There is a serious push in the advertising industry for marketing agencies to develop some sort of new consulting model.

Agency consulting branding options

There are many agencies, all showing a different face, and yet everyone’s the same.

The news is filled with stories about consulting, ad agencies, and the various attempts to combine the two. Most of the large-system agencies have experimented with some sort of consulting model. And most have failed. The reasons include a refusal to fund a separate new business activity behind the new practice area and believing existing clients will flock to the new service. Agencies have difficulty separating the new practice area from the more traditional creative side. In many cases, the agencies offered the consulting services free to their larger agency accounts, mostly as some sort of value-added service. In effect, they’re giving away more for free and diluting their brand.

Several large agencies and direct response firms have sought to combine consulting with advertising by hiring consultants to run their advertising agencies. They hope the skills and methodologies these consulting leaders bring to the organization will transfer into the world of advertising. It can, but not in the way they expect or anticipate. Consultant leaders can’t overcome the inherent bias towards communication solutions, but they can help drive organic growth if positioned and managed. The overall verdict on this trend is still out – but the early results don’t bode well.

The large consulting firms have been buying up marketing agencies for years. Accenture, Deloitte, et al. have all added significant marketing talent to their rosters, taking a bite out of agency revenue. It is much easier to add the more tactical communication and creative services to their existing business model. It’s a less strategic service, much as an ad agency can add design services.

We’ve been shouting at the rooftops for agencies to add a consulting arm to their business model for years. Along the way, we have helped many agencies set up their own successful consulting shops and even offer a one-day training session on how to go about doing this. Below are a few lessons we’ve learned coaching leaders and helping agencies succeed.

Ad Agency Consulting Model Lessons Learned So Far:

  • Setting up a separate consulting firm within a marketing firm can be very profitable – but it must be done correctly.
  • A new consulting organization helps. Trying to do consulting under the current agency brand has proven difficult. The same base name, but different look, can work.
  • Don’t mention advertising or communications in the title or in the underlying copy for the consulting arm. Never show creative. That reduces you to just another communication vendor.
  • To date, agency people have had difficulty in consulting because they rush to communicate. They see everything as a communication problem, solvable with better communications, a new ad, or an improved website.
  • It’s been difficult to sell consulting to existing clients. For existing clients, it’s been proven more effective to sell in value-based initiatives.
  • The people who buy consulting typically are much higher in the organization than traditional agency contacts. To be successful in consulting you must target at the C-level (CEO, CFO, CMO, COO).
  • A separate new business program is needed because your consulting new business prospects are different from your agency new business prospects.
  • Consulting can increase the value of the agency dramatically.
  • Many companies in the middle market have no place to turn to except for one-or-two-man consultancies or college professors. Traditonally, this is because the big consultants usually have a cutoff of $1 million in revenue per year per client. It’s a target rich environment, if the consulting firm is correctly positioned.
  • Getting an experienced consultant on board and teaching that person branding and advertising hasn’t proven difficult.
  • Your current advertising clients are also your consultant clients. That means you have an established consulting practice now because you have consulted with your advertising clients in the past. You just didn’t charge for it.
  • You need a consulting process to follow and a strategic process to merchandise.
  • Consulting clients flow easily into the agency, becoming agency clients. In other words, the agency can do very nicely off the output from the consulting table.

There is Another Way

One option open to traditional marketing firms is to consider becoming what we call an Enterprise Agency with a strategic side and a tactical side of the business. Create a mini-holding company model with a separate consulting firm right within the agency. The consulting firm goes after C-level prospects offering a range of services that appeal to senior management. Things like building the brand, getting everyone on the same page, taking marketing leadership within the category and more. The advantages to firms that move this way are many, including opening another stream of revenue, we recommend targeting a minimum of $500,000 per year.

This option offers a perfect way to recycle top talent that has grown tired of the ad game and can’t work comfortably with the younger client-side managers. And this option acts as a feeder of new business assignments into the agency side of your business because consulting can generate plenty of creative work. The investment is minimal, perhaps a new phone line, some stationery and promotional materials and an outreach strategy to touch C-level prospects. This option is called the Enterprise Agency because the new structure works at all levels of the client’s enterprise, from the top to the bottom. And that builds a much stronger relationship and really maximizes profit potential.



Photo by Ryan Berry and used under creative commons