Many marketing services businesses have made progress, however, and some are thriving despite the current market conditions. Evidence suggests that it is those agencies that are focused on point of sale branding, activation of campaigns directly with consumers and offering brand experiences that are also doing relatively well. And marcoms businesses with strong digital pedigrees seem to be holding up as well, although margins are tight.
So where do we go from here? The first thing to remember is to keep it simple.
In other words, 'stick to the knitting'. I first read this advice two decades ago in American business management writer Tom Peters' book, In Search of Excellence. Peters suggests that if you want to be truly excellent at something in the long term, you should focus on what you know best and be as good as you can possibly be at doing it. Professor Michael Porter of Harvard Business School echoes the advice: avoid trying to be all things to all people and getting 'stuck in the middle'.
This is as true now as it was back then -- perhaps even more so. When the going gets tough, it's tempting to go for just about any business that comes your way, even if you're stepping outside your comfort zone. However, this can distract you from your core offering and dilute your brand's presence in the client business. It can also lead to an inability to maintain service levels.
Admittedly, with fewer really interesting projects out there, there has been a far greater degree of competition and certainly more 'speculative pitching' -- often for free. Competition is always good as it drives creative thinking. However, I believe that agencies should avoid speculative pitches as these undervalue the value of the work and can also encourage clients to pursue 'window shopping' non-pitches. In difficult market conditions, it's prudent to focus on your strengths, rather than trying to be a Jack-of-all-trades.
Once you've determined to stick to what you know best, the next step is helping clients to solve their problems. Successful agencies are those that are committed to delivering practical solutions to real problems. With increased pressure on marketing spend, it's those projects that are really critical to a brand or product that manage to secure clients' approval and a share of the budget.
This is where we as marketers need to demonstrate truly creative, out-of-the-box thinking. Our clients are now looking to us for the kind of innovative campaigns that will really help drive forward their brands. If we deliver successfully, we're building strong relationships, which should serve us well as the economy improves. Indeed, there is a great deal of research which shows that those brands that maintain or grow investment in a recession get much greater returns and market share than those that don't.
It's also important that we continue to deliver real value for our clients. And I don't necessarily mean value for money. Real value to our clients comes from us helping them achieve their business objectives in a far more cost-effective manner than they could otherwise. This means really investing in the client relationship. As a result, our own people will probably work longer hours, reworking creative output and coming up with alternative approaches and treatments. In some cases, we may even need to reevaluate the rates we charge to those clients commissioning large volumes of work from our agencies. However, working with our clients rather than just for them will further help cement the relationships.
Of course, we need to bear in mind a trend for some clients to splinter larger projects into a number of smaller ones. This makes it harder for us to plan, and in such cases, it is fair to pass on some of the increased costs to our clients.
Above all else, in tough market conditions, it is essential to focus on the fundamentals that underpin any successful professional services business: investing in your staff and staying close to your clients, and for marketing agencies, upping the ante creatively. The businesses that are successfully doing a few essential things really well are the ones still prospering. At Loewy, we are fortunate to have eight diverse businesses that excel at what they do, and it's by focusing on the fundamentals and playing to our strengths that we've made progress in spite of the economic downturn.
2009 has been a tough year, but with 2010 drawing near, there finally appear to be signs of recovery as clients start planning their budgets for the new year. Looking ahead, I believe it is by focusing on the simple things -- and doing them well -- that our industry will continue to prove key to the success of our clients' businesses. And by doing so, in turn continue to grow and flourish through next year and beyond.
Iain Johnston is CEO of Loewy.
