Episode 85:

Drew McLellan is the Top Dog at Agency Management Institute. For the past 21 years, he has also owned and operated his own agency. Drew’s unique vantage point as being both an active agency owner and working with 250+ small- to mid-size agencies throughout the year, give him a unique perspective on running an agency today.

AMI works with agency owners by:

  • Leading agency owner peer groups
  • Offering workshops for owners and their leadership teams
  • Offering AE bootcamps
  • Conducting individual agency owner coaching
  • Doing on-site consulting
  • Offering online courses in agency new business and account service

Because he works with those 250+ agencies every year — he has the unique opportunity to see the patterns and the habits (both good and bad) that happen over and over again. He has also written two books and been featured in The New York Times, Entrepreneur Magazine, and Fortune Small Business. The Wall Street Journal called his blog “One of 10 blogs every entrepreneur should read.”

 

 

What you’ll learn about in this episode:

  • Why agency owners are confident again and why new business is easier to come by right now
  • The trend where talent inside agencies has become a scarce resource
  • What to do about having to hire underskilled employees
  • The challenge of providing clients with the right data
  • Having an answer when clients ask agencies about diversity
  • Opportunities for agencies with old school media
  • Why you have to be great at marketing automation

 

The Golden Nugget:

“Part of today's reality is adding an education plan to the employee onboarding process.” – @DrewMcLellan Click To Tweet

 

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Ways to contact Drew McLellan:

We’re proud to announce that Hubspot is now the presenting sponsor of the Build A Better Agency podcast! Many thanks to them for their support!

Speaker 1: If you’re going to take the risk of running an agency, shouldn’t you get the benefits too. Welcome to Agency Management Institute’s Build a Better Agency podcast, presented by HubSpot. We’ll show you how to build an agency that can scale and grow with better clients, invested employees, and best of all, more money to the bottom line. Bringing his 25 plus years of experience as both an agency owner and agency consultant to you. Please welcome your host, Drew McLellan.

 

Drew McLellan: Hey, everybody. Drew McLellan here with another episode of Build a Better Agency.

 

  So today’s episode is one of my solo casts. So for those of you who are new to the podcast, every fifth episode, I don’t have a guest, it’s just you and me chatting about something that I think needs to be on your radar screen. So sometimes it’s something that has popped up in many conversations with agency owners, so I know it’s a pressing need. Other times it may be a situation that I’m hearing a lot from agency employees or something that I’m counseling a lot of folks on in some of our coaching work.

 

  So today’s podcast, today’s solo cast is going to be about some trends that I see breaking in the business. So as many of you know, a big part of my daily life is working with agency owners that are in the AMI owner peer networks. So the way that works is these are agency owners that it’s a membership model, they pay a fee to belong to this group. Think of it like a Vistage or a Young President’s Club.

 

  It’s a set group, so they’re always with the same people. Some of these folks have been together for 20 years or more, and we may be on the second generation of owners. And others are coming to it new. But anyway, they come together, and so I have eight of these groups. So I’m hanging out with about 100 agency owners every year. And when I say hanging out, I mean, I am seeing their full financials. I am talking to them every single day. I’m spending two and a half days with them in the fall and two and a half days with them in the spring in person at these network meetings. But obviously we’re communicating in a plethora of ways all throughout the year.

 

  On top of that, we have the coaching clients and all the agency owners that we come up against and meet with in our workshops, and some of our remote consulting where we actually come on site.

 

  Bottom line, about 250 agencies a year do we get to peek under the curtain of, and sort of see what’s happening for them. So out of that, we’re able to sort of identify the trends that are impacting agencies across the land. And for us, those are agencies that are anywhere from a couple full-time equivalents or employees, whether they’re actually employees or you might have contractors that behave like employees. Two, agencies of 200 or 300 people.

 

  So I thought what I would do is I would talk to you about some of the trends that I’m seeing. I’ve identified 19 trends. What I’m going to do is I’m going to tackle nine of them in this solo cast, and then I’m going to tackle the last 10 in my next solo cast. So that’ll be in five weeks. So that’ll give you something to look forward to.

 

  Let’s jump in on these and let me tell you a little bit about what I’m seeing. One of the things that I’m glad to see is that many agencies are really finally putting some gasoline on the fire. The recession really knocked the wind out of… The US recession really knocked a lot of wind out of many agency owners sales, if you will. Lots of you barely survived or you really knocked to your knees.

 

  And even if you got through it without a lot of pain, you were skiddish and it made you anxious because it was very clear that the rug could get pulled out from under all of us again. And so what I’m seeing now in 2017, so fast forward six, seven, eight years from really the lion’s share of the recession impact, is that agency owners are finally confident again and are finally recognizing that A, this is the new economic normal, and B, that they can build and grow successful agencies.

 

  New business is coming back better and stronger. It’s easier to land new clients. So agencies are really starting to invest both financially, but also even more so agency owners are beginning to invest emotionally. You guys are back in the game. For a while, lots of you had sort of lost your mojo. But when I look across the networks that I work with now, most of those agencies are back on their feet, financially they’re doing better, and the owners have really, re-engaged. They’re excited again about the business as opposed to a few years ago, they were just barely getting through the day. And they were doing it because they had to, not necessarily because they were excited about it.

 

  The good news is agencies are really finally putting some gas on the fire. Agencies are growing. Agencies are doing innovative things again. And there’s just an energy around the business and inside the shops that I have not seen for a while, so that’s really great news.

 

  The challenge with that is this next trend, which is, while it is easier and easier for you to get new clients, it is more and more difficult for you to find great talent. So talent today inside an agency is the scarce resource. And in fact, across our industry, as a whole, turnover in agencies is sitting at around 30%. 30%. That is huge.

 

  And if you are a smaller agency, it may feel like you are running a business with a revolving door, and people are coming and going so fast you barely get to know their names. And I want you to know a couple of things. One you are experiencing what many are experiencing. And two, you need to talk to your staff about this, because many of you are concerned about the perception inside your shop that you’re losing a lot of people.

 

  And so you need to talk to them about the fact that this is a national trend. Lots of agencies are struggling with it. And quite honestly, I would be talking to them about what ideas do they have to make your agency a great workplace that is stickier and allows you to keep the good employees that you have.

 

  On top of that, not only are you struggling to find people to hire, but the people that you’re hiring are under-skilled. So many of you are ending up hiring someone who either has the wrong or not enough skills. And that’s coming from a couple of places. Number one, many of you are hiring digital teammates. And oftentimes the folks at the top of your organization don’t really have the skill and the knowledge to do a great job of interviewing those folks for their skills.

 

  So when they tell you they can do something, you sort of have to take them at their word because you don’t know how to crawl under the hood and look. And then you’re getting that employee inside the shop, and all of a sudden, all of the things they told you they were great at from a digital perspective or a non-digital perspective, but I’m seeing this more on the digital side, all of a sudden that is no longer the case. They’re not really delivering what they told you that they could deliver. Or you’re having to settle. You are having to settle for employees who are not all that you want them to be, because you can’t find or you can’t afford the employee that you really want to hire. And so many agencies are having to invest in a significant amount of internal education.

 

  If you could find a body, you are then having to educate that body. And so lots of agencies are putting their staff through all kinds of digital training, whether it is certifications through either Google or HubSpot or Market Motive, any of those things. I know we’ve seen our AE bootcamps have doubled in size in terms of participants, so more people are sending the AEs to courses to help them shore up their skills.

 

  So if you’re looking at your staff and your new hires and thinking, “Man, these guys aren’t quite what I want them to be.” I want you to know that you are not alone in that. That that is a very common challenge that is coming out of the talent pool shortage. So resign yourself that you may have to hire kids that are greener or people who don’t have the depth of skill that you want them to, and that part of their onboarding process is going to need to be an education plan to get them where you want them to be. That’s just today’s reality and a part of this new trend. And with that, it seems like a really great time to take a brief pause and then we will get right back to the show.

 

  If you’ve been listening to the podcast for a while, odds are you’ve heard me mention the AMI peer networks or the agency owner network. And what that is really is it’s like a Vistage Group or an EO group, only everybody around the table owns an agency in a non-competitive market. It’s a membership model, they come together twice a year for two days, two days in the spring and two days in the fall. And they work together to share best practices. They show each other their full financials, so there’s a lot of accountability. We bring speakers in. And we spend a lot of time problem solving around the issues that agency owners are facing.

 

  If you’d like to learn more about it, go to agencymanagementinstitute.com/network. Okay, let’s get back to the show.

 

  Another thing that I am seeing is agencies are really wrestling with this. Back in the day, just handing clients some Google Analytics data wowed them. They were astonished at all that we knew and all the things that we could tell them, just in terms of what the analytics data provided at sort of its most standard format.

 

  But now as our clients are getting more sophisticated and as they are beginning to understand more about the data that can be collected, and they are reading more about big data and all of that, then it’s becoming common vernacular now. Unfortunately, the basic analytics that we were handing clients is no longer acceptable. What clients are now saying to agencies are, “Okay, I see all of this data. What does it mean? What does it tell us to do?” And agencies are wrestling with finding the right direction to provide glance and the right people on staff who are really good at looking at the raw data, whether it comes from Google Analytics or other sources, whether it’s from a marketing automation software or whatever it may be. But knitting all of that disparate data together and actually being able to prescribe next steps.

 

  And it’s not prescribing next steps in terms of, “Oh, our traffic is down so we need to do XYZ to get more traffic.” It’s really, “Our traffic is down, but these are the pages that are really sticky and are resonating with visitors. And so we have a whole program around that content.” Because clearly that’s happening. That’s a topic that is pertinent to people. Or, “Boy, we’re going to marry this data with this data and we’re going to shift the way we are doing our email marketing.” Whatever that may be. Our clients now want analytics to inform and drive future decisions.

 

  So for many agencies, they don’t really have the staff who are sort of those data analysts. And so they’re either partnering us with someone to do that or they are scrambling to find someone. What one agency said to me is, “You know what? I am done scouring journalism schools for employees. I am going for data analysts and I’m going for math geeks. I want people who can help me understand this data better.” So if your clients aren’t asking you to connect the dots, know that that’s coming, and know that either you or someone on your team has got to get really good at this in a hurry.

 

  Another trend that I’m seeing that many agencies are being surprised by in conversations with clients is conversations around diversity. And it’s coming from two different positions. One, many agencies are being asked about the diversity of their own workforce. To help me understand the, how you agency, who wants my business, tell me about your workforce and your commitment to diversity and your commitment to representing a host of ethnicities and sexual preferences? And you name it, they’re asking about it.

 

  So don’t be surprised if that comes up. The truth is that as an industry, we still are a little homogenous. And so depending on the market you’re in and how homogenous that market is, this may be a challenge for you. But I want you at least to have an answer ready because sooner or later you’ll be asked.

 

  One of the other things that is coming is that agencies are being asked to think about diversity as they prepare creative. So not like token diversity, where you have a mix of people in a photo and they happen to be three or four different races, I’m not talking about that. But to really genuinely better reflect the accuracy of your client’s customers, again, in terms of every aspect of diversity.

 

  So be thinking about that now and charge your creative team to really start looking at when you’re putting together personas or things like that, asking yourself the diversity question, like where does diversity show up in this customer base? And how can we represent them and how do we honor that diversity? Rather than pander to it or just do it in a token way. Clients really pushing on that. It’s happening in a big way at the big box agencies, the big holding company agencies, and it’s happening more and more in smaller shops. So I want you to be ready for that.

 

  Interestingly, one of the ways that agencies are really showing incredible revenue growth is by acknowledging that what is old is new again. So the pendulum for most of us has swung pretty far to the digital side of things. And many agencies have really abandoned or downplay their traditional routes and the traditional services that they offer clients. And what I’m seeing in quite a few of our agencies is that they are seeing a resurgence of opportunity and revenue when they step back and they really do look at the genuine definition of multimedia, and they start talking about things like radio and direct mail and other things. A video even.

 

  It may be that there’s a 2.0 version. So it may be that you’re not doing radio the way we used to do radio, but now it might be radio using technology, and maybe it’s podcasting that you’re cutting into radio spots, or you’re producing your own radio show “for a client that is all web-driven”.

 

  It may not be that we’re doing it in the same way, but that we are going back. Video, when I started in my career, we never… When I was at YNR, we never did a video that was less than 40 or 50 grand. And now agencies are shooting beautiful video for a few thousand dollars. And if it’s a run and gun video and you know they’re going to just use it on YouTube and social, obviously the price point has to be different. But lots of agencies are really seeing a great spike in revenue from this old school media. And I’ll tell you the one that is really the leader in all of this is direct mail.

 

  So direct mail is the hot new media. As you think about our mailbox is getting more and more empty as our inboxes get more and more full, all of a sudden the clutter that used to be our mailbox is a pretty wide open field. And lots of agencies are doing some really brilliant direct mail.

 

  So again, it may be direct mail 2.0, so a lot of it is very personalized. It may not be a big run, although some agencies are making hay with big runs as well. But a lot of agencies are also doing some pretty cool three-dimensional direct mail pieces at a targeted sort of small list. But they’re really integrating direct mail and connecting it to digital tactics so that they’re working together. So don’t dismiss your old school background or your agency’s old school ruts because there’s money to be had there. And clients are eating it up because it’s fresh and new, ironically. And it’s showing some great results. And so don’t be afraid to let the pendulum swing back a little bit.

 

  All right. The last trend for this podcast is marketing automation. It used to be that if you were an agency that could do marketing automation, so that was you’re using a HubSpot, an Infusionsoft, one of those tools, to help your clients automate their CRM, to create drip campaigns, to create tree trunks with branches coming off them based on the way people react to an email, if they click on this, they go this way. If they don’t click on this, they go that way. All of that used to be pretty, pretty cool stuff. And an agency that could do that could really wow a client.

 

  Well, I hate to be the bearer of bad news, but today the ability to set up marketing automation software, the ability to create a really great strategy around it and great content to feed into the marketing automation tool, that’s table stakes today. If your agency isn’t good at it, and isn’t selling this to clients and isn’t talking about it, and quite honestly, isn’t doing it for yourself, you are starting to look behind the times.

 

  So clients expect us to be good at marketing automation, whichever tool you may use, but they do expect you to have some expertise, not only in the technical side of it, but more importantly in the strategy side of it and in that content creation side of it. So this is not something that you can pass off anymore or that you can be sort of good at. You need to get really good at it and you need to get good at it in a hurry.

 

  But the awesome thing about marketing automation is that clients do not want to understand it. So they don’t want to be able to crawl under the hood and make the tool work. They don’t want to understand all of what it takes to set up a drip campaign.

 

  So when you’re good at marketing automation, it is super sticky with clients, because, back to the point I made earlier, they’re very data hungry. And as you know, marketing automation tools give us incredible insight and data into the topics that our audience cares about, how much time they’re spending, not only in the content we send them, but on the website, if we’re driving them to the website. So clients really get engaged and addicted to the data, and if you do it well to the leads that you’re generating.

 

  So it’s a very sticky way to be very valuable to your clients because they don’t really want to understand how to make it work, but they do love that it works and they love the data because they can then leverage the data up the chain on their side of the business and help their boss or their board of directors or their C-suite understand that this is a great investment. So you need to get good at it, but the good news is when you get good at it, it does help you retain clients.

 

  Okay, that’s the first half of the trends for 2017. So I am going to wrap this up and I will be back in a few weeks with my next solo cast and tell you about the last 10 trends. In the meantime, if you have questions about any of these, or you’re trying to track me down, you can find me at agencymanagementinstitute.com.

 

  In the meantime, always super grateful when you take the time to do a rating or review of the podcast. I read them all. I’m grateful for them, and it does help us get on the radar screen of other folks. If you need anything, reach out to me. Otherwise, I will be back next week. And next week will be an episode more like you’re used to with a guest who will share their expertise and help all of us get smarter and run our agencies better. Until then, have a great week and I will talk to you soon. Thanks,

 

Speaker 1: That’s all for this episode of AMI’s Build a Better Agency, brought to you by HubSpot. Be sure to visit agencymanagementinstitute.com to learn more about our workshops, online courses, and other ways we serve small to midsize agencies. Don’t miss an episode as we help you build the agency you’ve always dreamed of owning.