Growth Insights for CEOs

Attention CEOs: Your Agency of Record Is Strangling You

Posted by Joe Grace

Why you should fire your AOR and build your own virtual agency created exclusively for your company’s unique needs

If you are interested in marketing or advertising, you may have also been a fan of Mad Men, the wildly popular AMC television show about a 1960s New York ad firm fighting to stay atop a glitzy heap of competitors lining Madison Avenue. The show conjured up days of vintage marketing grandeur where the print, television, and radio ad were king. As the show came to a close in late spring, a new slew of blogs and articles sprung up on the Internet regarding the stark difference between marketing’s yesteryears, and the increasingly segmented and fragmented media world we market in today.

The marketing and advertising agency that handles a mid-size company’s everything just doesn’t make sense in today’s world, and the CEOs and companies that rely on multi-channel marketing success are sensing a lack of results – and revenue in their pockets – more than ever. Yes, in the traditional world of marketing and advertising, the Agency of Record (AOR) concept worked. The general premise of what worked for one company seemed to work well for the next: Find an awesome jingle; create an engaging TV, radio, or magazine ad.; lather, rinse, repeat.

When the world started insisting upon digital and inbound marketing strategies, your company’s favorite AOR has likely, in perfect knee-jerk fashion, “added” SEO strategies, PPC campaigns, blogs, and social media platforms to your company’s repertoire. To a large degree, the agency, which definitely knew what they were doing in the past, has now been trusted to go off and complete these new, unfamiliar tasks with success, report about these new tactics vaguely and with little to no accountability, slowly but surely strangling your company. Little wonder that the average agency-client relationship now tracks less than three years – nearly half of the tenure enjoyed in 1984, according to The Bedford Group.

A one-size-fits-all marketing strategy does not work anymore, no matter what industry you are in. Depending on your company’s unique needs, you need to cultivate a multi-channel marketing and advertising solution that’s custom tailored to meet your unique needs. And rather than hoping an AOR can cover all the bases, many companies today are discovering they can get a better return on their advertising dollar by assembling a network of specialty agencies that collectively can act as a virtual agency, to deliver game-changing results.

Your company’s needs can and will change based on given goals, products, services -- and even your stage of business growth. The typical Agency of Record has too much overhead, tradition and bureaucracy to be nimble enough to deliver properly in the dynamic, ever-churning landscape of 2015.

No doubt, the shift from traditional media to digital is hurting advertising agencies across the country – stalwart enterprises that reaped their fortunes for decades can no longer count on making significant fees on both production and commissions. This summer, the Wall Street Journal reported that investors in these legacy agencies were gravely concerned about declining advertising revenues from media companies. As their revenues decline, large agencies may find it even more difficult to deliver acceptable results as an AOR.

My Experience with AORs

I will give AORs credit where they are due—they were well suited for the era that recently concluded. However, I knew immediately when they began to wear out their welcome. In 2000, I joined a management team as CMO to help turnaround a struggling digital startup. The first thing that caught my attention was the company’s AOR, which had responsibility for a $20 million multi-channel advertising budget.

At first glance, I was stunned to discover that there was very little accountability and few tangible results being produced. As I looked deeper, I became very concerned about the creative strategy, creative execution, media mix, media costs and more. I knew we could do better. We cancelled the deal with the AOR and began hiring small boutique agencies with expertise in their specific domain – and a much more affordable price tag. We assembled a roster of dedicated small firms for TV creative, digital creative, traditional media, digital media, SEO, SEM, etc. With a lean and mean group of dedicated specialty agencies, we are able to reduce our marketing and advertising budget by 80 percent, while accelerating growth to reach profitability within two years.

I am concerned that many mid-size companies today will run into the same problem, sitting on their hands, with nowhere to go but the next common marketing and advertising agency. I do, however, propose a viable solution.

Your Plan for Continued Success

Today’s CEO not only needs a solid virtual marketing and advertising team – but a quarterback for this “mod squad” in the form of a dedicated, savvy CMO who has the experience and knowhow to create this custom, piece-by-piece agency that can dramatically outperform your AOR. Gone is the trustworthiness of a large agency claiming to do it all. It’s about analytics, results and accountability in the digital age, providing solutions for your business that are customer tailored for success.

Interested? Let’s talk.

Topics: CEO Marketing Strategy, Marketing Implementation

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