3 (More) Reasons Why Ad Agencies Fail

iStock_000012340050_SmallLast week’s Struming , 7 Reasons Ad Agencies Fail, was not a happy topic. However, it was one which clearly hit a hot button based on the feedback I received from agency leaders locally, as well as throughout the U.S. While I thought the previous Struming covered the main issues about agency failures, I received lots of feedback about a few other critical reasons that I initially missed.

So beyond the original 7 reasons, here are yet 3 more reasons why ad agencies fail (Gratefully, this will be the last Struming in this series, lest I be seen as “Debbie Downer”).

1. Lack of marketing

I’m always surprised that marketing firms are weak marketers, but sadly this is often the case. Obviously the lack of marketing doesn’t create a fast demise, but as accounts are lost over time (and yes they all go at some point—for whatever reason) that’s when agencies get religion and want to accelerate their marketing. Alas, since professional services marketing is a marathon and not a sprint, the agency is in no position to reap the benefits of past efforts. Agencies which market themselves proactively over time most often succeed. Those that don’t, often fail.

2. Buy. Buy. Buy. Lots of ill thought through acquisitions

I’ve seen this first hand. More is not better. Many agencies look at an acquisition through the happy lens thinking that 1+1=3. They look at only the supposed additional services, clients, and economies. The pro forma P&L of the combined business looks great. Then whammy. People leave, clients leave, efficiencies are not gained and 1+1=1.5, or less. Whatever you assume you’ll be gaining should be reduced, and you’ll need time focus, and great sensitivity to work an acquisition through. In the end, advertising is a people sensitive business. Greedy agencies often forget this.

3. Technology laggards

Those that look at digital marketing as a grudging “capability” are sure to be left for dust in the future. Underlying their bravado of “leading edge” capabilities, many agencies are in fact very resistant to change. And there’s no time that change has impacted the industry more than the present.

So that’s it. The original 7, and 3 more very good reasons why ad agencies fail. Don’t let it happen to you.

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