the show and as you know, I’m super grateful that we get to do this work together. So thank you.

Susan Baier:

Well, always a joy to talk to my work husband. So thanks for having me on again, Drew.

Drew McLellan:

I am happy to be your husband. Thank you for sharing your expertise. And if folks want to learn more about the work you do specifically for agencies, where should they head?

Susan Baier:

Just go to audienceaudit.com. There’s a whole bunch of information there. Our work is for agencies, so there are things you can download about what we do. And as you well know, I spend a lot of my time on the phone with agencies who just want to talk about is there an opportunity here? Is this something we should be looking at with a particular client. So phone calls, emails and stuff are also welcome too.

Drew McLellan:

Yeah, and for those of you that are AMI members, either associate members at the Gold Level or above, or you’re a member of any of our peer groups that have access to the marketplace, Susan is always super generous to AMI folks. And so there are some discounts worthy of consideration inside the marketplace.

Susan Baier:

I love my AMI agencies, for sure.

Drew McLellan:

Well, they love you, too. So thank you for this. As always, it was awesome.

Susan Baier:

Yeah, thank you, Drew. And I’m excited to get you a first glance at what we’re doing for the 2020.

Drew McLellan:

You too. All right, guys, this wraps up another episode of Build a Better Agency. Thanks for being with us. Hopefully, this really got your wheels spinning in terms of thinking about the clients that you currently have and categorizing them based on the data that we’ve shared. Again, just a reminder that we’ll be doing that webinar on November 12. And you can sign up for it on the AMI site under Tools. Go to Agency Edge Research, and the link will also be in the show notes.

I will be back next week with another awesome guest, who’s going to help us think a little differently about your agency. A huge shout out to our friends at White Label IQ for being a presenting sponsor of this podcast. Their generosity makes it possible for me to come and hang out with you every week. So grateful to them. If you are interested in White Label, design, dev or PPC, head over to whitelabeliq.com/ami, because they have a special deal just for you as a podcast listener.

The last thing I want to remind you is remember, every month, we give away a workshop. So the value of that is almost 2,000. We give one away every single month to someone who has left a rating or a review on the podcast. So all I need you to do is go leave a rating and review, take a screenshot of it because you guys have some crazy usernames. So bikerchick102, I don’t know what agency you own. I want to know what agency you own but I don’t know. So send me a screenshot. So I know it’s you. Your name will go in the drawing. If you’ve already done it, I promise your name stays in the drawing so you don’t have to keep leaving a review, that I don’t think you can. But don’t worry, we don’t refresh the drawing bowl every month. And then you can either win one of our live workshops for yourself or one our on demand workshops. So with that, I’m going to let you get back to work. Thanks for listening, and I will be with you next week. Talk to you soon.

Thanks for spending some time with us. Visit our website to learn about our workshops, owner peer groups and download our salary and benefits survey. Be sure you also sign up for our free podcasts giveaways at agencymanagementinstitute.com/podcastgiveaway.