An Agency Positioning Strategy is About Trade-Offs

By Tim Williams

By Tim Williams

Strategy making is about trade-offs.   You can’t have both a funky and a business-like culture.  You can’t be structured as a local/regional agency and handle global brands. And most importantly, you simply can’t be good at everything.

Having a positioning strategy for your agency means deciding what you’ll do and not do.  And very often this involves some real soul searching on the part of senior agency executives and owners.  In the early stages of exploring your positioning strategy, it’s best to deal with the following questions first, all of which involve a series of trade-offs.  You can’t have any of these things both ways.

1. Do the key people in your firm like to travel … or … do they really prefer staying close to home?

This trade-off in part determines whether or not you’ll be working on national brands.  Some agency executives really prefer not to have to get on airplanes to see their clients – they don’t like constantly being away from their friends and family.  Some are willing to fly, but only on day trips, which means clients within a fairly close geographical radius.  None of these options are right or wrong, but you should evaluate if this is an issue with your senior team.

2. Do you value being well-known in your own hometown … or … is it more important to your business model to be known nationally or internationally?

To many agency executives, it’s extremely important to have a strong presence in the local community.  They thrive on the reputation they have among community leaders and local business associates.  Agencies that are focused on national business may not have any accounts in their hometown.  They may not even participate in local award shows or care about local press, because that’s not the market they’re going after.  Again, there’s no right or wrong to this issue, but you shouldn’t pretend to want one thing when you really want the other.

3. Do you want to be hired for what you do … or … what you know?

Agencies that get hired for their “hands” are valued and compensated differently than agencies that get hired for their “heads.”  Would you prefer “supplier” status or “advisor” status?  This is not a trick question — you should really think about the implications of your answer.

4. Do you want to compete in a large geographical market … or … a small one?

Specialist agencies draw business from large marketers all over the country who are seeking specific services from agencies as part of their roster of agency partners.  National marketers aren’t seeking “full service” agencies (the average Fortune 500 company has 16 agency relationships.)  On the other hand, generalist agencies tend to be hired mostly by smaller local marketers who believe they need “full service” and aren’t either large or sophisticated enough to consider hiring and managing a roster of specialists.    

5. Do you need stronger earning power … or … are you satisfied with your current margins?

This is also not a trick question, but a genuine strategic issue.  In professional services, the individuals and firms that get paid the most are the specialists, not the generalists.  Retina specialists earn more than optometrists.  M&A specialists earn more than audit firms.  It’s true in everything from medicine to law to marketing.  This is largely because of the law of supply and demand.  It’s hard to charge a premium price for services that are widely available by thousands of other agencies.  You achieve premium pricing only by offering services that are unique, differentiated, and scarce.

6. Do you want to be mildly appealing to a broad group of prospects … or … intensely appealing to a small group of prospects?

Agencies with a “general” approach to business target the “general” market.  Trouble is, there are a lot of other firms doing the very same thing.  Generalist firms are literally flooding the market.  Agencies with a focused positioning target a specific portion of the market – specific clients who are actually seeking what the agency has to sell.

7. Do you want to be hired based on your reputation … or … based on your ability to do great speculative work?

The more focused the firm, the greater that chance it will be hired without the dog and pony show that characterizes the way most agencies get new business.  Very focused agencies often acquire business without a competitive review of any kind. 

While a very focused business strategy will produce greater financial rewards, some agency owners get important psychic rewards from doing business with a variety of smaller local clients.  There’s nothing inherently wrong with that – but you should make that decision by design rather than by default. 

Be deliberate about your business strategy by evaluating the trade-offs and implications of your choices.