The Truth About Agency / Client Relationships

[00:00:00] Todd: clients should want to be their agency's priority, and there's no way that's ever going to be a reality when you are trying to pay them less. , it's just not how the world works. Everyone Kelly McGuire excited to talk about today's topics.

[00:00:44] Todd: Everybody taught, Kelly's co founder. And today, we are going to kick around some contrary to maybe some popular or even just general opinions out there. We're going to dig in and unpack a subject that we often talk about, based on a digi day article that came out a couple of weeks ago.

[00:01:02] Todd: and this was relative to a Forrester wave reports, which anyone in our business sort of knows what those are and then a subsequent, Report that came out from media sense about remuneration for agencies. And so, to give listeners context, I'm going to go through a little bit of this article, Kelly, and just sort of bring out some of the key themes and points.

[00:01:23] Todd: And then I'm going to summarize those at the end, and then I've got some sort of key questions that we can, we can dive into and unpack, but context is key here. So this digital day article. Came out and it was coverage of the Forrester wave report, which was a report, about all the major agencies. And sort of how things are going.

[00:01:45] Todd: And it obviously covered all the holding companies. It doesn't get down into, into our independent agency level, but it gets even into some of the medium mid tier, hold co's as well as the big ones. And, part of this was. Transparency and transparency around compensation and compensation around business outcome performance, which is what we always say should matter, rather than anything else.

[00:02:14] Todd: So I always find it interesting when somebody writes about this and they talk about the industry in this way yet, we sort of continue to see things not really changing. As much as, we think that should change. It's good for us because we're the ones that are creating change. And if nobody else is, that's good for us.

[00:02:30] Todd: So, I always find that interesting. So some of the key stuff that I thought that came out of this was the conversation around compensation. again, this, the media sense report, I'll just read some quotes from it, reported for marketers, the highlight and they highlighted the disconnect between marketers desire for greater accountability and measurement, and that they're looking for more outcome based forms of compensation with their agencies.

[00:03:00] Todd: four out of five or 84 percent cited lack of data and measurement. Between advertiser and agency to measure outcomes as a major barrier. And I think that's a topic I'll definitely want to dig into because you and I share that frustration, but we share it with our clients because. They don't have the data to actually prove the outcomes in many cases to, or to help us prove the outcomes.

[00:03:27] Todd: And so, we're sort of working with our hands tied behind our back. another key theme was this, comment in here, where marketers still,look at their media agencies as partners that deliver a commodity. We've always talked about this idea that for some reason. Media planning and buying has been perceived as a commoditized.

[00:03:51] Todd: Service, which has no logical rationale to it whatsoever. I'm happy to, happy to debate that with anyone, but it is not a zero sum game. Never has been a zero sum game. It's always been quality people doing quality work will outperform those who aren't doing that. So it's always been a people game. and then finally it sort of goes into, as part of that message that there's the quote is there's a world out there where clients and agencies agree, that what they do should be a strategic growth driver, and, that should be something where, if there's a glut of competitors, they ultimately deliver the same thing over and over, and then it gives room for people to stand out, which is what our sort of brand promise and value prop is to the industry.

[00:04:36] Todd: And then, the final couple of things in here was the silver lining quoted in this article. Was that the report actually indicated that clients marketers are indicating and acknowledging that agency costs are going up. And I found that to be interesting because everything I read, seems to continue to showcase margin pressure on service providers.

[00:05:02] Todd: we feel it and it's, I certainly read and hear about it from more than 50 different, independent agency owners that I'm. In touch with, so it seems to not go that way, even though they're acknowledging that. So that's sort of the silver lining is that it seems like maybe while we're paying more for everything else in our lives, maybe marketers are finally realizing that, this, this final quote in here, that is, if you have the best team and the best culture, the best partner, you're going to win that championship.

[00:05:33] Todd: And in order to do that, There should not be any debate that you don't get the best team and the best culture and the best partner and pay less. There's no logic in the world that would agree with that. And so if you want that, and not everybody wants that apparently, but if you want that. You want the a team 100 percent of time, you have to pay the 18 prices and that's just a matter of fact reality.

[00:05:56] Todd: But, I think it'll continue to be an issue within any service industry like ours. All right. So that was really the context of the article. there were sort of 6 headlines that I took out of that are themes and it's accountability. Versus transparency. There's a disconnect there. some of that transparency is not just on the agency side.

[00:06:15] Todd: It's on the client side because sometimes they just don't have or can't share the data that we need to do what we do best or to connect the dots, which is the measurement challenge. There's lots of things we wish we could measure, but we don't always have all the connectivity of the data loops to measure everything.

[00:06:31] Todd: risk reward for, outcome based compensation. we have entered into very risky outcome based compensation models with wonderful clients. have they paid off yet?do they stand a chance to pay off? They could, and we're, we're willing to entertain that because we believe in what we're doing, the commoditization versus strategic partnership.

[00:06:53] Todd: And are you paying for that? Are you trying to negotiate that? And just assume you're going to get that, rising costs and expectations around that. Certainly labor costs have risen on client side agency side. the cost of a computer is more for a new user, cost of services are more of so on and so forth.

[00:07:11] Todd: So that's the table setting of this article, which I love anytime somebody talks about this. It's our favorite subject to talk about. So I have sort of 3 questions for us to kick around. the 1st 1 is, do we think clients are justified and their demand for more of this transparency from the agency to whatever that transparency is?

[00:07:37] Todd: It could be. I don't know, media transparency. It could be ad tech transparency. It could be staffing plan and hourly rate transparency. It could be. I don't know what it could be. It could be all those things. Right? But just the idea of the demand from a client to say, hey, I want you to lift up the kimono and I want to see everything under the hood.

[00:07:59] Todd: and if you don't show me that you're hiding something and, I, I mean, I'm not going to work with you or I'm going to pay you less or whatever. So this whole idea of demand of transparency, what, what do you think?

[00:08:11] Kelly: Yeah, so I think there's a lot to unpack there. Obviously, you've covered a lot of different things. And I have a lot of different thoughts around it. And I'll try and keep this as focused on the specific questions you give as possible. I think 1 thing that I want to paint the picture back to that you said to start out and I'll go back to your question is, kind of giving an analogy of the way I look at it when we talk about the commodity component,it brings it brings to mind the.

[00:08:36] Kelly: The analogy in sort of the car world, right? You can have an assembly line car, or you can have a handcrafted craftsman driven, Ferrari. And, technically they both drive, they go to the same place, all the, all those same things, but, it's very tangible and easy to understand that the difference is there.

[00:08:51] Kelly: And so I'll come back to that analogy when I think about, kind of the realities and that, We see this so clearly in other parts of life, but for some reason in the in certain industries or certain service type things gets lost in the shuffle a little bit circling back around to your question around the need for transparency.

[00:09:10] Kelly: My 1st answer goes more around if you are in a client agency relationship where you feel compelled or the need to require that level of transparency. Transparency. My argument is you're probably in the wrong situation and it's it's more of a symptom of a bigger problem that that is a concern or a worry that you have because I would argue.

[00:09:34] Kelly: And again, this goes back to the commodity component that I do not see. This is the right relationship. The right. Service that you should be getting should be less media buying as the singular service or commodity you're buying and more the experience that you're invested in. This is that partner side of things.

[00:09:52] Kelly: This is what you're going through. This is what you're experiencing. And if you are on a day to day basis, getting the experience out of your agency that you expect, that is driving value, that is. Proactively contributing to the benefit of your business. If you are getting the right conversations, if you're getting the right questions, if you are, getting the right information and the data and that engagement is happening in a way like it was your employee, like it was someone that worked for you that was thinking about your business and was challenging things and was, highlighting problems and going through that.

[00:10:26] Kelly: There shouldn't necessarily be this need of, do I need to, to dig in and go further and, what, what am I not getting or am I getting value out of my money? I mean, it's, it's, it's a value based service, right? You should be experiencing the value that you pay for. We always make the joke that we don't want any clients writing checks to us that they're not happy to write, that they don't feel like we're earning and that we are delivering value against.

[00:10:50] Kelly: And that's, it's easy and sort of hyperbole to say, but I mean, it's, it's really true. Now,

[00:10:55] Todd: Hold on. Let me jump in on this real quick. What do you say to that though, in that situation where maybe the people that are seeking this transparency or they're, some aren't really the people involved in the day to day relationship. For example, we could have a beautifully wonderful relationship with our day to day marketing.

[00:11:12] Todd: Clients and our marketing directors and people that we work with on a regular basis, it could be some CIO, CTO, CFO, COO, whatever person's lurking in the background saying, well, I want to see this and they don't. They don't know you and I from Anna and Eve, right? So the relationship right there from the person's asking goes out the door.

[00:11:32] Kelly: no, it's perfect timing and it leads me on a second point and it's Timing that we're recording this, I literally just got off of a call with one of our clients that is helping us go through this exercise where leadership is asking these questions, and they are positioning down on the pricing and what should it be and where is it as a goal.

[00:11:49] Kelly: And exactly what I said with them is, that's a reasonable question. You're cutting a check, you're writing a check and you're spending money asking what you're getting for it and what to expect from it and if things should be a certain thing versus a metric that you're getting reasonable questions. If I was in their shoes, I would want to know those things.

[00:12:09] Kelly: Now, the reality is, is the answers aren't always as crystal clear as you'd want them to be. There's a lot of caveat and nuance and variables and things that are in there. You should not be discouraged from wanting to know that information and go through and so the other side of the coin Well, I do very much believe that if you feel the need To have that level of transparency and you have a concern or you don't see the value that you feel like you have to dig into, that's a symptom of a problem, but on the other side of it, transparency shouldn't be a problem at all.

[00:12:40] Kelly: There shouldn't be a hesitancy or a reason to not share that if there is a desire for it. Going through the exercise of laying out, Here is the work that we do for you. Here is why we make the decisions that we make. Here is what we are driving. Here's the cost. Here's where your dollars are going, because that's what we're responsible for, for clients, right?

[00:12:59] Kelly: We are stewards of their money. We're fiduciaries of you are making an investment and seeking an outcome. It is our responsibility to be the expert that takes those dollars and makes the best. Informed decisions to make those dollars go as far as possible. It doesn't always work Media is not as simple as put a dollar in get two dollars out.

[00:13:18] Kelly: I'd love it If it was there's so many variables that are outside of what media can control on its own that determine whether or not There is the outcomes that you want and we'll put a pin in that because that's going to be part of the conversation on Why it's hard to do strictly performance based compensation models having that conversation being able to get clear answers is to Where are you spending my money?

[00:13:45] Kelly: What ad formats? What did you consider? That you just chose wasn't the right next place to put a dollar. Why is all my money in Facebook? Why is all my money on these search terms? Why are you choosing the keywords that you're choosing? Why, what technology are you using? How much is that being taxed on every dollar that I spend?

[00:14:01] Kelly: That's not going to buying more keywords. And where am I sacrificing volume for efficiency? All of these things should be open conversations because the us as being responsible, those dollars. should have a good answer as to why we are making every decision that we're making. It shouldn't be a secret, it shouldn't be hidden, it should be We are doing these things because we believe that this is in fact the next best right place to spend that dollar for that outcome.

[00:14:27] Kelly: Now, are we going to be right 100 percent of the time? I sure hope we are. I try to be, maybe not, but as long as it's intentional, it's well thought out. And again, putting a pin in a further argument that we'll have later, as long as you have the experience and the expertise and the knowledge to be the best person to know what the right, best thing to invest that dollar is in, then you should be able to have that conversation.

[00:14:49] Kelly: And that should be on the table again. You shouldn't have to have that conversation, but you should be open and willing and able to have it if you need to. And especially if. If your day to day contact, you have a great relationship, or you should have a great relationship if their challenge from up above from someone who doesn't know it, and you need to simplify the story and arm them with that, you should easily be able to do that.

[00:15:12] Kelly: You should be able to go through and say. Yes, you're spending a million dollars with me and here's where those dollars go and here's why I'm doing what I'm doing. Here's why it's the right thing. Here's why I am doing the best I can for what I can control on your behalf because that's your job. That's what you get paid.

[00:15:28] Kelly: Whatever fee you get paid is to do that.

[00:15:30] Todd: I agree. I guess we have to try and get everybody else to agree to that. all right. So let's talk about risk and reward and, and sort of compensation.we have long discussed this and our business model has always been about risk and reward. we have a unique business model. We put a ton of risk up front, takes a long time to recuperate that there is a big risk in that.

[00:15:56] Todd: And sometimes there's a nice reward and payoff. So the question is, should agencies take on more financial risk for potential higher rewards, or is the current model just sort of safe and don't mess with it type of a thing? That's, that's the key question. And I think part of that is are we just simply supposed to be immune to the rising costs of labor and ad tech and that for some reason, our clients are just supposed to be immune to those costs rising for the service provider and we're just supposed to.

[00:16:30] Todd: I don't know. Figure it out. Wouldn't you argue that that might be why agencies might be doing things Under the hood to make up missing margin because they simply cannot Pay the the increase in labor they increase in ad tech and yet still charge the same thing or less And make ends meet so is there so there's that part that's part a how are we supposed to do more and get paid less?

[00:17:01] Todd: and then part B is should agencies consider more risky financial arrangements with their clients, as we have, I don't suppose the big ones can do that. Maybe they can. I don't know. They're publicly traded company. So they probably can't risk their shareholder value. but on the Indy side, maybe that's more possible.

[00:17:20] Todd: What do you, what do you think about part a and part B,

[00:17:23] Kelly: Yeah. To be careful here or else we're going to end up with a three hour long podcast here. so I'm going to try and keep it as succinct and summary as I can. And so. I mean, really where, where my head goes with this is, is again, it's carrying off of what we just talked about, which is. Well, why, why would someone be hesitant to the transparency and the openness to basically what I, what I just said, and this is where it's a very slippery slope on what the realities are.

[00:17:48] Kelly: The only reason in my mind that you would be less than ready to have that conversation or not necessarily want to go into that is if. Not not necessarily have something to hide. I'll temper that down a little bit into maybe something that you're less than totally proud of, right? If you aren't deploying the best talent on there, if you're not going above and beyond and really pushing into the boundaries and exploring every rock and really taking on that partnership responsibility of pushing through, if you are cutting corners or maybe not doing quite to the nines, You probably want to be able to have some deniability and some some protection before that gets uncovered and you're sort of exposed in that way and where that happens and again, this is something I feel like you've lectured me on a lot is And I do believe that the vast majority of people have the best of intentions and desires for the most part.

[00:18:43] Kelly: They want to do the best work. So if I then assume that as a for granted, which, is a slippery road, but let's, for the sake of argument, say that's the norm. What would cause that to not be followed through upon? And then that comes into the business structure problems that force certain hands or can force hands if you're not careful, which is there's only so much.

[00:19:02] Kelly: Be your compensation in place, which means you can only afford to pay for so many hours from so much senior leadership that has such a high salary that goes through and only so many times and you have to maximize it out. And so this is where you end up with. While I can't afford my 6 figure salary person on there, I need the freelancer to do it or whatever.

[00:19:21] Kelly: I need the, the outside resource to do it, or I need, I need a tool and machine learning that can go generate efficiency at the sacrifice of certain things. Like, you start to have to cut these corners and find these areas that I would argue oftentimes lead to less than the most ideal results, which then has a waterfall and trickle on effect that kind of can create this environment of.

[00:19:43] Kelly: Now, it's a shell game of I have to appear to be delivering on what you most likely did to win the business, which is promise the A team or promise the world. But now you don't necessarily have what it takes to always show up and do that. And so it's this very interesting opposing objectives. That that exists between What it takes to win them is and sorry i'm just going to extend on the next thing It takes a lot to win business these days You have to promise the world like no one's hiring an agency that came in and said i'm going to do mediocre work for you I'm going to put in you know My b team on your business and it's going to be good enough like you win business by promising the world and then figuring it And oftentimes it's a salesperson who Not even involved in the execution after the fact all that much.

[00:20:26] Kelly: And so it's a whole different set of people that may not even work at the agency yet, who's going to have to take on those promises and fulfill upon them. So that's a whole problem that exists as well. But you know, and then you have this opposition of rising agency costs and what we have to go through.

[00:20:42] Kelly: And then you have clients who are under that same pressure, right? They need to lower their costs. They need to maintain results. And so they can't just be like, sure, your costs go up. I pay up.

[00:20:52] Todd: but they're not lowering their cost. Just a quick interjection on that point. They're not. So if you're a CPG food, Product that's being sold at grocery retail for the last three to five years. You've done nothing but raise your prices. Why? Because the rest of the supply chain has raised their prices.

[00:21:07] Kelly: They're not in the business of distributing those profits around there. They're in the business of maximizing their bottom line and the pressure they're under. And so it automatically creates the everyone's trying to maximize everything everywhere and it creates this conflicting relationship dynamic if, if the relationship is not built in a mutual way where there is an understanding of if we all benefit together, all, rising tides lift all boats kind of thing where there is that synergy and, things go up and down together,sometimes for us, like, how many times do we have to make decisions for clients where things aren't going as well as they are?

[00:21:41] Kelly: And, we don't track hours for a reason. We're like, look, it's all hands on deck. I'm not tracking how many hours or how many meetings or what's in there. We have to figure this out. We took on the responsibility of a client's outcomes and it's on us to at least do our part in solving the problem, regardless of the outcome.

[00:21:59] Kelly: How many hours I have, but there's no controller over us saying you have six hours to figure this out. And if you're on hours, you got to wait till next month to solve this problem, right? We have to be problem solvers, but to your point, we have to be paid to be problem solvers, not service providers. Like there's all these different ways to look at it and what you get, what you pay for all these problems.

[00:22:20] Kelly: And I'm kind of going all over the place here, but there's so many different angles and components to factor in here that it gets, it gets really tangled really quickly.

[00:22:27] Todd: Well, the, the, the matter of fact, point of that story is, and I don't, people may disagree with this as we, as an age, me as an agency owner. My job, part of my role and our relationship is hiring and staffing to service our business and deliver on our brand promise in order for us to deliver on our brand promise.

[00:22:45] Todd: We have to hire premium people because that's our brand promise. It's a premium service brand promise. So I have to hire premium people and I have to play pay premium wages. How am I supposed to provide that work for industry average or less? The mathematical equation, you could be a second grader to understand that doesn't work yet.

[00:23:08] Todd: That's what this article talks about is that, maybe some clients are starting to realize that. Yeah, things are going to go up, but the large majority people still believe. Hey, I got to cut to your point. They got to cut costs. They got to try and make up. Where they can all the while they're charging more for their product or service that they're selling to whoever they're selling to in many cases.

[00:23:28] Todd: so I, it doesn't none of it really makes sense. But the point of that this question was should agencies consider more risky financial arrangements like Deferred comp or or compensation based on hitting certain kpi milestones like we're only we're going to get paid a base fee Basically, we break even We're not making any money.

[00:23:53] Todd: And the only way we're going to make any money is if we're uber successful. And if you think about that, one more point to add, if you think about that as a media agency, media is not the only thing responsible for a client having success. What if their product just sucks and people don't like it? What if it's not priced competitively?

[00:24:12] Todd: What if the user experience or the shopping cart process is terrible and they, and they have card abandonment? What if all these other things affect. Conversion sale and revenue, yet the media gets the blame and the media is taking all the risk. The media agency is taking all the risk for things that they can't even control.

[00:24:33] Todd: Should we, should we be doing that?

[00:24:36] Kelly: I want to answer that, but I don't want to get lost in another point really quick. So I'll come, come back to that. And if I don't circle background, please let me know. But cause you said something really important there where it's, we have to hire and we have to find the talent. We have to get the people that are able to fulfill on the promise.

[00:24:51] Kelly: And this is where I go back to. The experience and I think this is the uncertainty in the unknown of what we do and the sort of behind the curtains nature of some of what happens create some of this problem, right? Because if you don't know, if you're not exposed, if you don't have the experience that I'm talking about that makes it crystal clear what you're receiving, it's really hard to know what is the difference between a tool running Google search or Google Gartner.

[00:25:18] Kelly: Again, someone overseas making 5 an hour doing it versus someone who's got 20 years of experience and is great at doing it. Like, unless you are seeing these incredible results, which, again, is not always singularly controlled by the media only. It's hard to necessarily know exactly what's happening in the back end and all these things that can be done from terribly to you know Really incredibly but that's not abundantly clear.

[00:25:48] Kelly: It's not in your face. It's not crystal clear like For example, creative, right? You can see the outcome of creative. Like I like the way that looks, I love what was produced for me. It's there's no ambiguity as to what did I get out of my money? It's in front of my face. I either like it or I don't like it, or it hit the marker.

[00:26:05] Kelly: It didn't hit the mark. What we deliver. Isn't always that obvious and that clear and that known, and it creates this black box of possibility that I think it's exploited a lot. That idea of the black box of what gets done is heavily exploited in this problem. And I will add one of the biggest problems that exists in our industry is there's always somebody willing to over promise and under deliver promise the world for cheaper just to get someone to move and commit.

[00:26:36] Kelly: And they don't care if they only get it for six months or a year and they lose it because it's revenue and it's a churn and burn system and and it creates this problem where you're constantly in this defensive mode of we are delivering value. We're going above and beyond, but someone's whispering in your ear.

[00:26:50] Kelly: I'll do it for cheaper. I'll do it just as well. I'll promise you the world and. How do you know what you don't know if you're if someone's really good at selling that and making you believe in promise? It I think it's a self fulfilling problem overall.

[00:27:03] Todd: It is. am I, yeah, that question I, that you wanted to come back around to was.should agencies

[00:27:11] Kelly: yeah,

[00:27:11] Todd: take a financial risk position with their compensation, at all, case by case, never just leave

[00:27:21] Kelly: a I think there's a couple of considerations to it. I love that idea I I definitely do and we've done that I think I think there has to be a very specific set of circumstances and tolerances in place to make it practical. As you said, there's only so much control that media has, right?

[00:27:38] Kelly: So, if an agency takes on the risk of we're not going to make any real profit.unlike, we're not a charity where, it's a for profit business, right? There's risk involved. There's opportunity costs. There's major opportunity costs in taking in business, especially at an independent level.

[00:27:56] Kelly: there's only so much. Excellent talent to go around. So factoring the opportunity costs that you're factoring in there, and then looking at what if we do the best job that you can possibly do from a media perspective, and one of those other variables that we have no control over creates. Less than ideal outcome, right?

[00:28:15] Kelly: What if they run out of inventory? What if their website goes down? What if their CMO quits and it just goes downhill from there? What if they get sued because they don't have the IP that we knew or the copyright that they want? Like, there's so many things that you put up to risk that you can't control, and then it's out there.

[00:28:32] Kelly: And so then you have to look at, let's say you vet that out all out and you feel pretty good. This is a good company, well structured, good product. I believe that it should be able to, there's every reason in the world that it should have the chance to succeed, especially if we fill the gap that we're being brought into that should put fuel on the fire, right?

[00:28:53] Kelly: There's, there's something tangible there to believe in and we should be able to help Exponentially grow this thing, which is again, our job and our role. Let's say you believe that now you have to have the tolerance for compensating for the risk, right? If I do my job and I get paid for it and I take on the opportunity costs and everything, I need to get paid for that at a certain degree of profitability.

[00:29:15] Kelly: And I would argue the better you are as an agency and the talent, everything you bring in. Like anything else, the more valuable that time and that profit level should be. And so if you're risking that or deferring that or whatever you want to do, you have to be exponentially compensated on the backend.

[00:29:32] Kelly: If you achieve those results. And I would argue it's not a one to one, right? If, if you're going to defer half of your fee or whatever your profit margin would be, and then you hit the goal that you've agreed on, you should probably be making three, four, five X what you otherwise would have. If you just took the fee in the first place, because.

[00:29:54] Kelly: it's, it's that, that actuary math that you have to come through and be like, okay, what is that risk and possibility of not getting paid out? And the, this is what sports betting does. What's the probability of an outcome versus the payout. This is why, if you do a parlay, the more you go through and the less likely the outcome is the higher, those crazy payouts become.

[00:30:12] Kelly: It's not unlike that consideration that you have to think about it. Not everyone is tolerable to that. And honestly, not every business is conducive to that. Like sometimes. Especially if you're in a startup, which is often most friendly to these types of things, you kind of need to know where your dollars are going to end up.

[00:30:27] Kelly: You can't just be like, well, I got my results, but I had a big payout. Sometimes you can, because it's easier to spend money that you get if you achieve a result than it is without it. But these are all the complicated factors that have to be thought through. So it's not just as easy as being like, it'll be crystal clear, the role we played in the goal you hit, and there's no other factors outside of our control.

[00:30:48] Kelly: So this is an easy process to come to.

[00:30:51] Todd: Yeah, the sports bet analogy is perfect because it is a gamble. It's a gamble on both parties sides, but I don't know that the, the client hiring the agency and asking the agency to take a financial risk based on that really is, is taking equal. Side of that, right? They're going to get what they're going to get pay what they're going to pay and they only have to pay something.

[00:31:13] Todd: if they have success, they have no risk. The agency is the 1 that's taking. I guess the risk is it doesn't work and they, their business doesn't grow or whatever.

[00:31:19] Kelly: that no matter who you pick because anyone could

[00:31:21] Todd: You're going to risk that anyway. Yeah, the agency is taking all the risks. So, again, I find this. Fascinating that this article is prompting the conversation of agencies taking on more risk.

[00:31:33] Todd: But to your point, why would you do that unless the upside is going to be more than what just equal payout would be, I think is the bigger part of the conversation. I want to move past this subject, because we've beat this one up, but that's where we'll leave that question. if, brands out there, if you want us to take on more risk, you have to be willing to give us more upside.

[00:31:53] Todd: we'll leave it at that.a future of agency clients relationships was also sort of the final point in here. and it, and it sort of opines about, are they more collaborative now or heading in that direction? Are they, are they. Getting more increasingly transactional.we can probably only speak from our experience.

[00:32:14] Todd: I can also speak from my wider, independent agency sort of network that I'm involved in. I'll just share that. I think my opinion on that is seem to be less transactional. I do think I see more closer, intimate rel reliance and relationship development between brands and agencies. Again, I, this is on the indie agency side.

[00:32:37] Todd: I don't know what it looks like on the big, hold co side of things. I would say, it, it looks less transactional unless you're just sort of a one and done, like a website type of thing, just building a website. But even those firms would argue that there's more work to be done after you build the website that that's ongoing.

[00:32:53] Todd: And I think part of the, the trend, even though there, I think they're going more collaborative part of the transactional piece that I have seen, which plays back to something we've been talking about in this conversation, the transactional nature of the agency that does sell the work for a cheaper price.

[00:33:10] Todd: And I've literally heard. The people that did that say, and now we're just going to go hire a cheap offshore team to do the work because that's all we can afford to do to make a profit. And so, because the client paid us what they're paying us. Now, we're going to go deploy an off an offshore team for 1 5th of the labor cost.

[00:33:31] Todd: And that's what the client's going to get. Client doesn't necessarily know that, they think they're still getting a great product or premium service. And yet it's being fielded and serviced by, an offshore team at, at a fraction of the cost. Anyway, more collaborative or more transactional. What have you witnessed?

[00:33:49] Kelly: I'm going to make a pretty bold blanket statement in my experience. Maybe, maybe this isn't true for everyone, but I can say, I can't think of a single scenario, whether it's media, whether it's development, creative, any, I can't think of anyone I've ever heard say I took the cheap out of the box commoditized route, and I was thrilled with the outcome.

[00:34:09] Kelly: I loved it. I loved what I got out of it. It was exactly what I wanted. I've heard endless numbers of stories of I tried it. It was a nightmare. It didn't work out. I had to undo it I had to redo everything like it's just Maybe maybe there's someone out there that has figured out how to just templatize it and create the machine and it somehow works Now i've never heard i've never even heard I've never even heard that outcome of I just set it up in Facebook and let him run with it.

[00:34:36] Kelly: I just set it up in Google and just let him run with it. I just set it up on this tool or this wizard and it just ran and it was perfect. And I got everything I wanted out of it, all the insights and the data and the learnings. And it was wonderful. And I never had to touch it. Like I've never heard, I've never heard anything even close to that being the outcome.

[00:34:52] Kelly: cause I wouldn't expect it to be possible in that front because I do think the collaboration component goes back to the experience that you should be developing. Is that is it? Like you should be hiring an agency. And I, this is the Hill I will die on. I've said it a hundred times. It should be like you are hiring employees of your company.

[00:35:13] Kelly: You should experience it. Like you're hiring employees of your company. You should rely on this partner to fill as many marketing gaps as possible. Yes, they might buy media for you. But it should be so much more than that. And it should be an evolving relationship where the people working on your business and learning it and understanding it, stay with it over time.

[00:35:34] Kelly: And they understand your business. They understand your nuances, and they have a history of knowing what does and doesn't work and what's been tried and where it's been. just like having an employee who's been with you for Five, 10, 15 years. There's so much value in the history and the knowledge and the evolution that they have with your company.

[00:35:51] Kelly: If possible, that is what you should get out of your agency. It honestly should not be easy to just replace an agency. That's been with you for years with a new person, that new agency should be, should have a very hard time because they have to onboard and learn and understand the nuance and dive in and get the history and all of that.

[00:36:10] Kelly: If you feel like you could just get rid of your agency tomorrow and replace it, no problem. Again, that's a big, big flag of the wrong problem, the wrong symptoms. You should feel like you would experience a lot of pain if you lost your agency because they know your business so well and they, they ask questions you don't even think to ask about and they bring you ideas and they're, they're challenging things that you didn't think to challenge or they're.

[00:36:32] Kelly: they're picking up the phone when you have an emergency and they know just where to go and just where to answer and they're, they're trying to help you solve problems, that's what you should be paying for and that's what you should be willing to invest in. And honestly, I would pay two, three X for that.

[00:36:46] Kelly: If it came, if I had that choice versus the, just someone runs my Facebook ads for me and it's great. Someone, someone buys keywords on, on Google for me. And I expect a five X return in a long customer lifetime value out of that. These are all choices. There's scales of it, but that collaboration to me is so critical.

[00:37:05] Kelly: It should be an extension like you have that fractional marketing team that acts like a marketing team, not a, not a service provider, not a media buyer, but a, A person that knows you and says, oh, man, we should try this audience. And when, when this created be cooler, this thing didn't work last time and last year, but I remember we ran this thing and we should try it again here and bring ideas that should evolve and grow and, and be the experience you have, and you should be willing to pay for that, just like you would be willing to pay for your own employees and you pay the salary of the good experience.

[00:37:38] Kelly: Great person who should bring to measure it value. With what they command in terms of compensation.

[00:37:46] Todd: And that's a good way to, well, we framed it up that way multiple times. And I think it's a great way for anybody in our business, listening to this, to frame it up that, you should pay for our people as if you were paying the salaries of your people. And I'm pretty sure you're not hiring people going, let me see how cheap I can get this person and beat them up and expect them to do the best work.

[00:38:04] Kelly: think about it as well. There's even a weird little nuance in it. Let's say, hypothetically, you did that, right? And you had a team that was working on your business. And hopefully, you were lucky enough to have them work on your business for years. Well, what does every employee want every single year?

[00:38:16] Kelly: They want a raise.

[00:38:17] Todd: and they want more money.

[00:38:18] Kelly: more money, right? Literally, if you are lucky enough to have senior quality talent that hopefully is knocking you out of the park and crushing your KPIs, they want to be recognized and rewarded over time for that growth, but you don't usually review the compensation you have with your clients every single year and have it go up in comparison.

[00:38:37] Kelly: You don't even make the connections between something as simple as that reality in an ideal scenario.

[00:38:44] Todd: you and I make that connection, which is why we're bringing it up on this podcast. I don't know if anybody's listening to it, but,that's the idea, right? How can you expect. To pay less when everything else goes up, there's no common sense or logic that supports that rationale. Yet companies and marketers are faced every day with trying to cut costs as if cutting costs is going to somehow,improve their, their bottom line, long term it'll improve it short term.

[00:39:13] Todd: But if you're cutting those costs and your marketing efforts fail, as a result, your growth. It's going to be stunted. Now you have a bigger problem down the road versus the short term gains. You, you got at a cutting cost, but I, I digress. We've kicked this around a lot. I'm going to wrap this up. any, final closing thoughts about this, this article and this topic, which we love to debate.

[00:39:35] Kelly: is just It's it's understanding and taking the time to really think about this is no different than everything else in your life, right? It's it's thinking about the other side of the coin I oftentimes feel like I benefit greatly by putting myself in the shoes of the other side and that includes clients Right, like I said when I just got asked this by our clients, you know the the challenging of you know Should we be paying this rather than being defensive and saying well, why would you ask that don't ask I I was like Okay, if I was in that role I would have this question that'd be valuable information to me and that allows me to then think about how do I deliver what I would want if I was over there.

[00:40:14] Kelly: And again, we, we run, we've been involved in companies where we've hired providers and things like that. And I've said this before. I have consciously followed what I suggest here, where I have had multiple quotes from different places and I have specifically chosen not to pay the lowest cost. Because I understand you get with paper.

[00:40:33] Kelly: I've even run into scenarios where I've gotten a quote back from a provider that I felt wasn't fair compensation for what I was asking them to do. And I've offered to pay them more. Because again, I want to be that person's priority. I want that person giving me 110 percent and I understand the reality of why they're working for me.

[00:40:51] Kelly: It's not because I'm so wonderful and so great. Shifting and thinking about that side of the coin and not just your bottom line and where you're going, I think can be so beneficial in the outcomes you get and can reduce that churn and that chain having to change agencies or be promised the world and be disappointed over and over again.

[00:41:10] Kelly: If you approach it differently, I think you can really get what you want out of it and that little bit or even significant amount of extra cost. In my opinion will always pay what what's the saying in products, you know it I forget what it is It's something like, if you buy it buy it once and it's buy it buy it right or buy it twice kind of thing you know it like everything else it holds true here pick right or you're gonna be picking over and over again Every couple years and that's really painful.

[00:41:40] Todd: I think a key thing to end on is clients should want to be their agency's priority, and there's no way that's ever going to be a reality when you are trying to pay them less. it's just not, it's just not how the world works. So, I typically ask you at the end, what ad, do you recall seeing recently, but I'm going to ask myself that and not in that same context, but I do want to throw a shout out to something, an ad vis a vis becoming a client of ours that I saw this week.

[00:42:12] Todd: And last week that I do think is really, really cool. And I do think it's sort of a, a mover shaker difference maker in the market. And that is, the new mobile service by mobile X. I like what they're doing. I like their creative, I like their value prop. I like their offering. I like that, that this is somebody who founded one of the biggest companies out there and is now trying to kick that old model on their head very much like what we're trying to do in our business.

[00:42:41] Todd: so I'm a big fan and I hope that they have a lot of success because I think it's a, it's a great way to, Use your mobile service. So shout out to mobile X. cool, cool advertising they're doing as well. all right. let's wrap it up. We said a lot as we usually do about this topic, and I will hope to continue to say more as people continue to address it in our industry.

[00:43:02] Todd: Thanks for joining and, spreading all your words of wisdom. Appreciate it.

[00:43:07] Kelly: Thanks everyone