Size Doesn't Matter (for New Marketing Agencies)

In Austin Powers: International Man of Mystery, our hero, driving a massive steamroller at a snail's pace, bears down on a security guard, about 20 yards away.  Despite ample time to move out of harm's way, the guard stays put, eventually flattened like the proverbial pancake.

This is not unlike the scenario playing out between large marketing agencies and their outmoded, outbound marketing methods, and smaller agencies embracing inbound marketing.  Big agencies see inbound marketing coming, but remain flatfooted.

The Internet disproportionately benefits small businesses, and that includes small agencies, too.  With inbound marketing, smaller agencies aren't one giant sloth of a steamroller, but a fleet of quick-moving little ones.

This disruption boils down to business-model alignment, or rather misalignment, from recent shifts in marketing.  Most large, traditional agencies excel at outbound marketing and their business model is aligned for that.  They need a large, fixed staff and they charge accordingly.

But what happens when this comparative advantage is no longer advantageous?  When what agencies do best (outbound marketing) is no longer best for clients?

Smaller agencies aren't wedded to old marketing methods  They have no stake in preserving them. In fact, just the opposite since the new world order benefits them in several ways.

1. Today's marketing is about content, not distribution.  You don't need big budgets for TV/radio/print ads.  You don't need PR agencies' access to gatekeepers.  Where distribution is a polo game for the elite, content is a scrappy, pickup game anyone can play.  The challenge now is breaking through the cacophony of content online... but that just requires brains, not budget.

2. Marketing tools are freely available.  No need for expensive monitoring tools only big agencies can afford when there's a myriad of inexpensive ones (e.g. HubSpot, Radian6, Cision).  To create content, you don't need professional equipment or staffing.  HubSpot's latest marketing video was born from a great idea, one hour of scriptwriting, and two hours of shooting using a $100 camcorder.

3. You can be a virtual, full-service agency.  Inbound marketing doesn't require a huge, integrated staff.  We built the HubSpot Marketing Services Marketplace as an eBay for marketing services (open to both HubSpot and non-HubSpot customers).  It turns out that marketing agencies also use it to find collaborators for projects.  One agency may be great at graphic design, offering call to action buttons or landing page design services, but collaborates with freelancers to provide clients with blog writing services or social media marketing services.  Flexible staffing in the virtual agency model makes them more nimble, specialized yet general, and thus able to charge more competitive rates.

4. You can afford -- and win with -- guerilla tactics.  Most big firms won't change their practices quickly, even if they see the steamroller (or in this case, many tiny steamrollers) coming.  Smaller firms, unencumbered by a broken business model, have little to lose trying new things.  Think outside-the-box to take capture business from traditional firms.  Contemplate la carte jobs, which often lead to ongoing business.  Embrace performance measurements (such as the ones on our Marketplace directories) and consider performance-based pricing from the resultant traffic, leads, or customers from your services.

We've had raging debates here as to whether PR is dead, Madison Avenue's future, how the marketing services industry is broken Parts I and II, and how we can help transform the marketing services industry.  Not all agencies are in denial, but watch out for smaller, nimbler agencies already pouncing on the opportunities created by this market disruption.

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Comments

Posted by Jordyne Wu on Thu, Mar 18, 2010 @ 03:26 PM