For an agency no other activity can match the ‘fire in the belly’ feeling that winning new business can provide. Not keeping clients, not winning awards, not making more money. The high of new business wins are what most agencies thrive on. If you want to lift agencies spirits during a particularly tough month, announce some new business wins.
The new business pitch can be a path to growth for agencies. However they have to balance the pleasure of a new business win with the pain and cost of the process. The solution for many agencies is to become a lot more selective about what pitches to pursue. In the real world, good agencies minimise the risk and the financial burden of pitching by saying no more often than yes when invited to pitch.
This works as a risk mitigation strategy for the usual suspects but also results in agencies leaving opportunities and money on the table when it comes to working with unknown brands. There is a great opportunity to develop dynamic new brand strategy and creative platforms for young, energetic entrepreneurs who have an appetite for the more risky and edgier routes to market. The chance to get involved at such an early stage with a brand can be very gratifying, but the real trick is in managing that risk without blanket exclusions.
Outside of the advertising agency bubble, there are dozens of potential clients with skinny budgets and bright futures just waiting to be snapped up.
New enterprises and products are being developed every day in Ireland in the eHealth sector in particular where Ireland is emerging as a leading player. Ninety seven high potential start ups serving the financial services, ICT, games, pharmaceuticals and medical devices markets were supported by Enterprise Ireland in 2012. They are on track to generate €300 million in sales and thousands of local jobs by 2015 are by and large left untapped by adland. Why is this?
One of the main reasons startups are not engaging with agencies is that they are not well versed in marketing speak, are unfamiliar with the players in the market and they don’t know how to buy advertising. They often find themselves on an unknown and difficult path that is sometimes filled with dead ends, wrong turns, misleading signposts and the occasional highwayman leaving them with a load of nice looking brochure work but little campaignable insights to really grow their business.
The way in which agencies go about growing their business and the way start ups develop partnerships are currently at odds. Start-ups have finite resources but huge potential upside and frequently partner with companies whose goals are aligned for little or no outlay but with an agreement to ‘share the pig’ on the upside. Agencies new business processes traditionally can be very top heavy and labour intensive with the goal of doing more and monetizing each and every hour spent developing a partnerships with a client with little or no consideration to the upside.
But what start ups actually need is for agencies to do less, to move faster and cut the fat. Is there room for a skinny pitch? Startups don’t need the A team – they just need a team to crack an idea for them. The B or C Team, the agency young bloods would kill for the opportunity to take an unknown brand and make it a household name.
So is there a way for adland to engage more effectively with this sector taking this into consideration? Alternative compensation models are oft alluded to but seldom actioned. A ‘cost plus’ (a share of the upside) is a model that should be seriously considered and a compensation model that is fair to both parties should be developed. In the US we are beginning to see some agencies develop interesting risk/reward remuneration models that involve exchanging some agency sweat for equity – highlighting the significance of the ad agency’s input at that juncture to the future growth potential of the brand.
The Irish Times recent idea lab initiative bringing startups together with creative agencies and advertising agencies to grow their businesses is to be welcomed. By the same token just because a start up and a creative or advertising agency can get in a room together doesn’t mean everyone’s going to leave the room satisfied. There is the danger that start ups may fall into the trap of being short term PR fodder for news outlets and agencies alike looking to tap into the start up zeitgeist. This is a lost opportunity for both sides.
How might we re-imagine engaging with high potential start ups? How can adland draw on its considerable experience in delivering work that has real sales effect to this sector in a way that works for both parties?
Advertising agencies and entrepreneurs could and should become powerful allies. Adland needs to work together with these enterprises and see them as an asset that can deliver exponential returns for their business in the long term rather than a finite short term budget opportunity. This could lead to a whole raft of new opportunities, bold partnerships and a whole new way of doing business that could lead to growth in a declining sector whilst giving these start up enterprises a fighting chance to realise their potential for Ireland Inc.
Heather Kennedy is an accredited IAPI pitch consultant specialising in the online space and is also a mentor to Enterprise Ireland HPSU’s (High Potential Start-ups) where she advises on marketing and technology initiatives.