In our work with agencies throughout the US and Canada, we've noticed some constants.
- Agency owners have a wicked sense of humor.
- Agency owners both hire and fire too slowly.
- Agency owners have a love/hate relationship with clients.
For the most part, agency owners like and respect their clients, but they're often frustrated by the games they have to play to get information, and they're never quite sure where they stand.
In many ways, the relationship is like a dysfunctional romance. When a client works with more than one agency, there are hurt feelings, and when the agency pushes for answers or more projects, the client feels backed into a corner.
Agencies can usually ferret out what the client is up to, but the attitudes and beliefs that lead to those actions are often hidden from view.
That's why, in Summer 2014, audience segmentation research firm Audience Audit partnered with Agency Management Institute (a consultancy that helps marketing, PR, digital, and advertising agencies be more successful) to conduct an original study exploring the reasons organizations hire agencies, what they're looking for, and how agencies can position themselves for relevance with their target customers.
Three Segments of Marketing Decision-Makers
What we discovered is that there are three distinctly different segments of marketing decision-makers with marketing budgets of $1 million or less annually:
- "Looking for Love" (29% of respondents) segment value agencies as a critical partner for business success. For this group, agencies are a key participant in strategic planning efforts, a trusted source of new ideas and insights about marketing trends, and a tactical partner across a wide range of marketing services and expertise. These decision-makers feel it's important to develop a long-term relationship with an agency, and they expect that if their agency doesn't have an answer, they'll know where to find it.
- "Playing the Field" (38% of respondents) segment sees hiring a marketing or advertising agency as a necessary evil to gain specialized expertise. They prefer to work with subject matter experts and feel changing agencies periodically is important even if they're doing a good job.
- "Single and Satisfied" (33% of respondents) segment feels their organizations are fairly self-sufficient regarding marketing. They believe that they have clear marketing plans and know exactly what they want. When these CMOs do use agencies for strategy, they do so as a source of ideas that can be executed by the organization in-house.
Frustratingly, there are no demographic clues as to which prospect would fall into which segment. There's absolutely no difference when you look at company size, budget, maturity of the company, or experience level of the CMO.
A Closer Look at Each Segment
Until you understand the segments so you can ask some insightful questions, you're going in blind. And you definitely want to be able to tell them apart because what matters to them varies greatly.
The Looking for Love segment genuinely sees its agencies as partners. This segment counts on agencies' outside perspective and credits them with being the best source for marketing strategy. However, regardless of its company's revenue, this segment spent the least on marketing and deployed the fewest marketing tactics.
In terms of finding an agency, this segment relied heavily on its own online research. It will also ask its peers for referrals.
This segment's polar opposite is the Playing the Field segment. They see agencies as vendors and want to buy very specific tactical expertise for a defined outcome or goal. Interestingly, regardless of the company's revenue, this segment spends the most on agencies. These CMOs are willing to pay a premium for that depth of expertise that niche agencies offer.
When selecting an agency, Playing the Field CMOs care the least about an agency being in the same city as they are. They're also the most likely to engage an agency search firm.
The third segment, Single and Satisfied, is the epitome of indifference. These CMOs don't believe that they really need agencies at all. They are confident in their in-house capabilities, but despite that fact, they still spend more than the Looking for Love segment.
When Single and Satisfied CMOs shop for an agency, they rely heavily on their own research—online and through their connections and tradeshows. These decision-makers also are more likely than the other two segments to already be following your blog or social media channels.
What All Three Segments Have in Common
Although the segments were quite different on many points, a few universal truths exist.
All three segments were direct about not being interested in working with just one agency. A total of 81% of all the respondents indicated that they were working with two or more agencies and liked it that way.
The three segments were equally unanimous in saying that agencies were too pushy and needed to know when to back off. That was the No. 1 response they had when asked what agencies should stop doing.
Perhaps part of the pushiness comes from not understanding where clients are coming from and what they value in their agency partner. Each segment will be a good client for some agencies and not for others.
Being able to diagnose prospects with some artful questioning will help savvy agencies either tailor pitches to match their segment's hot buttons or bow out if they know they're not really a good fit.