10 Things That Should Scare The Hell Out Of Every Leader Of A Small to Midsize Ad Agency

While the rest of country gets to scare itself silly with Halloween horrors, if you’re the leader of a small to midsize ad agency, you know there’s more than enough to work your nerves the rest of the year. Clients who want more for less. Disappearing margins. Young talent who are often more concerned with changing the world than honing their craft. Next month’s payroll. Next year’s payroll. There’s plenty to keep you up at night.

Growing and running a healthy, thriving, profitable agency is harder now than it’s ever been. And after talking with colleagues, we agreed these are 10 things that should scare the Hell out of anyone running an agency:

1. The Level Of Analytics Clients Expect vs. What You Provide

Where once advertising leaders could nervously laugh off John Wannamaker’s quote about not knowing which half of his advertising dollars were being wasted, those days are gone. The ability to track results – primarily driven by metrics for digital work – has grabbed the attention of clients and new business prospects alike, to the extent pitches are being won and lost on the agency’s attention to analytics. If you can’t show your clients whether your work is actually working, they will find someone who will.

2. The Lack Of Diversity In Your Staff

In the “Mad Men” heyday of the late 60s, advertising agencies were primarily white and male. Since then, U.S. demographics have changed radically with Hispanics now accounting for 17% of the population, African-Americans accounting for 12% and Asians accounting for 5%. And let’s not forget that women account for more than 51% of the country. Ad agencies? Still primarily white and male. The world is changing and it’s imperative that we have people in our companies who intimately know and understand the audiences we’re trying to reach. It’s not race or gender. It’s mindset, experience and perspective. Diversity makes us better. We need more.

3. Your Real Level Of Digital Expertise

Have you developed a mastery of all things digital – planning, creative, media and tracking – in your shop, or are you kinda, sorta, making it work with young people who kinda, sorta know more than you do? While marketing prognosticators were wrong about digital killing television, they were right about digital accounting for a huge shift in the business. In 2016, Digital spending outpaced television spending for the first time and estimates are that by 2020, digital spending will exceed television spending by more than $35 billion. Even though digital is just part of the mix – and not without critical challenges of its own – it’s hot, it’s commanding everyone’s attention and it’s what clients are hearing about, reading about and getting asked about. Virtually every discussion we have with client prospects begins with a discussion of digital.

4. How Often Clients Are Splitting Up Disciplines Making It Harder To Earn Reasonable Margins

Remember when a new business win meant getting the creative, the media and the production? Every year, those wins become fewer and farther between. Many clients – large and small – are now embracing a “Best In Class” approach where they are more than happy to part out their marketing budgets, farming each area out to whichever company they believe does each one the best. We’ve come a long way from the 60s when agencies gave away the creative to get the media budget. But we will always have to perform exceptionally and constantly prove to our clients we’re worth what they’re paying us for our expertise.

5. The Extent To Which Accountants Are Controlling Comp

Agency compensation has never been easy territory. But it certainly used to be easier than it is now. Today, more and more client compensation conversations are being driven by accountants whose lone goal is saving their company every penny possible. There are certainly exceptions to the rule. Like Conscious Capitalist companies who want all stakeholders, including their agencies, to conspire for and share in the success they help create. Unfortunately, this corporate leadership philosophy is still the exception to the rule.

6. How Little You Use Freelance Talent

How often do you use freelance talent? If it’s less than 10% of the time, you need to ask yourself why. There is a wealth of creative, media and marketing talent on the sidelines that you could be tapping into on a regular basis. Smart, insightful people with 15 to 25 years of experience, a wealth of knowledge and extraordinary ability. You could never afford to hire them full-time, but at $100 an hour, they are an effective resource for pitches and added thinking.

7. You’re Killing Your Horses

Here’s another reason freelance is critical: more than likely, you’re killing your horses. You may not realize it, and they may never let you know. Part of what makes them your best, your favorite, your most valuable employees is they don’t complain. They just put their heads down and grind – often long into the night. But that takes a toll. A big one. If you haven’t taken stock of how much your people have left in the tank, do it. And if you find they’re running on fumes, do something about it before you lose them. Or worse.

8. Embracing the “Field Of Dreams” Fallacy

In the scramble for new business, it’s easy to fall into a “build it and they will come” mindset regarding your capabilities. It’s an intoxicating misconception that you can build the perfect “one stop shop” for clients looking for the best of all worlds. It’s also extremely taxing, time consuming and insanely expensive to build everything yourself. One solution? Look for other small companies you can partner with, or incorporate into your agency. We’ve done that on four separate occasions in the past decade and it has been a huge unlocking move for our success. But, it’s never a slam dunk. Acquiring resources and blending creative cultures is often fraught.

9. Your Agency Is Nothing Special

What is your identity as an agency? Who are you, really? In ten words, what makes you different from everyone else? It’s not that you’re really good. Or do “award-winning work.” Or provide “breakthrough creative.” Or “move the needle for your clients.” Go read the homepage and “About Us” sections on the websites of your competitors. Go read them on the websites of the country’s best agencies. Ninety percent of them say the same exact things. You have limited time and precious resources. Figure out who you are and what makes you special. We need to take our own medicine and create true distinction, challenging though that is given the highly competitive nature of our industry – and growing more so all the time.

10. You Haven’t Even Thought About A Succession Plan

It’s a fact that nobody gets out alive. And if you truly care about the agency you’re working so hard to build and lead and the team and clients who make it go, you have to plan to replace yourself. That could be 20 years from now. Maybe Ten. Five. Next year. As the Chinese proverb says, “The best time to plant an Oak tree was 20 years ago. The next best time, is today.” You owe it to the people who work so hard for you – and their families – to make sure they will always have the right person to lead them. It’s simply the right thing to do.

Now, let’s get back to the ad business.

MIKE SULLIVAN is the President at LOOMIS, the country’s leading challenger brand advertising agency. For more about challenger branding, subscribe to our blog BARK! The Voice of the Underdog