Episode 16 Transcript

Brent Trimble: Welcome to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry. So I'm Brent Trimble and my guest today is the managing director at Mirren Business Development, Brent Hodgins. Brent is an author and international keynote speaker. He's lectured at several Ivy League schools, such as Harvard, the small private school up in Boston. As well as driving innovation, leadership, consulting and change management for agencies and marketing services industries worldwide. And Brent, it's great to have you on this episode, I've been looking forward to this. It's wonderful to have you.

Brent H: Good to be here, thanks Brent.

Brent Trimble: Before we kick in and really gain some of your insight around trends you're seeing in new business, trends you're seeing in marketing services and the agency space, give us a little bit of the background. So kind of the 32nd overview or so of what led you to form Mirren and a little bit about what you're up to, that trajectory.

Brent H: At our core, we're a consulting firm, we're a training firm, focused primarily on the marketing services agency world, as you mentioned. And the objective of our training is to help fuel growth primarily through growing existing accounts and more effectively bringing in new accounts to the agency. The principles actually apply across much of the professional services space and at the core of it, it's having teams. As they're speaking to their clients, working with their clients, as they're pitching new accounts, to have them better understand, better address the business goals and the business objectives. And the most pressing business needs of their clients and their prospects and have them correlate everything in terms of how they describe their firms, how they position their firms and how they pitch their firms. Then the work that they provide, having it correlate back to those client KPIs [key performance indicators], those metrics by which clients measure the health and performance of their business and their marketing.

When I was still at Agency Side, I noticed that a lot of marketing services agencies well brilliant at marketing, the wearers of their clients broke down when it came to marketing themselves. They weren't so good at holding up the mirror, reflecting the same methodology back on themselves. Plus I think it's hard when you lose your objectivity really quickly when you're trying to market yourself and position yourself. So I’d noticed the issue when I was still at Agency Side and realized that there was an opportunity to provide services to help marketing services firms with us. And we've since actually been pulled into media sales as well, working with media, publishing and entertainment companies who target brands, who target agencies, who also need some support. And having what they're providing, buying time and space, having that better correlate to benefits for their clients.

Brent Trimble: That's great. And I'm going back in time because I attended a few of the first Mirren symposiums that we'll talk about at the conclusion of our episode, but you're more than a decade in now with Mirren, is that right?

Brent H: Yeah, we're actually 15, 16 years in now. And DS to your point, in addition to the consulting and the training work, we have our annual Mirren live conference every May.

Brent Trimble: So let's dive in and talk about some practical topical observations we're seeing in the market. And 'll start with two we observed in our space, which is different. Of course, we're a platform operation backstop provider for marketing services and consulting orgs. But two trends I think really stood out to me over the past 24 months plus of upheaval, one was the overall resilience of the space. Agencies obviously took a hit in the initial financial shock as they always do, but then quickly rebounded because marketing and messaging are really important. And particularly in times where businesses had to adapt and pivot to restrictions and in different ways to reach consumers. The other is this notion we've seen of agencies beginning to really modernize a bit, both their technology and their process. And then in the midst of all this, we see the results, right? I think S4 capital, of course Martin Sorrell’s group posted something like 40% growth year over year in his last quarter. WPP I think posted something between 12 and 14% growth, which in a large established business a double-digit growth is really compelling. What are you seeing in the practice? And I know you work with agencies, medium size, large public and private. Give us some quick hits of trends you're seeing with both agencies and their leadership right now.

Brent H: Well to your point, the notion of market resilience with agencies, it's been interesting to watch even over the last couple of years, even the decade kind of pre-COVID. You know, the agency business is a tough one, it's competitive. There are thousands upon thousands of marketing services firms in the US alone, all competing for pieces of that marketing budget. Whether they specialize in digital or advertising or communications, public relations, or experiential, they're still competing for a piece of that marketing budget. It's a tough business. And when COVID really hit mid-March-ish, late March of 2020, there was a significant dip. And we were looking at projections for the industry that in my more than 30 years in the agency world were bleecker than anything I had ever seen before. Thankfully those projections were off and there was a dip for a few months.

The role that agencies play in building brands that command markets is still absolutely necessary to keep the economy moving. And even as agencies deal with new competitors coming into their space, management consulting firms, retail networks like Amazon, Walmart, Target, Google and Facebook. A couple of areas in particular where agencies excelled is number one, their understanding of consumers, not just the demographics, but the psychographics. Understanding, purchasing behavior and understanding those unmet needs that can be tapped to help compel people to support a brand, to engage with a brand to buy their product or service. So their understanding of consumers is unparalleled. At the same time, the creativity that comes out of agencies, I think it's an area where management consulting firms have struggled a little bit more. And that's in part because management consulting firms are a little bit more oriented around process and models and framework and scalability, which is absolutely brilliant. However, it's difficult to put systems, processes and scale behind the creative side of agencies.

So there are just a couple of areas where I think clients realized they still needed a lot of support. And especially with the changing market conditions, the pace of change, the complexity of change made it so that clients had to throw up a white flag and say we need help here, we can't do this. Holy cow, this is absolutely crazy. What's going on right now. Let's get our agencies back in the fold, we need them, we need help. In general, outsourcing is sort of what firms do when it becomes too complex to do it yourself internally and we certainly saw that happen. And the growth that's happened since has just been phenomenal. Even with the latest projections, the growth of marketing spend and even the growth of the economy is projected to be greater than if COVID never even happened, which is fascinating in and of itself. So certainly resilience agencies have done quite well.

Brent Trimble: Yeah, the proof is definitely in the pudding, whether it's public filings and quarterly results, or just anecdotally what we're hearing from our shops on the ground. And then certainly just in the overall zeitgeist, I mean, just the open roles available at agencies of all sizes, the variety of roles, I think, pivot to strategy and creativity, where that all still matters and hyper-fragmentation seems to really bear that out.

One of the things you touched on was this notion of growing existing accounts. And I think of my years in agencies and I think of a seminal conversation that sticks out to me once. Of course working late at night on a pitch in Manhattan and all the creativity and collaboration and kind of hyper frenetic pace that goes into that. And then walking past more of a junior account person's desk and them dealing with an issue on a key client. You know, the client is upset about something, or some kind of deliverable wasn't met or expectations weren't in sync. And him turning to me and saying all these pitches that go through, it'd be great if we could be in the keeping-business business, as well as the new business. And so that's always kind of stuck to me. And then the times I've spent in management consulting and talking through adapting some of their methodology around this notion of account planning every year with an engagement in an account. It sounds to me like you're seeing agencies pivot a bit there and really going deeper with the existing business.

Brent H: Absolutely. There's been a positive shift in that way. Historically the agency world has been addicted to RFPs to pitching new business. And there's a thrill, there's an excitement, there's an adrenaline rush that goes with the production of a large pitch. And as much as agencies complain about having to pitch for business, secretly they actually love it. At the same time as the addiction deepens and even as they maybe have a low win rate, what happens is agencies sort of get caught in this rut of as long as we're pitching, we're moving forward. As long as we're pitching, we're trying to get better. Rather than stopping, stepping back, taking a good look at the organization, the practices, how it's growing itself and better looking at how to allocate the finite amount of resources that they have. And I think that's been happening much more over the last year or two. And it's resulting in agencies having this light bulb moment of hang on, we've got some incredible clients on our roster already. We have a relationship, the door is open and we understand the business, why don't we more proactively lean in on these existing relationships? Plus it's one of the highest margin uses of time in terms of bringing more revenue into the agency.

With RFPs, the big challenge there is not just the time, the energy and of course culture that you hemorrhage or morale that you hemorrhage when you have a few losses in a row, but the out-of-pocket costs can add up pretty quickly as well. When I was still Agency Side I was in a number of pitches where we spent several hundred thousand dollars out-of-pocket, particularly when I was at Weiden+Kennedy and TBWA, spending a lot on new business. The problem is, if you lose, now the amount of revenue that you need to generate to throw off the profit to cover what you spent on those other pitches, the math just doesn't work at all. And that's just to cover the out of pocket costs, not the time, the effort and the energy that went into it as well. Whereas with organic growth, you're probably able to be in front of the client again in a week or two and leaning on that relationship and that understanding of their business. Plus when you more proactively lean in with an existing client, you're deepening the relationship, you're demonstrating your proactive nature, that you're on it, you're on their team. We're here with you, we're focused on your growth, you increase the tenure of those clients and you increase the margin of those clients.

So there are all kinds of benefits to organic growth. In fact, I remember at one of our conferences, one of the founding partners of Anomaly, Jason DeLand, made a comment giving one of his talks that the agency believes that new business is the lifeblood of the industry. It's not at all. It's organic growth, it's growing your existing accounts. That's where you need to be leaning in first. Plus the other challenge with agencies or any firm, if your pipeline is solely based on RFPs, you don't have a balanced pipeline, you don't have a choice. So now you feel undue pressure to have to say yes to every RFP that comes in because you don't know when the phone is going to ring again. As opposed to well maybe we could put those resources against that account or that account, or build a proactive prospecting program where we start targeting prospects that we have the credibility to go after that are a good fit for our firm. So we've got options now, but most tend to be caught in that RFP addiction, the RFP pipeline.

Brent Trimble: Well yeah and of course, there's nothing like working days and nights and evenings and getting that call that you've been selected and getting it splashed over all the agency press. It's maybe less glamorous to have those steady relationships. But to your point, that's really where I think values-driven and long -erm profit back to the shop, stabilizing the business. You go into a year with a great backstop and some predictability and not the frenetic sort of up and down cyclical nature. And again, a good point you brought up and I think this is one of the things Mirren really emphasizes in your training, to give some kudos there, is the notion of qualifying. Not every RFP is a great fit, in fact, many aren't and tremendous expense on spec work and potentially now hybrid travel. And man-hours that are a direct hit to EBITDA, I mean those are hard costs, right?

Brent H: Qualification is key. We often say a lead is not a lead until it is qualified and until you are qualified, until you've qualified yourself for that lead as well. Because part of what's happening particularly in the RFP process is the involvement of procurement. You've now got this situation where X number of vendors must participate in every RFP and in the case of agencies, that could be 10, 12, 15, or 20 agencies that must participate in the initial round. But marketing, who does not love procurement, marketing client-side, they don't have time to spend all this effort researching 20 agencies. So they'll pick the one or two that they know will do well, so those are the favorites, then they look up another 15 or 18 agencies who are the filler agencies. And agencies don't realize often when they're being invited to the review, that the job of that person calling on them is to fill seats. And one of the things you have to sus out pretty early in the process is are you a favorite or are you filler to meet pitch participation quotas? And that just complicates things even further. And the client's gonna give them the sales pitch because they want to get another agency confirmed so they can move on to the next one. It kind of feels like a bit on the receiving end of those calls, you feel like a hero. “Oh you guys look amazing,” they don't know anything about you, but you look amazing. You're great, you're creative, love your work, they can't name any of it, but they love your work. And then oh my God, we're gonna win this, let's go.

Brent Trimble: So along that vein of organic and then there are a couple of quadrant pressures on the business from several years, almost decade of the management consultancies moving into the domain of agencies. And this perception that their talents and their folks are more business-focused. You know, they're getting to the meat of the client's business sooner. Maybe a bit more serious with creativity, comes up sometimes a perception of kind of a fumarate sort of tactical stuff, whatever the case might be. You bring up a good point around a trend of diving back into the client's business, getting a bit deeper, but from a talent, match fit and cultural DNA, how are agency folks still different than the clients with whom they're interacting with?

Brent H: Yeah, there are a couple of good points in there and the talent consulting side, management consulting side, I would say the talent and the training that talent receives is quite significantly different compared to the agency world. And then you have the difference between agency executives and their clients. I think the simplest way to think of that is that agency people tend to be very right-brained, very creative, entrepreneurial spirit, variety is the spice of life, get bored very easily, always looking for something new. All of this is opposite from clients who tend to be, I'm generalizing a little bit here, but who tend to be more left brain. Linear, process-oriented, data-oriented change is very scary. Agencies love change, something new. So you've got these two forces, these two voices that don't always connect with one another. Well, the onus is on the agency to better translate for their clients.

Our goal is to understand exactly what they're looking for in their next agency, or their next marketing services firm. Why do they give more work to one roster agency over another? Why did they pick that last agency that they did for that RFP? And one of the key things that we're hearing from clients is that there's this fear that the agency world doesn't really understand their business and isn't really focused on their business. What's more important is doing work that's really interesting and really cool and creative, but not necessarily to the end goal of helping that client improve their business. So there’s this disconnect and agencies just have to get a little bit better at translating. In fact, for a client, what we'll often hear is one of the interactions that give them a little bit of stress is when they're looking at creatives. So say with an advertising creatively driven agency and they're looking at different creative concepts.

Creative is very right brain, it's very conceptual. And if they don't fully trust the agency, they get very nervous about which direction to go and which work to pick. And their sense of their job security fears kick in, particularly senior decision-makers, client side don't tend to have long tenures anymore. If the organization is not meeting its numbers, often the marketing chief is made the scapegoat and they're released. We hear from a lot of marketing chiefs how they feel like the day they start at a new organization, there's sort of been this gun that's been fired at their back. And they're just waiting for the moment that it catches up with them. And it might be a year, it might be two, might be three years, but at the same time, they're up for the challenge to dig in and make a mark and improve the marketing of the organization in a way that helps grow the business. And I think agencies need to better understand those fears and those needs that are taking place.

Brent Trimble: Now that's a good point. And I think there is a bit of a nascent movement to really try to train and equip and career path agency talent to think in a bit more business orientation. You know, if you're dealing with a large CPG, read their quarterly earning statements and listen to the analyst calls. There's a tremendous amount of data you can extract there. And building things like account plans, but part of it I think there's a lot of pressures on salary load. Your average account person in an agency is going to come in at a different level and expectation than say someone at a McKinsey or an Accenture. But it's good to hear on the one hand that the agencies are doubling down on existing client growth. At least awareness of trying to match that business to business at the peer level would really go far.

So we've covered a couple of really cool topics. And it's great to hear your experience because you see such an array of shops and even going into now media. In our listenership and the sort of body of both clients and partners and folks that are in the operational space, we've probably got a 30, 40% that are in that marketing services domain. Some are pure, you know, very creative shops, some we see many more of these hybrid consultancies with a creative arm and everything in between, but everyone is in services. Everyone is selling services to potential clients. And I've then personally through the Mirren pitch training find it to be extremely useful, a great investment. But for a firm, maybe a bespoke advisory firm or a firm that's maybe in the environmental engineering space that sells consulting or technology consulting, system integrator, what are some cool practical three or four nuggets you could leave with them that are universal in the pitch process to really hone in and think about improving their offering as they go to acquire a net new client because that's really where you and your firm shine.

Brent H: One of the things you have to look at right out of the gate in your pitch process is what are the KPIs of this particular client of the category that they operate within? Every industry vertical category has a unique set of business, operational and marketing KPIs. And you need to understand, you need to stop and as a team work through what those are, number one. Number two, which of those with your products, your services, can you best impact? And that's where the pitch starts. Now often in an RFP situation, there is some form of a brief. Not always well-written, but some form of a brief where the client has said here's our objectives, here are our goals. But often that brief is written by a mid-level person on the team. Senior people are too busy to write briefs, so they delegate brief writing down to people who are not as strategic and not as well-versed on the organizational goals. So you must elevate poorly written briefs. If you receive a brief that is tactical in nature and you respond to that brief without improving it, you are a tactical vendor.

So you take the KPIs that you can impact, that you've identified, you look at the objectives of the brief and then you sort of overlap them in a Venn Diagram kind of way. So what you're looking at is what is the client really looking to accomplish with this brief? What KPIs do these objectives ladder up to and impact? And that's where you focus. For example, let's say in the marketing services space, awareness is one of the most common requests to an agency. We wanna build awareness for this new product offering, new service offering and there needs to be a little bit of dialogue because that's also a very entry funnel. That's the low-value stuff. Awareness is low value, it's commoditized. It's important, but it's a low value compared to pushing a little bit further into the funnel. So there needs to be a bit of dialogue.

You know, all right, awareness, that's interesting, tell us more, why do you need awareness? How will awareness benefit and say maybe it's a lodging industry, a hotel client, well we've got issues with our off-season bookings, the shoulder seasons, we have a real dip. Alright, so it sounds like off-season bookings are a key initiative for you and it starts to evolve very quickly into a more significant, more important conversation and an elevated, brief and elevated focus as you're going into the RFP process. I would say that one of the most important and transformational steps that need to happen for any organization pitching a piece of business or pitching an opportunity with a new client is to elevate the brief and focus on those more important and meaningful objectives. Because that's where the senior decision-makers who didn't write the brief live, that's where they're held to account for their bonuses. So you need to anticipate what that senior decision maker, the one actually making the selection, what they're going to need.

Brent Trimble: That's excellent advice. And it sort of moves out of the boilerplate response to elevating, getting some nuance, getting some texture, doing some research on the client and then turning it into a real business reality.

Brent H: And that's why qualification is so key because to win, you've got to put in a bit more of an effort. So you only want to be pitching where you know your odds are going to be quite high.

Brent Trimble: Oh, this has been great. And I think those are really just some great practical insights in that pitch process because, as I noted, whether we're a system integrator firm for a suite of software platforms, you can differentiate. If you're in an extremely hot bespoke creative shop, you can differentiate. But elevating that brief, tying to real business outcomes is the name of the game. So it's always kind of bittersweet, but we're coming to the end of the broadcast and for our guests, I've had this great conversation. My name is Brent and my guest’s name is Brent, which is always a little bit confusing. And as my wife would say “I can't believe they made another one, you're such a giant pain.” And along those lines, whenever I interact with Merrin, I just have to tell the story that I think attending a conference in Manhattan, it would've been 2009, fast forward a year and a half later, marriage. Then a year and a half later a couple of kids, mortgages and all that from me attending a conference and going on a blind date with a young lady also in the advertising industry and there you go.

So for listeners, gonna give you a couple of really cool insights. One, if you're not registered for Mirren Live yet, you can go and sign up at their website live.mirren.com. It's gonna be an awesome event with tons of content, interactivity, collaboration, great live speakers, packed full of strategic as well as really practical insights to take back to your firms and deploy. And I think pound for pound, probably one of the really great values. They're gonna have a virtual event for those who don't wanna attend in person and the live event's gonna be in Kansas City, May 17th to 18th. And again, if you can't be there in person, there'll be the hybrid online option as well. We're gonna be there in person, I think I'm gonna be hosting a think tank and taking part in the panel discussion. So it'd be great to register and stop by and say hello.

Brent H: Yeah, we've got some good stuff cooked up. We're taking one more year off before heading back to New York and hosting it at Sparkly, one of the best agencies in the business. And it's really a rare opportunity to connect and collaborate with the best in the business. We've got Wieden+Kennedy, 72andSunny, Anomaly, Fig, Giant Spoon, an incredible group of agencies that just don't come together anywhere else. All the search consultants will be there as well, so it's an opportunity to connect with them, but yeah, we've got some good stuff cooked up.

Brent Trimble: No, that'll be great. Brent, thanks so much again for coming on the podcast. I think this will be a great episode for folks to download and hear some insights and some great views on the state of the industry, particularly in the light of the past 24 months. So thanks again and we'll probably try to have you back at some point.

Brent H: Brent, thanks for having me, a lot of fun. I can talk about this stuff for hours. It was great.