The 6 Common Concerns of Marketing Services Agencies

Marketing services agencies share similar concerns regardless of their specialty, identifying which is top of mind is the best first step to take when looking to improve growth and operational efficiency.

Since the early 2000s I’ve worked with agencies of all stripes and sizes. Some focused on branding, some on public relations, others on graphic or web design. Each had their strengths and weaknesses, and every single one expressed at least two or three of these concerns when evaluating the challenges to their business.

1.  “Margin compression is a reality, we constantly fight commoditization”

Rightly or wrongly many clients of marketing services evaluate what they spend with an agency as an expense. While there are a number of reasons why this is true the biggest is that the client sought out and acquired the agency’s expertise because they needed a very specialized and tactical need filled. When a tactical service is considered an expense it is treated as cost. During every annual budget cycle cost is highly scrutinized and actions are taken to improve cost efficiency.

2.  “We are a little too dependent upon a small handful of big accounts”

Agencies that are not worried about margin compression may be worried about their dependency upon a small handful of big accounts. Losing just one of them radically disrupts their cash flow, and forces the agency to quickly adjust their model to make up for the lost revenue.

3.  “It is a crowded marketplace and we struggle to differentiate”

The marketing services landscape is crowded to say the least. There are literally hundreds of agencies of all sizes in every major metropolitan region. This increases the margin pressure and it makes it incredibly challenging for any agency to differentiate their approach against their many competitors.

4.  “Clients can decide quickly to get rid of us in favor of a new provider”

When agency services are acquired against a very specific or direct need, clients make a decision on whether or not they’ll retain the agency after the need is satisfied.  It is an easy decision for clients to make because too frequently they believe that what the agency does is replicable by any other in the market.

5.  “We are specialists in two or three functional areas, but clients want complete coverage”

Increasingly clients seek to consolidate what they invest in outside and creative services. The landscape of social and digital media requires these clients to produce more content and have all their efforts well integrated across all channels of communication that are pertinent to their marketplace. As such they do not want to buy these services piecemeal or ala carte. If an agency lacks the ability to deliver in this integrated fashion then they risk losing the business.

6.  “We would like to grow but finding it difficult to scale”

Successful agencies want to grow and expand their business. They want to cover larger territories and offer more complete services. When they begin to map out a strategy to do so, however, they find that the main obstacle to this growth is determining how their current model will scale. This is especially difficult if the agency is already working on lower margins and has a small area of expertise.

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