Latest Agency Edge Research with Susan Baier and Drew McLellan

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Drew McLellan and Susan Baier discuss their findings from the eighth annual Agency Edge Research Series.

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Guest:

Susan Baier is the CEO of Audience Audit and has been a marketing strategist and researcher for more than 30 years. She crafts custom attitudinal segmentation research for agencies and marketers for B2C, B2B, and higher-ed organizations including Gap, AT&T, Jayco, Tufts University, and more.

Drew McLellan is the CEO of Agency Management Institute and has been in the advertising industry for more than 30 years. He advises hundreds of small- to mid-sized agencies on how to grow and become more profitable.

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Agency Edge Research Series

Episode recorded: Dec. 1, 2021

Episode notes:

Hello, and welcome to "On Top of PR." I'm your host, Jason Mudd. Today, I'm joined by not one but two expert guests. So, welcome to the show, Susan and Drew.

Thank you, Jason. Great to be here again.

Yep, thank you.

Yeah, I'm glad to have you, glad to be here. I also want to give a shout out to them for getting up early this morning to do this recording. So, I really appreciate your energy and effort to make this happen on a Wednesday morning. So, Susan, let's introduce you first. Susan and I got to know each other through Agency Management Institute and she is a research expert working with agencies and brands to produce research. And we have featured her on the show, this is, believe it or not, I believe your third appearance on "On Top of PR." That's the record.

Not that I'm keeping track. Yeah, it's great.

You should be keeping track on your bucket list, right. Now you can set it to be on this show four times. And so Susan, why don't you introduce yourself briefly and then we'll have Drew introduce himself? Drew is with Agency Management Institute and also a repeat guest.

Sure, thanks Jason. So, as you said, yes, I run a research agency called Audience Audit. We focus on understanding audiences in sort of a different way than maybe your typical demographics and we've been doing that since 2009 and for the vast majority of that time, I've had the great good luck to be working with Drew McLellan at AMI on research for agencies, which is our agency edge study that we're talking about today.

Very nice. Yes, and your research is definitely very critical to the industry and we appreciate you partnering up with not only Drew in Agency Management Institute to do that, but certainly other organizations to help with marketing research and studies. So, Drew welcome to the show.

Thanks for having us back. It's fun to be back to talk about this stuff. So, I'm an agency guy. I've owned my own agency for gosh, almost 30 years now and I have owned and run Agency Management Institute for about half that time. In Agency Management Institute, we focus on helping small to mid-sized agencies run the business of their business better. So, helping them with all of the back of the house stuff. And so, eight years ago, Susan and I decided that it would be really helpful to agencies and interestingly to brands for us to look at the client-agency relationship every year through a research study. And so, we picked kind of a very narrow topic every year and one year it was how to agencies get hired and fired, one year it was how do clients feel about account execs and what do they want from them? And so again, we're back to share with your audience, from their perspective sort of what's going on. If you're a CMO or a business owner or a VP of marketing inside a brand, what's going on in your world? Susan, I'm trying to remember, was it like a thousand respondents?

Almost 1,250 agency clients in the US in this study this year.

Yeah, so, just to give your audience a view what's going on with folks that do their job every day and hopefully help them get some insight.

So, your study was themed a little bit, I think 2021, riding the wave and you guys have been doing this since 2014. So, this will be your eighth annual and last time you kind of went to, one time you went to market talking about the height of the recession and how does that look and then suddenly the pandemic happened and so you start asking brands what they're doing in response to the pandemic. Now, here we are coming out of the economic boom, I guess, riding the wave of what's happening in the post pandemic worldview or positioning. So, we're going to share, I guess, approximately 1200 brands and clients are saying and thinking about what's going on in the marketplace, does that sound about right of how we're going to tee it up for the day?

Yeah, I think that's really it. And I think Susan can talk about sort of the statistical validity of the study so that your audience knows that this is not just the two of us saying. Well, seven people told us this but I think there are some insights for brand side folks and how they leverage their agencies differently in this moment in time because it is a very unique moment in time where everybody's back to work in whatever fashion that is, the economy bounce back very quickly from the recession. And yet the combination of post COVID shutdown and the sort of the gates flooding open with people wanting stuff. So, sales and demand, but you've got supply chain issues and you've got employee issues and you have all these things really has created this unique moment. And the survey, actually, in some cases showed us things we've never seen before.

Yeah, I mean, I think as you always do, we walk into these things with our own assumptions and we try to test those as we go through it and when we fielded this late last summer, I think that we had some expectations based on what we were hearing from agencies about how clients were really raring to go, and there was a lot of stuff going on in agencies. We're seeing a lot of activity from their clients coming out of the economic impact of COVID. But nevertheless, I know for me and for Drew as well, there were some things in here that we didn't expect to see that surprised us and I think that your audience may enjoy hearing about if they're feeling like they're sort of out there by themselves in a particular situation. This is 1,250 clients organizations of all sizes from all across the country, all different kinds of industries.

It's great.

So, yeah, it's interesting stuff for sure. We always learn something new, don't we Drew?

Absolutely.

Well, enough with the teasing. Let's get to the big reveal. So, what are some of the things that surprised you with this data?

So, our approach has been an attitudinal segmentation approach and if your viewers have followed our research for any period of time, they've seen this work which is looking at audiences, not just from the standpoint of how big is your organization, what is your role, what is your industry? But really looking at it from how are you feeling about a situation, how are you coming into a decision to hire an agency, renew with an agency, keep an agency, do something different for marketing, sort of where's your headspace at and where's your organization at with that? And this year, we found three very distinct types of agency clients in this study coming out as I said, late summer, coming out of what had happened economically with COVID. So, the first group we found is we call them committed. It's 25% of the audience, and these folks are just raring to go there. They're doing a lot of activity, they're very enthusiastic about working with their agencies, they're very bullish on the opportunities that are available to them and their organizations' ability to harness those opportunities for their own benefit.

The second group, and the largest group of the three, we labeled concern. So, this was 42% of the respondents is.

[Susan] Which is a surprising amount.

Yeah, normally we don't see that large of a segment in this work. But anyway, these folks are... The reason we call them concerned is because they're concerned. They're having a hard time finding new clients or customers and they're really having a hard time finding qualified employees to work in their marketing departments. And it's much more difficult for them than it was prior to 2020. And they're even struggling to find the right agency partners. They say to find agencies that are true experts in their space, in the client space, it's been challenging. So, they're worried about a variety of things. Everything from economic conditions, the shifts in consumer behavior, the big shifts in employee expectations. So, these folks, in general, have a lot of sleepless nights right now. They're really wrestling with how to get their work done. They see the opportunity. They just aren't quite sure how.

Yeah, struggles internally and with external factors. And the thing about this group, I mean, it's so large and this was before we started seeing the impact of supply chain issues which affected so many agency clients that are still struggling with. Well, that hadn't happened yet. So, you can certainly see sort of a pylon of additional issues coming for this particular group and it's a huge percentage of the audience. And then the third segment we found, and this was really surprising. We call them close because these clients, and we've never seen this before, this group organically bubbled up in the analysis based on their interest in having a very in-person relationship with their agencies. So, they feel pretty good about their marketing activity. They've worked with a lot of agencies, particularly specialist agencies but they really want to see their agencies in person and they also reflect a preference for working with agencies that are headquartered nearby. So, that was something that we hadn't seen before and I know for you Drew, that was pretty surprising and maybe created some challenges/opportunities for agencies.

So, I just wanna clarify. You're saying that in a environment after the pandemic, that we're seeing brands have some preference towards in-person agencies, if you will, or local agencies higher than it was pre-pandemic.

Yeah, this is a third of the audience. So, it's really two, it's really two factors. One, if we have our choice, we'd like you to be nearby.

[Drew] Physically nearby.

Physically nearby. Now, that can be challenging because they want specialist agencies. So, we'll talk about that a little bit too, but the other thing is they wanna see their agencies in-person. So, the first segment we found, the committed are perfectly happy to work virtually. They actually liked that. That works great for them. This group really wants some face-to-face time with their agency partners. So, we just found that really interesting. We haven't seen a group defined by those characteristics before.

Susan, remind me the committed percentage was what?

25%.

And then the concerned was 42 and the close was-

33, okay. All right, good, I'm just taking some notes for my surfaces. Very interesting and just anecdotally, yes, there was an occasion where we were approached by a pretty big company and they want us to do PR for them, but they wanted us to come to their office and meet in-person. And that was during a time where I just assured my team we're not gonna be in person for a little while and then the next day, they wanna meet in person and I was like, "That's not really what we're looking to do right now." And it cost us the opportunity and much to my surprise. So, they were like, "We're back in person. We want an agency who is back in person." Do you think that's part of the attitude?

I mean, it's defining for this particular group but I guess I think if you're an agency client out there and you're really sort of wishing you could get your agency face-to-face and really hammer stuff out in your conference room, you are not alone. There's a lot of agency clients who were feeling this way. Drew, there's agencies who feel this way too, who are really looking to connect more closely face-to-face with their clients after the last year and a half, two years that we've had.

Well, I think agencies have always wanted more FaceTime clients. And so, for some agencies, this is half good news that half is that they wanna have more FaceTime. The challenge is they want them to be physically headquartered nearby. And you one of the reasons why an agency specializes is so they don't have to be geographically bound anymore. And so, a lot of specialist agencies have clients all over the region or the country. And so, it's not insurmountable for sure, there's ways around it, but it is an interesting thing. And Jason, we've never seen this. In fact, what we have seen over and over again is clients going, "I don't care where you, where the agency lives." And in fact, I think it was last, not last year, but the year before. One of the data points that we talked about a lot, I think it was the 2019 study was how far away most agencies were from their clients because what clients wanted more than anything else was a depth of expertise and specialty. And so, they were like, "200 miles, 500 miles, I don't care. I just want you to understand my business."

Yeah, and understand Jason, that interest in a depth of expertise in specialization is still here, it's stronger than ever and it is pervasive across all of these segments. So, what we are saying, I mean, Drew and I've been tracking this sort of interest in specialization because as you know, we talk a lot about the importance of having an agent and the value for an agency of really having a specialization. Doesn't have to be industry. It can be audience, it can be a geography, it can be whatever typical type of tactic or approach but it really helps agencies sort of carve out a place for themselves in a sea of competition. But what we've been seeing since 2014 is a stronger and stronger interest among clients for specialist agencies too.

Right.

And we see that in this study, the committed, that first group really is more likely to have only one agency than any of the other groups. Most clients don't have one agency anymore, we've been seeing that consistently. But even with one agency, they want that agency to have real specialties. And the other two groups, the same thing. It is really important to them. So, when we think about this close group and wanting to have somebody nearby, I think what's happening, and your listeners may be able to validate this or disagree with it. I think those organizations are probably making a calculation between the value of the specialization that an agency can offer them and the proximity of that agency being nearby versus just flying in frequently or having regular sort of face-to-face meetings and where's the balance that they need to get the really unique expertise that everybody is looking for 'cause everybody says that that's the case.

All right, we're going to take a quick break but I just wanna point out I'm hearing two things. One, I've got some great questions for you guys on the other side based on this information. Two, I'm really hearing this interesting tension between the idea of wanting local experts in your industry. And 'cause one audience was saying they're struggling to find that expertise, the other audience says they have a strong preference for local, right. And I think if you're just shopping locally, which I'm a big fan of by local, right, there's still that tension of how do you find experts in your backyard and still feel like you're getting first-class services. So with that, we'll take a quick break. I've got at least three questions when we come back on the other side. So, bear with us.

Welcome back to "On Top of PR." I'm still your host, Jason Mudd, with AXIA Public Relations but today we're joined by Susan and Drew, and we're talking about the agency edge study and we're actually taking a moment to kind of flip the tables a little bit. This study is usually produced for agencies but now we bring you the unique opportunity to see it flipped around and flipped in the script a little bit and what it means for brands and clients of agencies and how you can use this insight and information in your own corporation. So with that, we welcome back Susan and Drew and as promised, I've got some questions for you guys. We were talking a little bit about meeting in person and clients are having a preference. A third of the participants in your study have a preference of having the agency close so they can do more in-person collaboration. I find that I found that ironic since I think agencies have done a really good job of pivoting and figuring out how to work virtually and how to brainstorm virtually and things like that but some people just really like those relationships. And so, that triggered something Drew and I, I've heard Drew talk about previously, which is vaccines and what our clients and brands mandating and expecting from their agencies in order to be able to work with them. And especially, I imagine to work with them closely and in-person. So, just kind of at a high level, what are you seeing brands do in the marketplace right now?

Yeah, it's really interesting. We're seeing kind of a wide range of expectations and in most cases, they align with whatever the corporate sort of philosophy is about vaccine. So, in some cases in the RFI or RFP process, even before you can get hired as an agency, they're asking, "What's your agency's policy around vaccines and will you be disclosing anybody on the team if they're vaccinated or not?" Some clients have literally said, "If you're not vaccinated, you can't come in our building." Others are like, "If you're not vaccinated, you need to be masked if we're gonna be in-person." And then there are other clients on the other side of the spectrum that really aren't asking the question at all. Sort of a don't ask, don't tell policy. But I would say most of them are saying, "Here's our corporate policy, How does it align with your agency policy?" And if the alignment is really off, then that typically costs the agency the opportunity.

And I think I heard you say that some aid or some clients are just mandating that, "Hey, agency, everybody you put in front of us must be vaccinated. And if not, they either need to stay back at the agency or just don't take on our accounts." And are they looking for proof of vaccination or how's that working?

Yeah, it's interesting. In most cases, it's really just verbal. "My folks are vaccinated." Kind of thing. But you're right. In many cases, they're saying, "Look, if you're assembling a team to work on our account, anyone we're gonna have actual contact with has to be vaccinated. So, if you have an art director in the back of the house that we're never gonna be in a meeting with, we don't really care. But anybody you're gonna bring into our physical space or we're gonna be on a shoot together, or we're gonna be, this is the PR person who's gonna coach me before I go on an interview or something like that, our expectation is that anyone you're gonna bring into contact with our team, needs to be vaccinated." Yeah.

Did we see any data on that from this one third of the group that's close that they have a high preference for being vaccinated or no preference for vaccinated, or did that not come out?

That's something that we explored in this particular survey now. And probably 'cause you weren't expecting a third of your audience to say, "We really want those agency people back in our offices-"

It was certainly one of the more surprising data points in the study, was this complete aberration from what we have seen in the last seven studies.

Right. Yeah, interesting, okay. Susan, one thing I've seen, research on from University of Southern California Annenberg, and they do a lot of research especially in the PR industry space. I've seen this year over year, over year where they say larger and in-house PR department is, the more agencies they actually hire and work with. And so, it almost creates this culture I see where you staff up internally just to have them kind of coordinate and collaborate and manage outside agencies. Have you seen any similarities in your research over the last eight years?

We've seen a consistent trend where folks are working with more than one agency. Drew talks about this a lot where it's really not sort of a one agency world anymore, and agencies need to work with each other on behalf of a client that they're collaborating with. We do ask how big internal teams are and how many agencies folks have and in the data from this year, we really don't see that variance except on the fringes. So, the very smallest internal teams, one or two people are more likely to only have one agency, but that's still only 30% of that group that only has one agency and the largest teams in our study with over 250 internal people are more likely to have more than five agencies, but it's still not a majority. And then between that number two and 250, it's really all over the place and I think it aligns with what we see across the board when we do these attitudinal studies that they are often not really differentiated in terms of organization size or those kinds of things because they're really coming from how people feel about their organization's capabilities and how bullish they are on their industry and things like that that don't necessarily correlate with how big your organization is or how big your internal team is. So, I think for agency clients, Drew talks a lot to agencies about finding the right clients for them and I think clients have to do the same thing. Clients, we see in our research year after year, they want different things from their agencies. So, as a client, you really need to think about what you want, what your internal capabilities on the kind of specialties that you wanna bring onboard to accomplish what you want and find the right agencies for that. I think it's a lot more about that than it is about how big your internal team is, and that's borne up every year in our research.

Yeah, I would say anecdotally, I see why a brand might hire a PR agency like AXIA to do their national PR and then they've got some local smaller organization to handle their local needs, like a community check presentation or something like that and/or ask us to do that 'cause it's not that significant to what they're doing, but then they've got a separate direct response agency or a separate paid media agency. Then, bigger brands might have one agency per product line or per service or per specialization-

Or an agency focusing on Gen X or an agency focusing on marketing to women. There's so many specialties out there and we do see clients using a mix of agencies to get done what they want.

Gotcha.

Well, when you think about it, the world's gotten a lot more complicated and the marketing channels have multiplied and they have gotten much more sophisticated. So, clients in general look at an agency and when an agency says, "We're a full-service integrated agency." Clients scratch their head and say, "How could you possibly be good at everything?" And so, I think the agencies that have specialized, like you have, Jason, give themselves and their clients a lot of both an advantage and a relief that you're not trying to be everything to everybody, that you have this depth of expertise and skill and that you really sort of stick to your knitting and stay in the space where you're really good as opposed to trying to be everything to everybody and being really good at some things and being good or marginally good at other things and then the agency client has to figure out what you're actually really good at.

Right.

Yeah.

Yeah, and there's probably nothing worse than that because they may jump to the wrong conclusions-

Absolutely.

I had a long time client launch a new thing and they said to me, "Oh, well." I was like, "Hey, how come we didn't talk about that?" "We didn't realize you specialized in real estate and construction." And I was like, "Yeah, that's one of our niches." And so I had to look in the mirror and say, "Where did I mess that up?" Right. Because that was a new venture for them to create a real estate and development division yet we were their agency and that was really where we were at our best. So, letting the client diagnose that can be very risky, I would say. And so, maybe to advocate for the brand and the client, that's the time to really ask your agency and I know I do this all the time with my vendors in my employment candidates, right. When you're at your very best, what is it that you're doing? And how should I leverage that capability at our agency. So, let's see. And then I'm putting on my advocacy hat here because I know brands are struggling with staffing right now and the great resignation has impacted them. It's impacted everybody. One, what I believe you started to see some signs of that early on in your research before it was secularized or talked about in the mainstream media and so I guess I wanna hear what did your study show, what are you seeing today and what do you think brands can do to react to this importance of not only attracting talent but retaining the talent they have?

Yeah, so what we're seeing is that particularly that large group, they are struggling to find people and they're worried about it and we saw it across the board with everybody in the largest group, it is a keep me awake at night concern. And interestingly, many of them are starting to turn to their agencies in couple of ways. One, I don't have enough bodies to do all the work so I'm giving more work to my agency, which makes perfect sense but two, maybe a little less obvious, my agency who helps with brand and messaging and all of that can help me internally a couple of ways. Number one, they can help me message internally to my existing staff so that I can retain them and two, a lot of agencies have really developed a whole new service line around helping their clients recruit talent. So, how do you build a brand that people wanna work for and how do you go out to the marketplace to attract potential employees? So, I think that outcome comes out of the data that we saw in the study, which is people are rightfully so freaking out about the fact that it's hard to find really good talent to hire right now.

Yeah.

yeah.

Go, Susan.

Sorry, I was just gonna add. We explored this in the study and in addition to what Drew's talking about, what we saw is that the agencies who have worked with... The clients who have worked with their agencies on these kinds of things to get have been overwhelmingly thrilled with the results of that relationship and are often keeping their agencies working on that even when staffing, they expect staffing to be back up to normal in-house. So, there's really an expertise there that clients who were tapping into it with their agencies are finding really rewarding and something that they wanna keep doing longterm.

Yeah, I love that. I think that's a really smart and a great idea. So, I know for sure that clients are struggling with brands, are struggling with retaining, I know agencies are struggling with that as well. And I think if you could work together and sometimes maybe put that burden on your agency to figure it out, right, and make it happen for us. It's one less thing that they probably have to worry about and like you said, they can sleep a little better at night.

Right, well, I mean, part of it too is just perception. It's very difficult to see clearly the label on the outside of a bottle when you're inside the bottle. And so, part of what an agency always brings to their clients is an outside perspective and informed outside perspective. And so, if you're struggling to hire, and you can't figure out why people are saying no, it's nice to get that outside perspective about, well, here are three reasons why we see people might be choosing not to work here. We can help you with those.

Yeah. Okay, well, this has been a great episode just in closing. I think if a person is listening to this episode and they're like, "Man, I love what I heard here and I'd like to contribute in the future towards the next agency edge study. I'm a brand and I wanna contribute and tell you what I'm seeing, what I'm feeling, what I'm thinking about working with agencies." How might they best opt into that, Susan?

We have a large group of people actually who have volunteered to participate, which is terrific. So, they can go to Drew's site or my site on the resources pages. There you will see the research which you can dig through yourself all eight years of it. But there's also a way for you to reach out to us if you wanna participate in the next study or if you have some questions that you would like to see answered in upcoming versions of this. We don't do the same study every year. So, we're talking right now about what we're gonna do for our 2022. So, we'd love to hear from brands about what they'd be interested in hearing.

So, it sounds like there's still opportunities. One would be to opt-in to get participate in the future, two is you take requests, which is great and third is you have access availability to all eight years of the research. And Drew, you were gonna say?

I was gonna say every year, we produce a pretty robust executive summary of the data. And you also, on the sites, can actually go into the data and kind of click around and say, "Well, I wanna see what organization's like mine." How they responded. So, you're actually able to manipulate not the data, but the viewpoint, the lens of that data. So, we'll make sure that links to all of that are given to your team, Jason, so that it can go in the show notes. But yeah, people can literally go back and learn what the last eight years of studies have taught us.

Wonderful, wonderful. So, I'm gonna go ahead and just say that we're gonna give a link in our episode notes as you mentioned, Drew, and you'll be able to find those episode notes at ontopofpr/2021-agency-edge, it's what we'll go ahead and just make that official URL that everybody can share with colleagues and can go and find the episode notes where you'll be able to watch this video stream or an audio version of your choice to go ahead and consume the content. But I wanna say, thank you both very much again for getting up bright and early on a Wednesday morning, December 1st, 2021 is when we're recording this. And it's a great episode, thank you for sharing what you've seen and what you're doing. And also just over the last eight years, I know this information is very valuable to the marketplace and your faithfulness in doing it, even when you had to make a great pivot during the great pandemic but I think everybody's better off because of that. So, thank you again, Susan. Thank you, Drew, I appreciate you both.

Thank you, Jason.

Thank you.

And with that, that's another episode of "On Top of PR." As I mentioned earlier, if you've seen value in this content and this conversation today, please take a moment and share it with a colleague that you think would benefit from it. Just like they take requests for their research, if there's a topic or an expert that you would like us to explore on "On top of PR," we'd be happy to do that. Otherwise, thank you for tuning in. Be well.