The Future of Agency Relationships with Drew McLellan
March 11, 2024
“You can’t read a label accurately from inside the bottle,” Drew McLellan, CEO of Agency Management Institute shares in our latest podcast. Translation: a fresh perspective can make all the difference. Discover what brands are looking for in a marketing agency partnership and how working with an agency can keep you ahead of the curve in this quick listen.
[00:00:00] Rochelle Reiter: This is The 19, a 19 minute or less podcast that brings you marketing insights aimed at improving lives presented by Orange Label, the leading response marketing agency for wellness brands that grow when their customers do.
[00:00:15] Rochelle Reiter: Hello and welcome to the 19. I’m Rochelle Reiter President of Orange Label. As a marketing agency with over 50 years of expertise, clients come to us with varying levels of marketing knowledge. One of the most asked questions is whether or not working with an agency is the right choice for their brand, and our answer depends on what they’re looking to achieve. Today’s guest, Drew McLellan, knows all about the marketing industry with 25 plus years of experience he is the CEO of the Agency Management Institute, a consulting firm for agency owners, and an agency owner himself. You may have read his articles in Forbes, AdAge, or BusinessWeek, and today he’s here to share more on what to look for in a marketing agency.
[00:01:01] Rochelle Reiter: So Drew, thank you for being on The 19 today. It’s so great to have you here!
[00:01:09] Drew McLellan: No, thanks for having me. I’m looking forward to it.
[00:01:11] Rochelle Reiter: Awesome. So you work with small to mid-size marketing agencies across the globe and help them scale. How have you seen marketing services evolve and change over the last few years?
[00:01:23] Drew McLellan: Well, I mean, the good and bad news of being a marketing agency is whatever you were doing five years ago, you’re probably not doing today. And so there’s constant change and evolution, but it seems like the change is coming faster and faster with technology and other channels. And you know, when you think about what advertising and marketing used to look like, think back to the Mad Men days where it was, you know, print and radio and television and that was pretty much it. so, it’s what we’ve seen is a. As a result of all of those changes, a fragmentation in agency. So it’s very difficult for any agency, frankly, of any size to be good at all the things anymore. So you’re seeing a lot of agencies sort of doubled down into a deliverable or an industry or some sort of way of specializing so they can drill down deeper into an expertise.
[00:02:15] Rochelle Reiter: Sure. Sure. And do you see that even getting further fragmented down the line?
[00:02:20] Drew McLellan: Oh yeah. Yeah, things are not gonna get more simple, right?we know that. it was like in February or March of 2023, the whole world caught onto the fact that AI was a thing. Like we’ve been talking about it for years, but it was, I don’t know what happened that the light flipped on and everyone was like, oh, there’s this new thing in the room. So imagine how quickly that’s going to evolve and change. How we communicate, how we connect, both good and bad, right? I mean, everything from the deep fakes. I was just having a conversation with, another podcast host and we were talking about how our voices are all over the internet and it’s so easy now for someone to grab your voice, replicate it, put a script into an AI tool, and make you sound like you are saying anything. So it’s not just the cool stuff that’s happening, but it’s also how are we gonna protect clients and how are we gonna watermark things and all kinds of things we’ve never had to deal with before.
[00:03:17] Rochelle Reiter: it’s funny that you mentioned that because in our Monday morning meeting this morning, we had a example of that and one of our team members did it, and it sounded exactly like him. Right? So, and the challenge there is getting the emotion and. that feeling into a recording if it’s not an actual real person. Right?
[00:03:38] Drew McLellan: Well, but imagine, so you know, you are, you’re Brand X and you are the brand challenger to brand Y and you could mimic the CEO’s voice because of course he or she is given a million speeches and all of that, and you say some horrible thing that would never come out of his or her mouth, but we don’t know the difference. Or by the time we figure out that it wasn’t them, the damage is done, the brand damage is done. And so I just think it’s a whole new world of not only the technology, but just really thinking through the ethics behind all of these tools and how we’re gonna use them. And so that’s interesting and exciting and scary all at the time.
[00:04:16] Rochelle Reiter: I agree with you. So given that and the fast evolution of where this is going. Do you have pros and cons of working with an agency versus keeping marketing in house for a brand?
[00:04:29] Drew McLellan: Yeah, I, you know, whether you’re working with an agency or not, you’re still gonna be faced with these challenges. And so, you know, for most brands they have a choice, they either can build an agency in-house or they can outsource it. We see the pendulum swaying back and forth. So depending on the economics, either everybody’s bringing it all in-house or everybody is, outsourcing. And I think what’s happening more and more today is because of the specialization and because of all the things you have to be good at, even the largest brands can’t possibly have a big enough department to bring it all in-house. So what most, what we see most people doing is sort of trying to decide what makes sense to keep in-house and where do we need that outside perspective? Where do we need that outside skillset? Where do we need that fresh perspective that we just can’t have anymore because we’re inside the bottle, so we cannot read the label of the bottle accurately anymore from inside and we need that. We need that outside resource. I don’t think ultimately it’s gonna shift to the point where agencies are irrelevant. I just think agencies are gonna have to work hard to stay relevant. Not because they’re gonna be replaced by in-house agencies, but because other agencies are, gonna eat their lunch.
[00:05:44] Rochelle Reiter: Sure. So at the AI for Agency Summit, you outlined what clients are looking for a marketing agency in 2024. Can you share some of that wisdom that you uncovered?
[00:05:54] Drew McLellan: Sure what we’re seeing brands wise, especially after 23, which was really a brutal, tough year for pretty much everybody in terms of business. Clients want an agency that, number one has a strong point of view, isn’t afraid to sort of argue against the status quo. they’re tired of agencies kind of dialing it in and bringing them the same stuff. So they want fresh ideas, big ideas. Again, that outside perspective. They do want expertise. They don’t wanna have to teach their agency how their business runs. you know, whether you’re a. bait shack, or you’re a butcher, or a baker or a candlestick maker, you want somebody who has expertise in what you already do so that they come in with industry knowledge and expertise. I think the other thing they want, and this is really an interesting shift for agencies, you know, I was talking to an agency owner the other day and I said, you know, we were used to really being the ones that had all the answers. we knew this stuff.
[00:06:51] Rochelle Reiter: Right.
[00:06:52] Drew McLellan: And today the stuff keeps changing, so there’s no way we can know all the things, and so agencies have to shift the way they present themselves to. Yes, we know a lot of things, but some of these things are new and some of these things have to be tested and we wanna do a beta test with a good client. We wanna explore this together, but we don’t actually know how this is gonna be. That’s a weird place for an agency. leader to be in because we’re used to walking in the room and being an advisor and a counselor, and we can still be that, but we have to be that in a more collaborative way. So we kind of have to let the clients see behind the curtain a little more than a lot of agency people are used to comfortable with. And we’re gonna have to get comfortable with that in a hurry, especially when it comes to some of the new technologies and stuff, because let’s just take ChatGPT. Every time you go into it, they’ve changed something. They’ve made it better. They’ve made it different. So there’s no way we can possibly know it anymore because it’s constantly changing. So those are some of the things I think clients are looking for from agencies.
[00:07:55] Rochelle Reiter: What do you believe the ideal structure of an agency is for the future?
[00:08:01] Drew McLellan: So what we’re seeing a lot of is, and, and again, it very much depends on the kind of agency. But what we’re seeing is the thinkers on staff in-house and the doers. Kind of a mix of , we’ll have a team or two of doers, but then we’re gonna outsource a lot of it because that’s the lowest commodity. And it’s not hard to hire a really good graphic designer today for four hours of work, but it’s really hard to hire a really good strategist who understands business and client acquisition and client retention and all the things that a smart client wants from a smart agency. I can remember a day when agency owners were like, I will never use a contractor. Everybody will be under my roof. I will never have a remote employee and the reality is, covid just sped up that evolution we were getting there anyway.But I think the structure is smaller, smarter, more senior teams in-house and younger doers being brought in to execute on an add needed basis.
[00:09:07] Rochelle Reiter: Okay. So when a client meets an agency, how can each party tell if it’s going to be a good fit in your opinion?
[00:09:16] Drew McLellan: Yeah. So first of all, you know, one of the things we know is clients are doing about 75% of the homework before they ever reach out to the agency. So they’re on the agency’s website. They are reaching out to people they’re connected to on LinkedIn. That’s not uncommon anymore at all. if somebody says they’re a client of yours, it’s not uncommon for them to get a message on LinkedIn to say, hey, I see you work with agency X, Y, Z. What do they like to work with? looking at case studies and examples of the work. So in most cases, they know if the agency can do the work. It’s really about is this the agency I want to work with? Are these people that I’m willing to be, vulnerable with. That I’m gonna tell them when our company’s in trouble or we need some help. Are these people who are gonna take my phone call because I’m in a panic at 10 o’clock at night? Versus somebody who’s you know what, look, we’re a Monday through Friday, we work like a bank. You know, we’ll talk to you on Monday and a lot of it is chemistry. Agencies and their clients spend a lot of time together. And so you really do have to like each other. you have to like and respect each other. And There is no substitute for figuring that out other than spending some time together. And one of the, things that happens a lot, typically in bigger agencies, more than small to mid-sized agencies, is the client will fall in love with the pitch team. And it turns out that is not the team they’re gonna be working with. So one of the things that clients need to be really clear about is. When we are courting each other, the only people I want in the room are the people that I’m gonna be interacting with on a regular basis. And so if I’m never gonna see the agency owner again, don’t bring ’em. If I’m never gonna see this person again, don’t bring them. I want to know who my people are because I do want to have that rapport and chemistry and especially in this era of experimentation. I have to trust them a lot. we often say to agency folks , if your agency loses a client, you’re gonna lose that revenue. But if the client chooses the wrong agency, a lot of times that person loses their job. So this is really important to them. this is feed the family, send the kid to college, important to them. And so we owe it to them to be as honest and transparent about who we are and how we are, and how we work, and what we’re good at, and what we’re not good at as possible so that they can make the right choice even if we’re not the right choice.
[00:11:40] Rochelle Reiter: So what are you seeing are in terms of a client agency relationship in terms of full service, contract work, project work, hybrid relationships? What are you seeing right now?
[00:11:52] Drew McLellan: Yeah, it’s interesting. So we do a study called the Agency Edge, where for the last 10 years we’ve gone out and done a piece of proprietary research where we talk to people who hire agencies. And there have been a couple trends that we have seen over the course of the years, and one of them is very few clients, even little clients, only work with one agency. And when we ask them why, what they say is, I don’t think any one agency can be good at all the things that I need, but I have one agency that really helps me with the strategy and the plan and whatever they’re good at, they’ll do. So if it’s a PR shop or a strategy shop or it’s a full service agency, but I want them, this is one of the big shifts. So five years ago clients were hiring 5, 6, 7 agencies and they were the sort of the ringleader that kept all the agencies playing nice together. And a couple years ago there was a big shift where clients were like, I don’t wanna be the ringleader anymore. I wanna hire a lead agency. I want them to bring me the agency partners that they have confidence in. I want them to wrangle the feral cats. At the end of the day, I want all the things to be done well and right, and it’s okay if three or four agencies do it. I just don’t wanna have to talk to all those people all the time. And I don’t wanna, I don’t want bills from all of them, and I don’t want the hassle of like interviewing all of them. You my lead agency are gonna help me build the bench and the team that’s gonna be able to do all these things. So that’s one of the big shifts.
[00:13:18] Rochelle Reiter: Well, and I think that creates buy-in too,
[00:13:20] Drew McLellan: Mm-hmm.
[00:13:20] Rochelle Reiter: and collaboration.
[00:13:22] Drew McLellan: Yeah. Well, and it also avoids the, you know, when the client hired four or five agencies, every agency was sort of fighting for market share. So they were constantly sort of sabotaging and throwing each other under the bus. But when one agency’s the lead agency and they bring in other agencies that they trust, typically that’s a collaborative relationship that sometimes goes the other way. So if I am the lead agency in this case, and I bring you in. Odds are sometimes you’re the lead agency because you got hired because you had a relationship and you might bring us in. And so there’s a much more collaborative spirit and it feels more like a team working on the work and I’m gonna get fired. My agency’s gonna get fired if you don’t perform. So it doesn’t make sense for me to make you fail.
[00:14:08] Rochelle Reiter: So what’s your take on clients that work with agencies that don’t specialize in a niche? It sounds like everything’s getting more specialized because of fragmentation and we really need to focus either on an industry or on a particular service. Can you expand on that a little bit?
[00:14:26] Drew McLellan: Yeah. So again, in, in some of our research, what we’ve found is for the clients. That chose to work with a generalist agency. Typically, they had a relationship with someone at the agency already, so they already knew, you know, the whole know, and trust model. They already knew them and trusted them and they wanted FaceTime and so they wanted to be able to have the agency drive down the street and still meet with them. And this was. Before and after Covid, by the way.
[00:14:51] Rochelle Reiter: Okay.
[00:14:52] Drew McLellan: So they’re willing to sort of limit themselves to a geography, which again, much easier if you’re in New York City or Chicago than if you’re in Tupelo, Mississippi. So you’re willing to limit the pool of talent to a two hour radius around your office or whatever it is, because you want that sort of connectivity. And honestly, if you said to most agencies, depending on the account, we need you to fly in once a quarter. I don’t know, an agency on the planet that wouldn’t be like, yep, we’re on a plane, we’ll be there. So I think sometimes clients do themselves a disservice by choosing someone who doesn’t have the depth of expertise that they wish they had because of geography
[00:15:33] Rochelle Reiter: That’s interesting. Okay, so what piece of advice would you give our listeners when it comes to vetting the right marketing agency for their brand?
[00:15:42] Drew McLellan: I think it’s a couple things. Number one, do your homework, obviously. Number two, you can’t hold your cards so close to your vest that the agency can’t know enough or doesn’t know enough to actually show you how they think and what they would do. So it’s incredibly disrespectful to call an agency in and interview them and when they say, well, what’s your budget? And they, I don’t know. how can I be helpful if you have a dollar or a million dollars? I’m gonna bring you different solutions. I can come up with smart solutions for all of those dollar amounts, but the results are gonna be different and the speed of the results. So I think there’s a level of transparency and trust that has to happen on the front end. And so, you know, again, if you’re not willing to trust them with some pretty superficial data. Then you’re not ready to actually work with an agency. We have agencies that’ll say, we’ve built in all of these measurement metrics so we can tell what works, but we can’t get sales numbers from the client, or we can’t get this from the client. Don’t hire an agency if you’re gonna play games. Either be all in and really trust them. Which means that you know what you wanna call some of their clients and say, look, does it feel to you like they always have their hands in your pocket and they’re always trying to get more money? What do they do for you that’s above and beyond? How do you what? What do they do that makes you feel like they’re actually invested in your success? Ask those hard questions, but ask ’em on the front end. And if you hear about an agency that they’re like, no, that’s not how they behave. They feel like a team member to us. They show up at our events. They do this, they do that. Then you know what? You gotta make the commitment and you’ve gotta really cross the line. If you’re gonna expect them to give you everything they’ve got, you’ve gotta give them the tools and the data they need to do their job well.
[00:17:29] Rochelle Reiter: Oh, I love, I love that you just said that. ’cause there’s so many times where we’re going in blind, right? We
[00:17:34] Drew McLellan: Right.
[00:17:34] Rochelle Reiter: don’t have a budget, we don’t have KPIs. They’re not, transparent with the sales. So, thank you for that. That’s such a good piece of advice. Drew, thank you so much for being on our show today. It was great to have you here and get your expertise on the agency world.
[00:17:50] Drew McLellan: You bet. My pleasure. Thanks for having me.
[00:17:59] Rochelle Reiter: Thank you for listening to The 19 with marketing agency consultant Drew McClellan. For additional insights from Drew, visit DrewMcLellan. com. To learn more about Orange Label’s strategy, data analytics, media, social, content, and design services, visit orangelabelmarketing. com.
[00:18:10] Rochelle Reiter: A special thank you goes out to our contributors, Creative Services Director, Kelsey Phillips, Copy and Content Strategist, Ashley Andreen and Design and Sound Director, Micah Panzich. Be sure to subscribe to The 19 Marketing Podcast by Orange Label on Apple Podcasts, Google Podcast and Spotify, and leave us a review!