Susan Baier and Drew McLellan at 2023 BABA summit in Chicago
If you are a leader at a marketing agency, there is good news. According to new research, marketing decision-makers at eight out of ten small-to-medium-sized businesses strongly agree with the statement, “My organization wants to work with agencies we can build a strong relationship with over time.”
Additionally, most of the 512 study respondents strongly agree their organization is interested in any new services their agencies can offer them, and just under half strongly agree their agency budget should be flexible to accommodate new opportunities.
The research did reveal one difficult thing: one in four decision-makers say economic conditions have made it hard to justify the cost of working with an agency.
“So even if the last few years have been challenging for agencies, many organizations want to cultivate lasting relationships with you and are willing to spend more for new services and opportunities,” said Susan Baier of Audience Audit, who conducted the research and presented the findings with Agency Management Institute (AMI) CEO Drew McLellan to more than 300 agency leaders at the May 2023 Build A Better Agency (BABA) Summit in Chicago. (As one of the event sponsors, I received a briefing on the findings).
In January of 2023, AMI and Audience Audit surveyed marketing decision-makers that work at organizations with annual revenues under $500 million, annual marketing budgets under $20 million, and that work with one or more agencies. The research yielded a margin of error of +/- 4.2 percentage points at a 95% confidence interval. The last time this audience was studied was in 2021 during the pandemic.
The research revealed the marketing decision-makers fall into three distinct segments.
Relationship Builders (30%). Relationship builders want strategic partnerships with their agencies and value their expertise. They are interested in new services their agencies offer. “Relationship builders are the most likely of the segments to be interested in new services and flexible with budget increases,” said Baier.
Relationship builders say prioritizing consistent relationships with agencies is the best way to achieve marketing goals.
Maintaining strategic partnerships is a top priority for their organization.
“Their organization wants to work with agencies they can build a strong relationship with over time, and that help them improve their marketing expertise,” said Baier. “They say collaboration between their in-house marketing employees and agencies leads to better outcomes. Their organization trusts the guidance and recommendations their agencies provide them. And they say agencies with high-level communication skills are easier to work with.”
Working with agencies saves their organization money and has helped their organization reach new levels of success.
These marketing decision-makers believe the budget for their agencies should be flexible to allow them to take advantage of additional opportunities. Their organization has the flexibility to adjust their agency spending.
Staff Prioritizers (43%). Staff prioritizers feel their employees have more expertise than most agencies. They want their agencies to integrate better into their organizations.
“Their organization needs agencies that can work as quickly as possible,” says Baier. “They say true experts in their space are hard to find among agencies. It’s challenging to find an agency that truly understands their organization’s wants, needs, and goals.”
According to the findings, they wish their agencies would spend more time getting to know their organization’s employees personally. Their organization likes to switch from agency to agency, so they always have a fresh approach. These marketing decision-makers say coordination between their in-house marketing employees and agencies complicates everything.
Savings Seekers (26%). Savings seekers want their agencies to help them save money and say they’re always looking for ways to reduce their marketing spend. Compared to other segments, the percentage of savings seekers decreases as the organization's annual revenue increases.
“Their organization will only work with agencies if their pricing is competitive, and they only want to hear how an agency can save them money, not spend more,” says Baier. “These respondents say economic conditions have made it hard to justify the cost of working with an agency. Their organization could handle their marketing needs in-house if necessary.”
What Marketing Decision-Makers Agree On
“The research shows that respondents from all segments want proof agencies can deliver,” says Baier. “Most respondents agree their organizations will only sign on for more work with their agencies if they have proven they can deliver results and wish agencies would show evidence their strategies and tactics work. Most also agree they want agencies to let them take the lead with their marketing strategy and initiatives, showing a preference for agencies to be the copilot in their partnerships.”
Bottom line: In my opinion, while relationship seekers and staff prioritizers are segments that offer profitability potential for agencies, the savings seekers are a group to be wary of. These decision-makers are focusing on cost and not return on investment.
The next BABA Summit—arguably the largest annual gathering of small-to-midsized advertising, digital marketing, and public relations agency leaders—will be held May 20-22, 2024 in Denver, Colorado.
