Episode 218: Bare-Knuckle B2B: Are agencies still worth it? Sage’s Harry Davies on the truth

Speaker A: Foreign.

Speaker B: Hello everyone and welcome to bare knuckle B2B A. Ah, B2B marketing and lessening X1 podcast series. My name is Kavita Singh. I'm head of Growth Solutions content at B2B Marketing and today we are joined in the podcast studio to start a series. Matt, I'm joined with you. Do you want to introduce yourself and tell us a little bit about the podcast series?

Speaker C: Sure. I'm Matt, I'm strategy director at Lesniac. What we want to do with bare knuckle B2B is really get to the nub of B2B marketing. There's a lot of flummery, there's a lot of smoke and mirrors, I think in a lot of cases around the discipline in the industry in general. So what we wanted to do was to cut the crap, get some fantastic guests on, have a good, honest, practical chat and hopefully come up with some really great tips for the listeners who can, ah, apply that in the day job.

Speaker B: Awesome. Yeah, I'm excited to kick off the series, um, and every episode we have a guest. So I will welcome in our guest for today, um, Harry Davies, the VP of Marketing and Strategy, Investment and Effectiveness over at Sage. How are you doing today, Harry?

Speaker A: I'm good, thank you. Yeah, yeah, very excited about it.

Speaker B: Why don't you tell us a little bit about your background just to give a little bit of context.

Speaker A: Sure. So I started in account planning, which is basically strategy, um, a long time ago in central government, um, I moved there, uh, I got very obsessed with effectiveness and measuring the impact of marketing and those are quite difficult, big problems. So I was fascinated with that. I then moved to Google where I worked predominantly with agencies. My first into Google, helping them generate insight from Google Tools and then move to Amazon, um, where I launched self service advertising. So all of those annoying sponsored listings that you see on Amazon, I was responsible for putting those there and then went back to Google where I ran a consulting team that went out and worked with the largest businesses across the uk, um, to help them understand the contribution of marketing to their business. And more recently, for the last five years I've been working at Sage where I've been running marketing strategy. Um, we sell accountancy software and so thinking about financial decision makers, how they make decisions, how they choose what solutions they use and then also still keep my hand in with marketing effectiveness and making sure that we understand the value the marketing is bringing to the business.

Speaker B: Great. Well, um, it's great to have that context and learn a little bit more about your background. Um, well, today's topic is actually around sort of the evolving agency and client relationship. We're going to be talking about what agencies are getting wrong to what they could be doing better from sort of a commercial and structural point of view. Um, but Matt, why don't you kick off the, uh, episode series?

Speaker C: Sure. Let's start with a small question. What's the point of an agency? What's the value to you as a client in working with one?

Speaker A: So it depends very much what type of agency you're talking about. Um, I'll, um, predominantly talk about creative agencies. I think, particularly media agencies. There's a large range of value that they bring because there's a certain amount of buying power that they have, which can reduce costs. Um, but if we think about creative agencies, the real value is bringing creative strategy and the creativity. Now you can buy those skills in house, but the advantage of using an agency is that they're working on multiple clients across different sectors. And so they bring a lot of different thinking. Clients can get very myopic and get stuck in their rivers of thinking quite easily. Agencies can break them out of those rivers of thinking. And I think that's really important. Being able to bring in that fresh thinking is particularly helpful. And then also agencies spend. Or people who work at agencies spend years thinking about advertising.

Speaker C: Yes.

Speaker A: And they really understand what works and what doesn't work. They've probably read more of the, uh, advertising and marketing theory than a lot of clients and they've got more time to think about how that, how that can work and how to apply that,

Speaker C: the better quality of nerd you can access. Essentially then on that, on that last point.

Speaker A: Yeah, definitely, definitely. And I think, you know, in a perfect world, um, you see the agency as an extension of your own team, as part of the group of people that are trying to drive value for the business.

Speaker C: That heterogeneity of thought's really, really important. I worked client side for some years and that was one thing I looked for in agencies, was to have that level of constructive challenge you need really, don't you? As you say, it can seem deceivingly simple, I suppose, to set something like that up in house, but to bottle that kind of dynamic you get with an agency is very, very difficult in that respect, isn't it?

Speaker A: Yeah, yeah, definitely. And it's like, I know that my own work, I, I get to a certain point after about three years where you're coming across the same problems.

Speaker C: Yes.

Speaker A: And you've kind of, you know what's happening and so you kind of slip into, well, what did we do before? And you're not necessarily pushing things out. And so getting that fresh thought in is really important.

Speaker C: Yes, yeah, yeah, absolutely.

Speaker B: I think we, you know, when we're going to talk a little bit about sort of the client agency relationship and maybe some red flags that you might come across when sort of working with them. Um, but, um, you know, I know. I think another contentious relationship is obviously sales and marketing in B2B. Obviously there's that misalignment, but I think as the years have gone by, salespeople aren't as involved in sort of that buying journey as they used to be. And so you know who's actually doing the work and on what channels are they doing that work on.

Speaker A: So I think it's really important to think about how the potential customer, how the buyer behaves. Now, uh, within businesses, there's often a group of buyers. So it's important to understand it's not a single person that you're talking to. You're often talking to multiple different people. But if I think about how marketing and sales used to work maybe 20, 30 years ago when I started my career, is you would become aware that you've got a problem. Um, so you might be. If you're, If I think about the sector that I work in right now, you may well be thinking, God, since we opened those new distribution centers in other countries, it's a lot harder to close our books. This, there's got to be a better way. And that becoming aware of the problem is that first stage. Now, 20, 30 years ago, you'd become aware of the problem. Now you'd be exposed to advertising. You would probably be doing some searching on online. Um, but the websites weren't great. There wasn't a huge amount of information about it. You talk to your colleagues and you probably end up, uh, talking to a salesperson really quickly or a group of salespeople where you're educating yourself about the potential solutions. And when you kind of go through that research, you then have already started talking to those salespeople. And so you already start building that relationship and that goes further through and then you purchase. Now that has definitely changed because people are doing more and more research online. They're able to, you know, ask AI for recommendations. There's lots of forums where they can talk. There's business associations that have got websites, slack channels, all kinds of ways of finding out what the potential solutions are for your problem. So you're going through that education phase on your own as Ah, a customer. And then you then normally get forced to talk to a salesperson when you need to start doing things like compare prices. And so you're very much at uh, the validation of your selection stage when you talk to a salesperson. If you think about how we organize marketing and sales, a lot of the marketing is pre awareness of a problem stage. So making sure that people know who you are and then at uh, that awareness stage, helping them educate them around their problem. And then we generate leads and then we push those through to sales. But at the same time um, people are making their own, doing their own research where marketing isn't necessarily as involved and sales isn't involved because people are getting the call from the sales development rep and they're hanging up. So I think there's an opportunity to not necessarily think about stretching marketing further down the decision making process or the buying journey but much more thinking about it as in distinct phases. So you have a marketing phase that's still at that awareness of a problem stage. Then you move to selling at scale where you're using a lot of the sales techniques but you're delivering those through marketing channels like email advertising, um, white papers events and then you hand over to a salesperson when the prospect is ready to talk to a salesperson. So you're still doing the same sales and marketing activities but you're using different channels so that you're matching when the buyer wants to have that. And I think that shift is something that you know, we're starting to learn about but that requires a lot more integration between sales and marketing. And people talk about go to market a lot more. Yeah, talking about sales and marketing. And then also that is probably a gap in a lot of agencies knowledge. So being able to do the kind of brand work, build mental availability, build a durable memory, um, at the category entry point they're able to do all of that but they're not necessarily thinking about right how do we take a sales methodology and deliver that in a really compelling way for a potential customer across marketing channels.

Speaker C: It could be two or three stages between what you're describing there as a traditional marketing job and where sales come in. It's kind of a gray area at the minute. M a no man's land if you like in some cases, isn't it?

Speaker A: And I think that's where you know, certainly the more specialized business to business agencies, they're getting that a lot faster.

Speaker B: Mhm.

Speaker A: Um, because they have lots and lots of business to business customers, clients. So they've learned that they've read all the right research, they're starting to develop that practice but I still think it's very nascent and uh, it's a definite gap, both client and agency thinking.

Speaker C: We see a fair bit of variety there, uh, just between clients in terms of what that gap as we called it there looks like it can vary hugely within B2B between accountancy software and through into something more industrial or architectural and construction and things. There's a huge variation there as well that you need to get under the skin of on an individual client basis I think to really understand where those levers are.

Speaker A: Yeah, yeah, definitely. And uh, I think that's also something that you want to see from agencies. M. You should think about how you, how are you giving the agency access to all of the people in the company, not just the kind of top end of marketing.

Speaker C: Yes, yeah, because there can be that challenge, can't there, in terms of how that, that information gets out of a. Especially a lot an enterprise level business that's going to have different experts and a large marketing team. The person briefing the agency isn't necessarily going to be the one who has the specialist information they need. So that's presumably a big challenge you've come across and surmounting that agency client relationship.

Speaker A: Yeah, and I think it's a particular problem for large businesses, uh, if we think about startups and scale ups, you know, you're all sitting in the same room. The person working on the marketing campaign is probably working on some other stuff. They're probably chatting to the product team on a regular basis and um, they know everything that's going on and so they can then talk to an agency about everything. As businesses grow, they build more and more specialized teams. So you know, like if you spending millions and millions of pounds with an agency, you probably think, right, okay, well we've got a specialist procurement team that does the contract. Then we've got a specialist um, creative team that works with the agency. You look at the profile of those people and you think, right, we need people that are good at managing agencies. Well, there's constant churn and change in the agency industry. So let's hire a few people from agencies. So you bring in people who are really well skilled at working with creative agencies but they haven't got the depth of knowledge around the product.

Speaker B: Right.

Speaker A: So then those people are ah, talking to the product marketing team. Uh, the product marketing team are talking to the product team that will get bubbled up. Hopefully all of those teams are talking to customers as well. Yeah, but Then that gets distilled into a brief that the person that's an expert at working with the creative agency takes to a creative agency to hand over to a person that's hired by the creative agency to work with clients. And so you have these sort of two people handing things over.

Speaker B: Mhm.

Speaker A: And then by the time it gets to the creative team working on, um, the ideas and the strategy person building the kind of creative brief for them, they're really far away. There's like these sort of weird Chinese whispers going through.

Speaker C: Yeah, yeah.

Speaker A: And then it may not meet the needs of the actual business because of all the specialization in between.

Speaker C: Yes. What's the answer to that, do you think? How have you addressed. Presumably that's a challenge you have in Sage, given the size of the business. How have you addressed it or how's your agency addressed it?

Speaker A: I suppose, yeah. So. So how have we addressed it? I'm not entirely sure I would say we're best practice. You know, it's a journey, um, if I'm perfectly honest. Um, but that's some of the things that we've done. We did a big strategy workshop about a year and a half ago where we brought in people from all the different teams within marketing. And as part of the pre work for that, I got everybody to watch three or four customer testimonials.

Speaker C: Perfect.

Speaker A: And then we got them to talk directly to customers. And I think that sort of thing is really helpful. I personally did, like when I was at Amazon, um, they uh, had a week where everybody would have to go and sit and listen into the calls.

Speaker C: Yeah.

Speaker A: And you know, you'd hear a lot of people complaining about, well, how come I've got Prime? I didn't want Prime. But, um, you'd also hear about how they work with customers, what customers cared about. And I think those sort of things are really important now, I think. And it's difficult, but I think it would be really helpful to bring agency people into that. Um, but not the account manager.

Speaker C: No.

Speaker A: You know, we're talking about the guys on the tools, the strategy. Yeah, the strategy people, the creative teams. Get them closer to the customers, get them closer to the product teams. The problem with that is, you know, agencies don't exist to not, uh, make money.

Speaker C: Nope.

Speaker A: And people's time is very expensive. So if you suddenly want to pull a couple of people out of the creative team and someone out of the strategy team and sit them in a client for a week just to listen to stuff, it's going to be a difficult ask you need to have a very strong relationship.

Speaker C: Yeah.

Speaker A: With the client in order for that to happen. Um, I think there are probably ways of, of helping that, of kind of breaking that up and creating snippets of customer information, product information that's really digestible. M. Um, I think some of the new tools can, can offer some help there.

Speaker C: There's an element of agencies needing to get out of their ivory tower a bit with that, I think as well, isn't that we've, we see that in that there's, there's got to be a meeting in the middle, if you like, with that. If agencies are serious about a long term, um, relationship and doing the best work they can with the client, then I think they need to have some degree of commitment to that and properly get. It's the old cliche about working as an extension of the team, that kind of thing. But I think it stands to reason, doesn't it, really? There's got to be an acceptance that something needs to be done there and there's a willingness to just get involved and say, okay, well, there might be a few hours here for the senior team, but the value to everybody of that senior team, the planners, the creators, everyone getting under the skin of the business properly is, you know, it just seems to make commercial sense in the long run to me. You know, it needs to, Needs to happen. I think it doesn't. I wouldn't say it happens enough.

Speaker A: Yeah, yeah. I mean, it's interesting if I, if I think about where it worked really, really well. And it's not surprising. I remember I spent a small stint when I was in central government working on forces recruitment. Okay, now you tell a creative team, would you like to spend a weekend a penny fan with the sas? Oddly, they're like, yeah, yeah, I'd like to do that. Yeah, no, I'll do. Yeah, you don't need to pay me for that. Um, but, you know, like, would you like to spend a weekend talking to an accountant? Possibly a bit more of a hard sell?

Speaker B: Yeah, yeah, yeah.

Speaker C: It could be tougher, couldn't it? Yeah, yeah, yeah. There's got to be some push to that situation as well, I think.

Speaker B: Ah, yeah, absolutely. Um, you know, on that information gap, I think technology obviously plays a huge role. Can you expand on if technology and tools can kind of fill in that gap at all?

Speaker A: Yeah. So I think a lot of thinking around AI has been around, how do we do things cheaper, how do we shortcut the production, get things out faster? And a lot of that work is really good. Um, it probably challenges some agencies because if clients are doing their own production and they were monetizing the production, that is a gap in the revenue stream for agencies. So that's a challenge. I was thinking about this a little bit more. So I'm a big fan of using knowledge bases.

Speaker C: Mhm.

Speaker A: Now ah, a large language model knowledge base. You build out this sort of brain of information so you throw in all the customer stories you've got, you throw in all the product documentation you've got. You can even throw in your marketing strategy of how you want to, how you believe marketing works or how you understand marketing to work. Um, your win loss, um, analysis. You can throw all of that into a knowledge base and then you can pull that out and that's really, really good. Very much a client side operation. But giving agencies access to that knowledge base would be good. We're starting to think about. Well agencies have tons and tons of knowledge from loads of different clients.

Speaker B: Mhm.

Speaker A: And an agency knowledge base would m be a really valuable thing because it would automatically be breaking things out of rivers of thinking.

Speaker B: Yeah, yeah.

Speaker A: And so I think there's some world where an agency knowledge base coupled with the client knowledge base would be an incredibly powerful thing for strategy and creative and it would be an opportunity to do things better.

Speaker B: Yeah.

Speaker A: Um, when we were doing this and we built a ah, knowledge base we built a very lightweight proof of concept with some sales development reps. The sales development reps are the poor people that phone you up and say hi, I'm, I'm calling from Sage. Um, I was wondering if we could have a chat about um, how you manage your finances and m. They get a lot of hang ups. They're generally pretty early on in their career and so they, it's a kind of entry level sales job really.

Speaker B: Yeah.

Speaker A: And they'll, they'll need to qualify the call before handing it over to an account executive to manage the sale. And so we started off seeing how do we optimize that role with artificial intelligence. And we built out a very small knowledge base and a front end to that knowledge base so that then a self development rep could pop in the prospect company, find all the relevant contacts, find a whole load of information about that company, news stories, things like that. And, and then also it would generate a um, kind of personalized script. So instead of a uh, standardized um, budget availability, budget authority need.

Speaker C: Yes.

Speaker A: Timeliness, qualification script, they would use a personalized script that would be relevant for that business. And um, instantaneously this saved a team of eight people One day per person, per week. So huge. But I then sat and listened to some of the calls and one call really stuck in my mind. As one of our sales development reps, she was on this call with a prospect that built things like fridges for restaurants.

Speaker B: Mhm.

Speaker A: So like catering manufacturer, very, very specific type of business. And she was saying, I see that, um, you've opened a new factory, you've got investment for that, um, how are you going to manage this increased, um, supply chain? What sort of products are you using? Are you struggling with that really relevant conversation? It progressed and it turned into an opportunity at the end. But what I most remember from that call was right at the end where the prospect said to her, how long have you worked at Sage? She said, I've been at Sage for about four years. And he then said, is that when you left catering manufacture? And she said, no, I've never worked in catering manufacturing.

Speaker B: Yeah.

Speaker A: He said, I can't believe it, you're so knowledgeable. And at that point I suddenly thought, ah, uh, okay, well this is the,

Speaker C: this that's clicked, eh?

Speaker A: It's not just making things faster and cheaper, but you can also make things better.

Speaker B: Yes, yeah.

Speaker A: And that I think is really, really exciting and so leveraging that. Because if you think about all of that knowledge can also push your strategy, your creative strategy forward. It can push your creative forward because suddenly people with very limited knowledge that are working in a creative agency of your industry can get up to speed really, really, really fast and then they can then use that and they can jump further because they're starting.

Speaker C: Exactly. Further, quicker as well. I think if you as a strategist, if you've got that depth of information to interrogate, typically you'd often be stuck is the wrong word. But you'd have a chance of speaking to customers and that's expensive to do. So there's a set play or you can interrogate, uh, two dimensional materials. But to have the ability to actually go on and ask a question at one point, perhaps do some thinking and then come back and interrogate that material again, from an agency strategy point of view, it's hugely valuable and it starts to surmount that information challenge issue, uh, you were talking about before as well, doesn't it? Yeah, it makes that available in the right way.

Speaker B: Yeah. I think that's a really great example of obviously AI. I think right now a lot of people are still experimenting with it. It's used as sort of productivity gain and not sort of a growth driver. But if you use it, the Right way. It's not only helping with like, speed and efficiency, but also from a creative point of view and a commercial point of view, just being able to expand on your horizons a bit. So, yeah, it's a really great example.

Speaker C: Yeah, yeah. There's massive potential there, I think, isn't there, in terms of how. One thing we're looking at is how we can aggregate anonymously the huge amount of research information we've got from different sectors and look at how we can offer some degree of analysis to clients on that level through AI as well. And there's massive value from that point of view. Back to that. Getting out of your river of thinking. That, uh, sense checking and throwing a curveball in there is really, really useful.

Speaker A: I had one creator, agency, um, executive creative director, talking about AI and what he would do is when he gets a client brief, he would then ask AI to respond to this client brief and then he would take all the ideas, he would give them to the creative team and he would say, right, here's the brief, here's all the stuff that you need to be better than.

Speaker C: There you go. Yeah.

Speaker A: So he's like. He said it was amazing because it would, it would get, it would get rid of all the first like 10 ideas where you're like, yeah, no, go back, try harder. It would just get rid of that. And so people start that little bit further ahead. And I think maybe that's the thing that we'll get from AI. Certainly in the short term, it's not going to be replacing tons and tons of stuff. M. But it'll enable people to be much faster, to better ideas quicker.

Speaker C: Good, good, people. Better. I think, yeah. Is a good way of summing it up. Yeah. Talking about the good in agencies, what about the bad? What, what really winds you up? What makes you fume about agencies? Naming no names unless you want to. But what, um, would be interested in, you know, from a client point of view? What, um, what really gets your goat?

Speaker A: Yeah, just so I, I generally really like working with agencies because you come across. It's a good discipline, some, some great, some great people, some great thinkers that really challenge the way you think. And so I think it's always valuable. However, um, um, and I've worked both sides. I certainly know that clients will be in a room together. And I go, ah, fucking, uh, agency. Yeah. And I also know that agency people will be in a room, um, go, fucking client. And that adversarial relationship isn't good.

Speaker C: No, no.

Speaker A: It then drives a kind of transactional relationship.

Speaker C: Yes.

Speaker A: Where the client is, I want this, this, this and this. And the agency goes, right, we are selling this, this, this and this.

Speaker C: Yes.

Speaker A: It becomes less of an extension of a team and more of an adversarial or transactional relationship.

Speaker C: Yes.

Speaker A: I think that's a problem. I think also in the same way that clients can get fixated on ideas, agencies can also get fixated with ideas. They can get very, very excited. Everyone loves it internally. They show it to the client, the client goes, yeah, that's not going to work.

Speaker C: Yeah. Slap. No.

Speaker A: And then it comes back. And then it comes back maybe a slightly different color and the amount of time that that takes.

Speaker B: Mhm.

Speaker A: Where it's just not gonna fly.

Speaker C: No, no.

Speaker A: And so I think that. And, and I suppose it comes back to like if he, if you invest time in something, you then believe in that thing. But I think it's important to have strong opinions. Yeah, but to hold them lightly.

Speaker C: Yes. Yeah, yeah.

Speaker A: And I think both clients and agencies could learn from that quote.

Speaker C: I think you're right.

Speaker A: Just let things go and move on. I mean the joy is that all of those historical ideas don't get lost.

Speaker C: No.

Speaker A: They can be brought back, they can draw.

Speaker C: Yeah.

Speaker A: And at some point they might become relevant. And you learn from that process. Yes.

Speaker C: Yeah.

Speaker A: But it is frustrating when you get the same thing.

Speaker C: It's just no good for anyone. It's attritional, isn't it? It's the sort of thing that chips away at that relationship over time. I think it uh, boils down to a meeting two cultures, I think, doesn't it? In that you've got a successful business, obviously has a very. Must have a strong culture to be able to succeed and keep growing. And at the same time an agency needs to have a level of culture and an attitude around creativity and that willingness to challenge. It's knowing where that line lies. And as you say, when to hold ideas lightly and when to push is a real, there's a real art to it, I think, isn't there? There's a real balance in that. I suppose overall you would. You need to have an element of that friction's, uh, perhaps the wrong word, but that element of back and forth. But it's knowing when to be pragmatic rather than ideological about it, I suppose, isn't it? I've used some grander words on something you described much more simply before, but yeah, ah, knowing where to hold that lightly is the real trick of the situation is.

Speaker A: Yeah. I mean another thing that is a little bit frustrating Is that in the pitch you get the rock stars?

Speaker C: Yeah, yeah.

Speaker A: You don't always get them on your business.

Speaker C: No.

Speaker A: And that's fine. But I think the transparency around that is important.

Speaker C: Yeah.

Speaker B: Mhm.

Speaker A: And I think that's if we think about agencies as the extension of the marketing team having. Being really transparent about who's working on the business, how much time they're spending on the business and then also how you make money out of the business.

Speaker C: Yeah, yeah, yeah. Because exactly.

Speaker A: Everyone, sorry, everyone understands that we need to make money. Um, being more transparent about it is helpful.

Speaker C: I think so. Yeah, I think so. That used to piss me off something rotten. Where you would have. Yeah, you'd spend time from client side point of view, spend time working on, you know, through pitch, process, chemistry, meetings, all that, you get to know people and then six months later they've not left the business, the agency, but they're off the account and you've got back to that information sharing point. You've got a whole reset you need to do there and things as well. It's just. Yeah, I would say that's probably number one reason why, you know, why those relationships fail early. A lot of the time is there's not that transparency around who's working on where. You know, if you put the, put the team that's going to work on it up front and if you're not, if you're not comfortable enough for them to actually do the work, then they shouldn't be on the account, should they? You know?

Speaker B: Yeah, yeah. Do you um, do you find that agencies might fall into like group thinking as well? Like if obviously they should be in alignment and operate as a unit. But do you find it almost feels like to the extent of like, oh, one, one good idea gets thrown into the room and then they just go with it rather than kind of have a back and forth amongst each other?

Speaker A: Yeah, I think, I think that can definitely happen. And it, I suppose that sort of, I mean it's interesting with, with, with that problem that I was describing earlier with the information flow and um, having very specialist teams within clients. That probably also means that clients have got the resource to be able to, you know, where, where it'd be great for agency people to spend time in the business, but also to have some people from the business spend time in the agency.

Speaker C: Yes.

Speaker A: And certainly if I think about our uh, the, our team that works with the creative agency, probably, you know, we, we forced people to come back into the office or we invited people to come back into the office. Three Days a week. And I love doing that personally and I think it's very good to work with other people. But um, one of the, one of the people that works with the creative agency probably spends more time at the creative agency than they do in our office. They're more in the agency's office more often than they are in our office and I think that's quite healthy.

Speaker B: Yeah.

Speaker A: Then there's someone there that can have a conversation in an informal setting.

Speaker C: Yes.

Speaker A: And so it's not just a set piece meeting. It's not a, uh, zoom or teams. Call it like just having a chat over a cup of coffee and you know, that's certainly what we do in businesses. Like people will sit and chat about work, um, over lunch. Um, they probably do the same in agencies. I don't know. Matt, do you get time for lunch now and again?

Speaker C: Yeah, Aldesco. Yeah.

Speaker B: Yeah.

Speaker A: Um, but that, um, being able to do that with the client in a more informal setting. Yeah, that's probably really healthy. So I think that could really improve things and that could break some of the group think because then the idea can be built on uh, uh, earlier stages. So you don't get to the point where the whole agency are backing this one idea and the whole agency, it's not going to be the whole agency because someone's going to be sitting there going, oh no, it's a rubbish idea. I could have done much better. But you know, having that, having it's

Speaker C: passed a lot earlier, isn't it? Yeah, the process.

Speaker A: Yeah. And I think that's maybe one of the other options for AI is that actually you can get things to quite close to production quality really, really fast and cheaply. Um, so you can kind of have an idea, get it to the point where a client can actually imagine it before you invested too much time and money into it. So I think there's some possibilities for exciting stuff to happen there as well.

Speaker B: Yeah, ah, no, definitely. Really bring the vision to life. Um, can you walk me through like what the ideal client agency relationship looks like from sort of a commercial and structural sort of point of view?

Speaker A: Uh, I'll start with the structure. So I think like spending time, like being able to kind of get over to the client's buildings and the client sites and spend time actually finding out about customers on an individual basis, talking to customers, talking to the product teams, talking to uh, the site managers, talking to the sales development reps, listening into those calls, uh, being able to experience that. It's probably from the. Predominantly from the strategy team bringing the client in, um, is very important. Being very transparent about where you make money and where you don't make money. Now my personal view is that creative agencies should be much more charging for the strategy and the creative and just passing on the costs for production.

Speaker C: Yeah, yeah, yeah.

Speaker A: That shouldn't be something that. All right, okay, well we'll mark up the production. I, I think having it very, very transparent where they make money and where they don't make money then um, enables a commercial relationship that's much clearer. I think there is probably, probably a value to performance related pay. So paying for advertising that works.

Speaker B: Mhm.

Speaker A: That is a, it's an easy thing to say. It's a much more difficult thing to deliver because if you are going to get paid for performance, you need to be able to go, well, okay, this is what we want to run.

Speaker C: The level of control an agency would want is higher than it is now, isn't it?

Speaker A: Yeah, but ultimately like this is very similar to the sales and marketing relationship in that, you know, the kind of conversation of well, you're sending us the wrong leads or you're not working the leads quite how we want. Quite often you are responsible for something and you get paid for something that is not fully in your control. So I think there are ways of structuring that and structuring it, uh, with good upside so that it is more profitable to be paid by performance when it performs well than a kind of flat rate or time based charging. Um, but that is something that um, Tim ambler wrote about 20, 30 years ago.

Speaker C: Yeah, it's come around the houses for decades.

Speaker A: I haven't, haven't really seen it work particularly well, but it would be nice to see that work well.

Speaker C: Yeah, yeah, I think so. There's, we were thinking about this recently. There's a few announcements. A few months ago some of the big networks were looking at that kind of model, weren't they? And yeah, for me it's the level of control that an agency would want from the client. And the questions that raises about, well, is the client willing to give up that level of control and perhaps even reduce headcount internally and give more of that responsibility and therefore risk to an agency is probably the key stumbling block. I'd think that it feels like there must be a solution somewhere along the line because um, I'd like to think we'd back ourselves to get the right results and want that. But logistically there's wrinkles there, isn't there? I think that smarter people than I need to Solve.

Speaker A: It's a challenge. But it's a challenge that will probably get solved in the next five years. Because all the big AI companies are starting to talk about paying for Outcome.

Speaker C: Yes. Yeah.

Speaker A: And so they're definitely going down that route. If they go down that route, it'll become a business model that more people are familiar with and procurement teams understand how to buy and um, there will be a model that other business sectors can follow. So I think there's definitely an opportunity for it. The difficulty is that your cost becomes variable as a client and that's always a challenge.

Speaker C: Yes. Watch this space. I suppose.

Speaker B: Yeah, definitely. Just to go back because, um, we did some research about what uh, marketers are looking for in agencies and we were expecting I guess a little bit more, um, I guess like controversial criteria. But one of the top things was location. And the reason why is because. Exactly what you said, going in and spending time with them, um, getting a call, people actually care about that. Which feels, I guess it does feel a little bit old school and like going to each other's offices and spending that time. But I think there's a lot of value in that. And also like it can be as little as having the same time zone. If someone's based in a different time zone, how are you going to coordinate that time to be able to meet together? Um, I think that's actually quite an underrated metric. That's.

Speaker A: Yeah, it is. It's certainly something that we consider now that can be a, that can also be a barrier.

Speaker B: Mhm.

Speaker A: To working with smaller agencies. Because if you're a global company. We're a global company. We operate seven to 12 markets depending on how you count it. Um, in order to have people at our kind of key hubs, that means that you definitely need a US presence. Definitely need a UK presence.

Speaker B: Mhm.

Speaker A: You probably want to have something around APAC as well.

Speaker B: Yeah.

Speaker A: And you know the moment you're going to three different locations. That's uh, that's a big agency.

Speaker C: Yeah.

Speaker A: That's likely part of a big agency group. The financials can then get a bit more opaque. So. And you're not, you know that we, we really value small and medium enterprises because we, that's who we sell to. So it would be really good. It's always really good when we are able to um, buy from small and medium businesses. But if you need a global small and medium enterprise, they tend not to be that small and medium. When they're global you tend to one thing.

Speaker C: Well, we're part of actually is an informal network. I think that that's, that's starting to become more common. I think for those reasons and that you got the benefits of a smaller agency that you've described, but at the same time you've got that replicability. I said that first time, that was good. I was worried about that one. And also that presence in different geographies around the world as well. To be able to have that balance without all of the, um, bells and whistles, should we say, that comes with the bigger network. So I think there's ways around it, but you have to find the right, the right rhythm there, don't you, really?

Speaker A: Yeah. And it's, you know, having lots of different agencies whilst being super relevant for the locale then means that the consistency can fall apart. So there's lots of challenges for that. But I do. It is something that I think is important and it is a strange. It is quite amusing. Um, but ultimately, like, if you've got really good strategy and really good creative coming out of the agency, that's really. That should be the metric that you care about.

Speaker B: Yeah, definitely. I guess before we go, do you want to maybe share, you know, a, uh, prediction for where you see the agency client relationship going? Do you see it evolving over the next couple of years?

Speaker A: I think if I'm optimistic, yes, I would like to see some of the sort of getting shared value out of new technologies about, uh, particularly artificial intelligence. I'd love to see that. I think pessimistically, you know, it's challenging times. They don't seem to get any less challenging at the moment. So when things are challenging, um, those relationships could become more transactional and they could get hollowed out a lot because clients start going, well, hang on a second, we can do all this stuff with AI. Why are we spending the money on this? And I think that's. That could. It could lead to a lot more an agency ecosystem where it's lots more individual consultants that have got a creative agency background that can come in, work with clients, help them set up their creative production, help them with their creative, uh, strategy and then they bounce on to the next place. You might. That could well be a, um, a future that we start seeing where, um, you have kind of you, you're almost paying for the individual talent as opposed to.

Speaker C: Yes.

Speaker A: The whole full service.

Speaker C: Yeah. The more pure play consultancy.

Speaker A: Yeah.

Speaker C: Side of things. Interesting.

Speaker B: Yeah, interesting. I mean, you say pessimistically, but I think it's just more of, watch this space and we'll see how it goes. I Guess.

Speaker A: Yeah. Yeah. I mean, the pessimistic bit, that, that last bit wasn't the pessimistic bit. I think that's actually quite interesting. But the pessimistic bit is, um, a more adversarial, more transactional relationship as people are, uh, clients are getting more and more worried about the budget. They want to see return on investment faster. You get this sort of lot more changing between agencies, a lot more switching procurement teams, pushing harder on terms, um, agencies not quite knowing how to make their margin when things are disappearing. Um, and then, you know, like a lot of my friends work in creative agencies. It's not like it's short hours and you're constantly off watching the cinema in the middle of the day.

Speaker C: Speak for yourself.

Speaker A: So I think it's, you know, it could end up being very challenging. And then the incentive to work at an agency versus working for a client, that could be. That could be problematic. So talent, um, you could get a talent drain quite quickly as well. That's the pessimistic.

Speaker C: Yeah.

Speaker A: Maybe we shouldn't focus too much on that.

Speaker C: I'm not sure we're near that point just yet. Oh, I think it's. Yeah, it's. It is. It's. It's tricky times. I'm old enough to remember 2008 and the last time we had a real financial crash, and there was. The agencies were rocking at that point. There was shifting sands under how things were operating. I don't think it's at that level, but there's definitely the. The Omni crises that we've seen the last few years is. Yeah. Certainly changed things.

Speaker B: Yeah. Well, something to think about. Um, I think that about wraps up the episode for today. Um, thank you so much, Harry, for joining us for our very first episode of this podcast series. Um, and stay tuned for another episode of bare knuckle B2B. Thanks, guys.

Speaker C: Cheers. Thanks, everyone.

Speaker B: Thank you. Thank you,

Speaker A: Sam.