Today agencies struggle in the most tough competition than ever. It’s obvious that without technologies they are just a “team of cool persons” who provide some services. The question is – how to make you stand out on such saturated market as an agency business?

 

From the editor

Initially we have faced with hybrid-agency concept about a year ago. Around that time we did a gradual transition from a technology company to a model that combines both full services model and technology model as well. By the way, about the same period, we came across to pretty deep and insightful post by Mark Schaefer who suggested agencies to act more like software companies. Sure, at that moment, it sounded more like theory or just thesis. However, our practice repeatedly demonstrated that it can make sense in many ways.. 

So why agencies should go hybrid?

 

1) It’s hard to stand out (Purple Cow Fail)

Marketing Technology Landscape

The author and marketer Seth Godin has invented the term “purple cow”. In practice this approach means that, in order to more effectively sell your product or service, you should get some combination of qualities, which nobody can repeat.

Now just imagine that you are marketing agency. It’s obvious that there are thousands of other guys who make the same. So, what’s the difference? The smartest team? Ohh, you probably know that most of agencies have “the geniuses” on the boards. Just look at this:

  • Brian – magic brain of our team;
  • Kelly – social media acrobat.

Wow, do you really think that you can stand out? Ok, let’s move further.

Awesome portfolio? Maybe, but quick research helps you to realize that Microsoft’s logo flaunts on thousands of agencies landing pages. The week ago we had a pretty funny conversation when our partner said something like: “Everything (he mean cases) is on your site is a bullshit until I’ll see how you deliver results for me”

So. Ask again. What’s the difference you keep to convince such persons? Period.

We believe that today agencies struggle in the most tough competition than ever. Without technologies they are just a team of cool persons who provide some services. The problem is – it’s not so hard to find a lot of substitutes on the market.

Lesson: Developing of your own platform can greatly boost your chances on the market. Let’s take our company as an example. We use own predictive analytics algorithms for smart social listening. In this case, it’s not only the chance to save money on such services (we don’t need to outsource it to BuzzFeed for instance), but also “the purple cow” that helps us to stand out among our competitors. By the way, it’s just one technology. We also actively expand our stack on other fields like VR (virtual reality) that can add more value for our customers.

 

2) It’s hard to nurture leads (Nurturing Fail)

Digital Surgeons Agency

Do you know the truth about agencies’ sites? They don’t build sites for yourself. They make “the magic”. How else? After all, they have to be creative. It’s important to note that we don’t want to discuss design issues or not obvious value proposition that make you stick to the screen.

However, for this reason they reduce their ability to effectively nurture leads. Let’s remember how classic SAAS works (Free Trial Model).

  • You visit the site;
  • You click on the “register / sign up”;
  • You go through the onbording and use an app during some period;
  • After that you make a purchase decision.

Sure, sometimes the answer is “no”. But the more important thing that company has already gathered data about your personality including: email, social accounts, name and etc. It’s a basis for a solid lead qualification.

Moreover, you are in funnel. Your services provider has a pretty high chances to reach you again via email for instance. The other benefit for a such smart company is a Big Data. Facebook, Twitter, Instagram and other unicorns knows about that. 

What’s about agencies? They just miss the top of the marketing funnel. Most agencies sites have a lot in common… it’s “contact us” form or button that just helps to get requests and briefs from your clients.

The problem is that you miss all the traffic who didn’t leave any request. Sure, you can use content marketing forms, smart widgets, ebooks landings and other things that help to gather emails. These tools work great. But most of agencies ignore such tactics. Or the other extreme is hard or impossible to implement such approach.

Lesson:  Ideally, if you can develop a client interface for your agency. In fact, many influence marketing companies act in this way . Example – TapInfluence. If this option is not possible, you can concentrate on content marketing, which is synchronized to the analytics system.

 

3) It’s hard to retain leads (Churn Fail)

In practice, the problem can be found not only at the top of the funnel, when we get the first contact information about our customers, but also in the middle part when the try to track customer behavior for further qualification.

In the case of SAAS services you collect enough data on how people use our application. So you can personalize the content, messages and notifications as well.

In the other hand, agencies face the complexity here.

Lesson: The solution is similar to previous advice. Platforms and interfaces can bring much more control.

 

4) It’s hard to grow deeper (Growth Fail)

Deutsch Agency

Quality > Quantity. Period.

However, most agencies grow only quantitatively. It’s not really bad that you hire 1000 persons to execute marketing tasks. The problem is that you don’t have a real potential to deepen your technology stack.

For example, Facebook started as a social network, but today they move in direction to media / content platform that provides users with everything from social media to real time video.

Do you think it happens because they became bigger? No, it happens because they became smarter.

All the time they refresh their technologies to keep the leadership.

Lesson: It’s not simple to turn agency to software company. And most importantly – it is not always necessary. So often it makes sense to move from building an effective technology stack, which delivers a great ROI for your customers . Within a few years you will be able to understand which technologies are the crucial for you (in terms of results and margin). After that you can start to build the platform around that (if it’s necessary).

 

5) It’s hard to scale your model (Scaling Fail)

Do you know why Uber have achieved such impressive results?

Answer – Uber’s business model is pretty simple to scale on any market without huge costs on localization.

The situation with the agency business is just the opposite. Once you have reached the limits of the local market, you encounter a problem that growth on global markets is a extremely difficult thing. There are several main reasons:

  • It’s expensive to localize agency business. For example, we still have not been able to adapt our services for the Russian and Chinese markets. The reason is simple. North America and Europe have a lot in common. On the other hand, on the emerging markets you face absolutely different mentality, technology infrastructure, requirements and other limits that grow your localization costs;
  • Agencies like huge teams. So you need either relocate some members our build new office from the scratch. It’s huge costs again.

Lesson: Scaling is always hard. Period.

 

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