The Triple Disruption in Agencies: Economic Uncertainty, Media Abundance, and AI with Tom Salmon

[00:00:00] Tom: They're not following the same tried and tested path that maybe we all kind of grew up in, which is, you know, you, you build an agency, you scale it by adding more people in, adding more kind of capabilities in, and at some point you exit probably, hopefully by selling to somebody. And I think that tried and tested path for journeys and for agencies is maybe probably gonna start to look a bit old-fashioned.
So then you start thinking, what, what is an agency going to be then?
[00:00:24] Mike: My name's Mike Lander, and you're listening to Higgle, the B2B Sales Club Podcast, where we bring you actionable insights about sales RFPs, negotiations, and difficult procurement discussions from sales leaders, brand leaders, and procurement leaders.
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Tom, thanks ever so much for joining me on Higgle, the B2B Sales Club Podcast. Great to have you as a guest.
[00:00:52] Tom: No, thanks very much for having me along.
[00:00:53] Mike: So without further ado, Tom, who are you, what do you do, and what's your favorite song and why?
[00:00:58] Tom: Thank you very much. So my name's Tom Salmon. I'm one of the co-founders of Agency by Agency, and we are an intelligence platform and a research and advisory service for agencies, agency advisors, anyone who's actually interested in the UK agency, uh, sector as a whole.
So we've compiled the only comprehensive mapping of every agency in the UK, which I'm sure we'll kind of get into in a, in a second, and my background is agency leadership. I used to be managing director of an agency called Epiphany. The last five years I've been working with agencies to help them think about their strategy, their positioning, their operations, their, um, their efficiencies, their cultural, pretty much every part of, of running an agency.
And throughout that whole time, normally when I start working with an agency, one of the first questions they ask is, "How are we doing?" You know, just how- Are we, are we doing okay? Are we, are we up? Are we down? Exactly.
[00:01:46] Mike: How do we compare?
[00:01:47] Tom: Exactly that question, and that's a really, really difficult question to answer robustly.
Of course, you can answer it based on your experience and kind of the mood music in, in the room. But we wanted to develop something that allowed people to actually see exactly what was going on in the agency sector, the trends, the, the key, uh, the key movements, and, and what could we do as a sector to actually best support ourselves.
[00:02:09] Mike: Yep, very good. And also, you collect more than just what's at Companies House from memory.
[00:02:14] Tom: We do. Yeah, we do. So we attach lots of different data points, and once we've found the agencies and categorized them according to our, our classification system, which in turn is based on how agencies describe themselves, we then bring in other data points to actually attach to that agency record.
So yeah, it is beyond what we can find at Companies House.
[00:02:31] Mike: Brilliant. And what's your favorite song and why?
[00:02:33] Tom: This changes every single day. My first job after university was actually working in live music and, and promoting. Ah. Um, and so today's answer is Turn the Page by The Streets. Oh. For loads of different reasons.
I think that Mike Skinner is, is a bit of a generational talent. I think he's, think he's brilliant. We happen to be roughly the same age, so yeah, all that good stuff. We actually put The Streets on twice, many, many years ago, and two of the best show-- live shows I've, I've ever seen or, or been part of putting on.
[00:03:01] Mike: Brilliant. Very good. So let's get into the questions. So first of all, agencies are facing this kind of triple disruption, which is, it's economic, there's media abundance, and of course, AI. So do you think this is the usual cyclical pressure, or is it more of a permanent reset in how agencies and agency value is defined by clients?
And none of us know precisely, but there are scenarios that will play out. What are your views?
[00:03:30] Tom: It means a hell of a time, doesn't it, to be running an agency. You would hope that the economic side of that triple disruption is maybe, maybe we're coming out of it after, what? 10, 15 years of disruption.
Although I think the Western economies of the world, uh, generally are probably gonna have, have some struggle compared to where, where they have been over the last 50 to 100 years with, you know, everything moving east-
[00:03:53] Mike: Exactly ...
[00:03:53] Tom: geopolitically. Um, I think Africa's one to watch as well, of course, with a, a really young population there.
I mean, that's a very sweeping statement, isn't it? Absolutely bloody massive continent, but - It's huge ... kind of summary form. But in the West and in the UK specifically, I think the economic side of that equation, you would hope that there's gonna be a more, a more positive future for us all to be existing in.
I think where it comes to AI, then that, that probably isn't a cyclical thing. I think that is a, that is a technology thing that's obviously here to stay. How disruptive that is in the long term, of course, is yet to be, yet to be seen. But of course, it's gonna have an impact both on agency models, client expectations, pace and speed of, of delivery, all, all the, all these kind of things.
That's a big one. Media abundance I think is a really interesting one from that cyclical point of view. And when we talk about media abundance, what we're basically saying is that there's never been so much choice for a marketer to actually, in terms of where they place their bets, you know, where, where they actually invest that, that marketing spend.
And I think we've had, we've had 10 years, if not more now, of the promise of performance marketing. You know, every single thing is measurable. Everything can be attributed. You can measure things, and actually marketing is a, a scientific thing, was definitely the premise of performance marketing, which was also the biggest land grab in, in marketing history, I think.
Pretending- Right ... that brand suddenly wasn't performance marketing somehow. So I think brand is kind of coming back into the picture. I think there is increasing kind of, um, undertow of skepticism about investment into the big kind of, uh, multinational media platforms. I'm talking about kind of your, your, your Metas of the world, your Googles of the world.
I think advertisers are actually looking increasingly about what is available outside of those ecosystems. So yes, there's way, way more choice in terms of where you place your advertising, um, or place your bets, I guess. But I wonder whether we're actually gonna come out to a certain extent of that. Are we at the moment of peak complexity in that environment, I guess is my question.
So I think the three things that are going on, so the AI disruption, the economic uncertainty, and then the media abundance piece, I think some of them are probably permanent. I think some of them might be cyclical and some of them, like the economy, might be semi-cyclical.
[00:06:02] Mike: Yeah. And we know that the economic piece goes in waves.
Uh, there's the short-term wave and the long-term wave, and the long-term wave, I think Ray Dalio talked about around long-term debt cycles. So yeah, where we are in the economy, who knows at the moment, but if you're an agency, it's probably everyone was hoping for a better year in two thousand twenty-six.
I'm not sure if that's playing out. Do you think it is? You speak to a lot of agencies.
[00:06:25] Tom: It's funny, isn't it? I, I think the mood music seems to be better than it has been over the last two or three years, I think. But of course, what, what does mood music matter? I think generally... So it's interest- So when, when we look at agencies, we've got twenty-five thousand agencies mapped in our data.
And actually, when you look at it, this is almost more than one sector, if that makes sense. So we try not to talk about kind of agencies in the global sense because there are some real nuances and different things happening within the sector. So, so for example, I think it's six out of ten agencies have got fewer than five members of staff.
They are agencies, but they're really micro-agencies.
[00:07:01] Mike: Doesn't surprise me.
[00:07:03] Tom: Yeah, exactly. Potential future models maybe later. Um, but of course, the big holdcos account for, I think there, there's something like nought point six of all agencies by volume in the UK, but they employ twenty-three percent of the workforce, so they're, they're huge.
So what happens in those holdcos has a dramatic effect on the mood music in the sector.
[00:07:21] Mike: It does.
[00:07:22] Tom: But there is growth actually in the independent scene, particularly in those agencies that are specializing in things that are harder for client-side marketers and other agencies to actually bring into their own business.
[00:07:33] Mike: So scarcity, I think, is something we'll come back to as a theme throughout the podcast recording because my... So it'd be good to get your view. I mean, they're often rabbit holes, Tom. It's part of the fun. My view of why agencies existed in the first place is because of scarcity. The, the very reason that brands need agencies is because of scarce talent, scarce resources, and obviously there's a capacity constraint, and there's also risk.
But those are probably the three big things, scarcity, capacity, and risk Maybe innovation as well about how the industry moves. But if you look at scarcity, let's just have a little chat about that for a second. One could argue that AI in its crudest form can systematize, automate, make more efficient that scarcity that existed before.
Not all of it by a long chalk, but if that scarce resource is a triangle, the scarcity bit of two-thirds of it may well be going away. Therefore, that must change the way that agencies configure themselves. Is that just nonsense, or do you think there's some truth in that?
[00:08:38] Tom: I think there's definitely some truth in it.
I think the AI impact is, is really, really interesting because of course, theoretically, any of us can pick up a piece, you know, an LLM and pretty much do anything. So theoretically, I could sit here in this small, badly lit room and try to figure out and unravel the, the human genome.
[00:08:57] Mike: Yes.
[00:08:57] Tom: But of course, I'm not gonna do that because where the hell would I start?
[00:09:01] Mike: Exactly.
[00:09:02] Tom: So yes, you're absolutely right. Theoretically, that's absolutely true. But just because we can, doesn't necessarily mean we all will, and I think that probably applies to clients as well for all those reasons you, you also talked about in terms of risk, in terms of, "Do you actually know what I'm asking for?"
[00:09:16] Mike: Yep. Do I trust the output that I'm getting?
[00:09:18] Tom: Yeah. How do I verify that?
[00:09:20] Mike: Yeah. Do I want to release a thousand campaigns across forty-seven languages in forty-seven countries or more, fifty countries, a hundred countries, without someone looking at that and going, "Yeah, actually, someone's got to look at each campaign before it's released and check the quality of it and check that it's gonna be culturally sensitive within the environment it's being released."
At the moment, as a brand, you wouldn't just hit Send.
[00:09:43] Tom: No. No, not at all. And then that's a quality thing, that's a risk thing, but it's also the fact that we can increasingly, we can tell, you know, how many years are we now into the, the kind of- Exactly.
[00:09:52] Mike: Well, we're about three and a half years of the public version-
[00:09:56] Tom: Yeah
[00:09:56] Mike: I think, of ChatGPT, OpenAI.
[00:09:59] Tom: And already, a lot of people, w- when we see a piece of content, you can look at it and you go, "That looks iffy. Do I trust it?" And that trust issue is really, really important. And of course, it's brand-building, isn't it? That, you know, that if a brand can't be bothered to actually craft something, to actually kind of put the time in, to actually tell a story, you know, in a proper, meaningful, engaging way, then why would it resonate with a, with a customer?
I think, I think there's a danger with all of this stuff. We get so wrapped up in the, the how we do stuff, the technology side of things that we forget that at the other end of this, there is a human being doing their thing, evaluating their choices, doing a weekly shop, crossing a road while on the phone, whatever whatever it is.
And AI doesn't necessarily always give you the best results
[00:10:42] Mike: No, exactly. So that takes us nicely on to where are the genuinely future-proof white spaces for agencies, do we think? So how should agencies think about creating kind of measurable client value going forward, and how do they carve out that white space?
And to qualify that, Tom, my view of the white space, and you can call it blue ocean strategy, whatever you like, really. But that white space, as the foundation models get better, you have to get more valuable. To me, it's a bit of a test. You can't be a thin wrapper around an LLM because that's the route to disaster.
[00:11:18] Tom: Yes.
[00:11:18] Mike: So you have to bluntly, as the LLMs get better, you have to, as an agency proposition, become more valuable. What do you think? Where is that space?
[00:11:27] Tom: I'd agree with that, and I think it's about... And the agencies that we see performing well in, in our data are really, really clear on how they create value.
[00:11:35] Mike: Right.
[00:11:35] Tom: And so who they're for, what they're for, sometimes when they're for in an org- the client organization's life cycle, but they're really clear on how they create value. And if you're really clear on how you create value and why, the technology can take a bit of a, a back seat-
[00:11:50] Mike: Yeah ...
[00:11:50] Tom: in that.
[00:11:51] Mike: And it is a true enabler at that point.
It's not the raison d'être
[00:11:55] Tom: Exactly that. So in terms of where are the white spaces, well, I think if we go back to that scarcity point from a, a second ago. So where we're seeing, we track the number of agencies with a capability and the growth rates of those agencies. We measure growth rate according to turnover and to headcount growth, like a combination of those two things.
And where we see the highest growth are in parts of the agency economy where there are fewer agencies, scarcity.
[00:12:19] Mike: Scarcity, yeah.
[00:12:20] Tom: And that's normally as a result of it being a, a inverted commas new type of channel. I say this because we're comparing to things like market research or brand and things like that, which have been around- Yeah
for, forever and ever.
[00:12:31] Mike: So for example, influencer, rela- relatively new.
[00:12:35] Tom: Exactly. So influence would be one, um, marketplace, Amazon, retail media, all these kind of things, so they're, they're kind of relatively new channels and therefore there is less of a workforce to recruit from and there's more of a kind of scarcity value.
[00:12:48] Mike: So commerce marketing probably is another one as well.
[00:12:50] Tom: It is, exactly. So anything that's kind of new and growing, um, where on the opposite end of the spectrum, you probably wouldn't want to be opening a fairly generic web development studio. Most agents, we're tracking around about nine and a half thousand agencies of the 25,000 that offer some form of web development and, and UX/UI design.
So that's not enough. That might have been enough maybe 10 years ago, 2017, '18, when web developer salaries were going through the roof.
[00:13:17] Mike: Yeah, UI and UX when they were the kind of like highly valued resources, what made a great user interface, what made a great customer experience, but less and less important now
[00:13:29] Tom: Yeah.
But then we are seeing, uh, consistent growth or higher levels of stability, which we maybe come back to as well, in things like brand strategy. So again, at that kind of more management consulting end of the spectrum rather than- Exactly ... the execution side of agency land. And I think if we do look about where the threat of AI comes into the agency space, I think it probably is more in the execution space than it is in the how do we do something?
Where is the opportunity? What can we do that hasn't been done before and therefore an LLM can't tell me to do, the, the kind of the true creative part of it.
[00:14:02] Mike: So Tom, last night, out of interest 'cause I, obviously I was preparing for today, and I just thought I'll just confirm something that I think is true, and so I asked one of the LLMs, "Is it broadly true to say that AI, the foundation models that we use, is based on a very broad premise of what comes next is based upon what's come before?"
And at a very high level, and all of the AI people that are out there will be tearing this apart, at a very high level, broadly, that's broadly true. So I was with a very, very interesting guy the other day. We were talking about the future of agencies, et cetera. And he talked about, look, if, if you get AI to analyze and build a brand strategy campaign, it will do a very good job based upon all sorts of things, but broadly based upon what others have done before.
It'll be very, very good, but it's unlikely to be breakthrough.
[00:14:52] Tom: Yeah.
[00:14:53] Mike: He said it won't spot the purple chair in the corner with a hamster on it that's doing something interesting because it would filter that out. So but that might be the very thing that actually triggers an emotion, like the Cadbury advert, for example, the gorilla advert.
So I think what you're saying is there's still a huge amount of scope for that level of human-level insight, creativity, unusual thinking.
[00:15:17] Tom: Yeah. It- There has to be 'cause, I guess, if we follow that train of thought, Misiek, what AI enables is anyone to do anything, and that means that more stuff will be produced.
And so we'll see more stuff on our social media feeds or served programmatically through, through audio. We, we'll just be bombarded with more stuff from more people.
[00:15:35] Mike: But looking quite similar.
[00:15:37] Tom: Yeah, exactly. It'll be, it'll be beige, you know? So- Yes,
[00:15:39] Mike: it will be beige ...
[00:15:40] Tom: so therefore, to stand out, it might actually be that the, the Cadbury gorilla thinking actually comes back into the, comes back- Exactly right
into everyone's way, but it becomes more and more valuable. Yes. Because it's a what is it that's gonna stand out? What is it this brand actually needs that the LLM can't get its kind of hands around because it's gonna model things based on some sense of reliability because things have happened this way in the past.
[00:16:04] Mike: 'Cause it's a probabilistic model based upon a bunch of nodes and networks. So none of us know, so anyone listening, none of us know the answer to this, but I'm gonna ask Tom anyway what the possible scenarios are. Does that mean from twenty-five thousand agencies- There will be less in the next five years.
What do you think?
[00:16:23] Tom: I think yes, and I say that with ... So I will be proved wrong, of course, in three years' time when there's an eruption of innovation-
[00:16:29] Mike: I'm sure we both will. Exactly. Something will happen that we never knew about.
[00:16:33] Tom: Yeah. So what we can see in the data, so we also track agency birth rates, for, for want of a better expression.
So how many new agencies are created every year? And obviously, agencies are really good at creating other agencies. We get hacked off with the management of the one that we're, we're working in- And
[00:16:46] Mike: we leave and do something else.
[00:16:47] Tom: Exactly. Yeah. Ex- uh, or, you know, someone buys it, and after the earn-out period is over, then you, you go again.
Agencies are really good at creating agencies. But there are fewer agencies being created now than there have been almost for the last sort of fifteen, twenty years. COVID had a huge impact on this. So twenty nineteen-twenty financial year was almost peak agency formation year. So the, the number of agencies in the UK actually doubled between two thousand and fifteen and twenty twenty-four.
[00:17:14] Mike: Wow.
[00:17:14] Tom: Yeah.
[00:17:15] Mike: So in nine years, it doubled.
[00:17:17] Tom: Yes. Yeah, exactly. Just in terms of new agencies being founded.
[00:17:20] Mike: Yeah.
[00:17:20] Tom: What then happens is COVID hits, and people think, "Mm, maybe now this is not the time to actually take a risk and go out and form an agency." So there, there are still new agencies being formed, but in way fewer numbers than there were pre-twenty twenty.
And where those agencies are being formed is really interesting because, you know, there, there are very, very few, for example, market research agencies being born, but there are influencer, Amazon Marketplace, creator, you know, all these kind of really interesting kind of new parts of the sector being created.
[00:17:48] Mike: So is the net number, i.e. births and deaths, is that declining? It
[00:17:52] Tom: will come down. Yeah, it will come down. Now, obviously, we only mapped the market in twenty twenty-four/twenty-five. We are seeing some stability in that figure of around about twenty-five thousand agencies over the last, the last two years.
But I think there are some consolidations. There is an argument to say that when agencies are being formed They're not following the same tried and tested path that maybe we all kind of grew, grew up in, which is, you know, you, you build an agency, you scale it by adding more people in, adding more kind of capabilities in, and at some point you exit probably hopefully by selling it to someone.
Selling to somebody. And I think that tried and tested path for journeys for agencies is maybe probably gonna start to look a bit old-fashioned. So then you start thinking what, what is an agency going to be then if, if it is more in this strategic- Exactly ... thinking space, and it's not about building head count and scaling the, the business this way, what does that mean?
[00:18:45] Mike: It's not based upon production economics bluntly.
[00:18:47] Tom: Precisely that. Yeah. Yeah. Precisely.
[00:18:49] Mike: Do you think they'll be called agencies?
[00:18:50] Tom: Yeah. Really interesting. The language is definitely changing, so we're actually... One of the challenges we've got is no one had a definition of agency before. Didn't exist. So we-- I can't claim to have found the precise definition, but we know an agency when we see it, if that makes sense.
But we, we do have this really interesting gray area where we have to look at a business and go, "Is that an agency or not?" And on a small scale, that can be, is that a freelancer or is that an agency? And, and it's relatively easy to tell the difference. As we grow out, though, as more agencies actually almost start to bring in like a SaaS or a subscription or a, some kind of platform element into their business, you start to go, "Are they still an agency at that point?"
And we say if they're still m- offering managed services to clients, and there's a human in there, it's not a purely a SaaS thing, then yes, they are an agency. But that kind of grayness is definitely kind of increasing rather than decreasing. So are they gonna be agencies? Yes, I think so. I think people will still want to employ human experts to help them solve a business challenge, and I think-- I don't, don't think that'll change.
But the shape of the business they employ to, to meet that challenge, I think we will see or, or maybe recognize, because I think it's already there, we will recognize there's more and more diversity within it. So we're seeing a huge number of really great, really small, really specialist nano agencies of maybe between sort of two and 10 people, and they are working with big grown-up clients.
They are proper agencies doing fantastic work. They're maybe drawing on more of a freelance bench around them and bringing that in. So again, they're not scaling through headcount in their own business. They're, um, probably in response to the economic uncertainty that's, that's around us, that they're not giving themselves loads of fixed costs to have to manage.
They're keeping themselves really nimble, really agile, really flexible. They're doing some really, really interesting work. So they're still agencies, but they're not necessarily the same shape, size, and feel of agency as they were five or 10 years ago.
[00:20:39] Mike: I think there's also, Tom, another thread to pull on, which is, and I've had this conversation with a lot of agencies, and again, it seems to resonate, which is if you were a CMO and you had a 10 million budget to spend per annum, obviously the board has said to you, "There's 10 million for marketing in total," which is headcount, insourced, martech, and all of your paid, all of your, your entire marketing ecosystem that you can spend money on.
Your job is to maximize the ROI for the business. For people listening, by ROI, I don't just mean performance. I mean the broader brand building and obviously driving sales growth. Well, what they need is someone to help them think that through. They need, back in my day, they need business consultants that understand the broader business context within which they operate to act as a sounding board and to s- show them things that they can't see, and to help them think about the investment allocation model.
Where do I place my bets? Do you see that becoming more of a trend as well?
[00:21:40] Tom: Probably, I think. I think the days of waiting for the RFP to come out or waiting for the brief to be submitted are probably ... You probably can't rely on that in the same way that you, you could- Nope ... some, some years ago. Definitely not.
The nature of agencies, I think, is gonna be, have to be more proactive. It's gonna have to be looking out for the opportunity that the clients can't necessarily see themselves or to kind of untangle themselves. So yes, I, I think I, I would agree with that, and of course, that provides a huge challenge to agencies.
Like, how do you, how do you proactively- If you like- ... look for opportunities for clients that you haven't won yet, and that's a really big challenge.
[00:22:13] Mike: Exactly, and it goes, and it also talks to thought leadership as well. So in terms of white space, if you were, like, placing some bets, where would you think the white space might be going forward?
[00:22:22] Tom: So if I was growing a business that I would really enjoy running, and would be really creative, I think there's some really interesting stuff happening in actually two, two kind of quite traditional areas. So events and experiential I think is a really interesting space at the moment, and you might not think that given what we're talking about with AI and all these kind of things.
But I think as, as human beings, we're actually, I think, increasingly drawn to experiences where you can literally look someone in the eye and-
[00:22:50] Mike: Yes ...
[00:22:50] Tom: you actually trust them on that. We
[00:22:51] Mike: are
[00:22:53] Tom: As opposed to kind of seeing stuff that's just served to us on our social feeds and sort, you know, kind of moving past it.
So I think e- events and experiential is actually a really, really interesting and really creative, uh, space at the moment. I think there's some really interesting stuff happening in out of home, particularly, well, sometimes programmatic out of home going on. There's, there's, so JCDecaux, obviously ev- everyone will know, uh, they've got a great phrase for this, which again speaks to that brand trust point, uh, which is that you can't lie in public, which I think is, is a great line that kind of sums a lot of it up.
The other ones would be where you've got the ability to kind of mix different things, d- different capabilities together in different ways. So where you're looking at things like, uh, connected TV, but also really high-quality creative, for example, or working more in kind of the media partnership space. I think that that's a really, really interesting space, uh, at the moment.
So I think anything that sort of pushes the creative and almost that kind of management consultancy side of it, the really strategic kind of in-depth thinking without the reliance on building a business by scaling capacity or execution, execution- Exactly ... ability, I think that, that would be where I'd place my bet.
I would go back to the point that you make, which is look for those moments of scarcity.
[00:24:04] Mike: Yes, exactly. And I think the ones that I'd add are, on top of what you've said, I think influencer marketing, the creator economy. Uh, brands are pushing into that now as well. So you can see where brands are spending on that.
[00:24:14] Tom: I would 100% agree with you on that. I probably answered that question with my own biases, which is that I'm actually not on social media
[00:24:21] Mike: myself.
[00:24:21] Tom: Yeah. So, yeah.
[00:24:22] Mike: But you can see where brands are spending money on the influencer creator economy, definitely. 100%. And obviously, as we discussed, commerce marketing, because again, it's a scarce skill.
Back to scarcity again. So to round it off, if agencies rebuilt themselves from scratch today, would they look more like flexible specialist networks built around client problems? rather than a traditional, "I employ people, and I become a full-service firm." What do you think may happen going forward?
[00:24:49] Tom: Yes, I think so.
So for new agencies, I think that model is increasingly looking really attractive. Lower risk, um, probably more fun, to be honest, to operate as well. But at the bigger end of the scale, I'm talking about the agencies employing already over 100 people, or 50-plus headcount agencies now. They're clearly not going to restructure their whole business, make a load of layoffs, so that will still exist.
I think in that space we'll see probably more and more, um, interesting consolidations. We'll s- I think we'll see some really, really interesting stuff in that space. I don't think it's gonna go backwards. So I think we'll, we'll continue to see an agency sector where agencies at different stages in their life cycle respond to these different disruptions in different ways, and I think all of them are completely valid 'cause I don't think there is one solution for every single type of agency at every point in its life cycle.
[00:25:41] Mike: Out of interest, if you knock out the networks, of your kind of 25,000-ish population, what percentage are greater than 50 people as an agency, roughly?
[00:25:51] Tom: That's a great question. A very, very small selection.
[00:25:54] Mike: It's not like 30%.
[00:25:56] Tom: No, it's not. No, it's not. It won't be too much smaller than that, but it is of that kind of grade.
I think 60% of agencies are in that nano-agency space, yeah. We publish all of our insights and intelligence on the website for precisely this reason, because I can never remember
[00:26:09] Mike: the exact numbers. No, and you couldn't be expected to, Tom, even though. Um, but yeah, we're not talking 70% of agencies are greater than 50-plus.
No, we're not. We're talking that it's kind of in the 20%.
[00:26:18] Tom: Exactly, and I think this is part the, the interesting challenge for us as a sector is that we are so used to reading about agencies in the sector press. And of course those sec- and this isn't, there's no blame attached to this at all, 'cause of course it's their business model.
They talk about certain size agency, and so if you are one of the, you know, sort of 10, 10, 12,000 nano-agencies out there, you probably don't feel very represented. You probably don't see yourself in Campaign magazine or The Drum, or... And again, that's no criticism of those publishers. They're doing a great job, but they don't talk to the part of the market, which is by volume at least, um, arguably one of the more significant parts.
[00:26:52] Mike: Exactly. Tom, it's been great having you. If you were driving the car, and you were going back from maybe school or you were going to work or, uh, you were doing something else, what are the kind of couple of things as an agency leader listening to this that would be your kind of couple of takeaways?
[00:27:07] Tom: Yeah.
So I'd say be really clear on how you create value, and that's a really, really simple question, but it can be incredibly difficult to answer. But I think answering it properly, bringing your clients- Excellent ... into that question as well, and actually establishing from them about how they think you create value as an agency, 'cause it might be different to how you think you do, is, is- Yeah
really, really key.
[00:27:28] Mike: And make it very tangible. I'd 100% endorse that. How do you create value, and what is that value? How do you measure it?
[00:27:34] Tom: Exactly. And use that as the golden thread that runs through your business. The, the ... So again, talking some years ago at Epiphany, we had a year where we lost some really big clients.
I think it was sort of 2015, '16, and we really felt that. Um, and of course, you lose clients right at the moment where you don't want to lose them, which is when you're ending one year- The worst time. Yep ... and starting another, so your run rate gets, gets knackered. And so we introduced a one-word strategy to the agency that year, and that word was indispensable.
And we just said to everyone on the team, we had about 190 people, we said, "Indispensable is what we're aiming for for our clients." And that will mean different things to probably most clients in most situations, and maybe for most campaigns or, or relationships we've, we've got with them. But we actually equipped everybody in the business to think about, "Okay, what is it that makes us as an agency indispensable for this client in this moment in time?"
And it had a dramatic effect on our client retention, about the results that we were generating for clients, the depth of the relationship, and so I'd, I'd probably offer that as a question for people as well. So in addition to how do we create value, what is it that actually we can do to make ourselves indispensable for this client?
[00:28:41] Mike: Exactly. And I think aligned to that, a kind of a, a question 2B, I think when agency leaders are thinking about that second question, what makes us indispensable, which is a great question, is, and what should we stop doing?
[00:28:55] Tom: 100%. I think that that focus, and actually using the answer to those first two questions to actually decide not necessarily what you're gonna do in addition to what you already do, but say like, "Okay, we'll just kill that over there.
That, that doesn't add any value to us as a business or to the client. Kill it."
[00:29:10] Mike: Exactly. Tom, it's been amazing. Thanks ever so much for joining me.
[00:29:13] Tom: No, thank you so much. Yeah, been a pleasure.
[00:29:15] Mike: Where can people find out more about you?
[00:29:17] Tom: So everything we do in terms of our insights about the whole sector is published at agencybyagency.com, and so you can find us there.
We're also on linkedin@forward slashagency, uh, by agency too.
[00:29:28] Mike: Perfect. And I'm sure you can find Tom on LinkedIn certainly as well.
[00:29:31] Tom: You'll find me on LinkedIn. Tom. Yeah.
[00:29:32] Mike: Brilliant. It's been great. Thank you.
[00:29:34] Tom: Thank you, Mike. See you soon.
[00:29:36] Mike: Thanks for listening to Higgle, the B2B Sales Club Podcast series with your host, Mike Lander.
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