Social media is still relatively new, especially to ad agencies, but I want to make a prediction:
The small-to midsize ad agencies that make social media central to their business model will find success and thrive in spite of the recession.
You’ll soon know who they are because they’ll be the ones hiring.
I recently posted an interview with Jaci Russo, principal of The Russo Group, a full service ad agency in Layfayette, LA, Ad agency having explosive new business growth by leading with social media. The podcast has generated lots of interest, traffic, emails and phone calls from agencies across the country. I was sure that it would because small-to midsize ad agencies have been anxiously searching for news of other agencies that have figured out what to do with social media, how it can generate income and how it changes their business model.
The Russo Group is a great example. A full service agency of 19 in a town of about 180,000 people that previously obtained most of its business within its own market. They’re having a breakout year with 8 new accounts since the beginning of the year, profits up 104% over this time last year, 94% of the new clients located well outside their market. Their new clients are located in California, Florida, Illinois, Iowa, Pennsylvania, Texas, Washington, Washington D.C. They even have a new account in London.
How did The Russo Group do it?
- They were convinced that social media was going to dramatically and permanently impact their agency along with the entire advertising industry.
- They developed an understanding of social media first by listening, then experienced if first hand as participants.
- They promoted their agency through social media and they did it the right way. Social media forces your agency to do new business the way it should have been done before social. It’s all about your audience, not about your agency. It compels you to lead with benefits and value to your audience and the moment you start to “sell your agency” you will lose them.
- They used the tools they recommend their clients use. What a novel idea. It’s also a powerful demonstration to prospective clients when an agency practices what it preaches.
- They stopped being everything to everybody. Their agency would not appeal to everyone but to those it did would have a very strong appeal. Strong enough for the prospective clients to initiate the call. That is in line with Forrester’s research of CMOs, where 80% found their vendor, not the other way around.
- They led initial prospective client discussions with the benefits of social media and how it provides a smaller investment of financial resources, greater ROI and measurable results (the benefits to the agency is that it is time intensive, you bill for your agency’s time and it has very little hard costs).
- They understood that prospective clients want to work with people they know, like and trust. Social media provides efficient and effective networking. They are able to create awareness nationally with prospective clients that are the best fit for their agency. They are no longer dependent upon local business, personal local networks and referrals, though that business will still be there for them.
By the way, if you know of someone looking for a job, The Russo Group is hiring!
Social media helps agencies create a more clearly defined focus and differentiating business strategy that will give them a competitive advantage for new business, a higher-profile reputation, and an improved ability to attract and win the clients they really want.
Additional articles that may be of interest:
- Four Ways Social Media is Changing Advertising Agencies New Business
- Ad Agency New Business News from the Front Lines
- Ad agency having explosive new business growth by leading with social media
- Social Media “Teaches” Ad Agencies to Promote Themselves the Right Way
- Difficult Times Create Opportunities for Small-to Midsize Ad Agencies
- Social Media: How to Generate Leads for Ad Agency New Business
What specific types of ad units or conversion mechanisms are the Russo Group using to monetize social media? I think there’s a perception (probably correct) that conversions with a CPM model in the social media space are relatively low.
It’s clear that having a sales force who knows how to sell the story can dramatically raise CPMs. Is that what you’re suggesting, or are you talking about something entirely different than a CPM model?
Jim,
I think that it is important to realize that CPM’s will most likely be going away as a pure form of measuring social media ROI. If you can spend $20,000 on a ad campaign that gets Twitter talking for a few days about your product, that word of mouth ROI on social networks is worth way more than the $20K the brand might spend on CPM banner ads.
Just my opinion.
Interesting point, Greg. My concern resides with the fact that the only campaigns that worked with Social Media imho have been campaigns about Social Media products. You sensed very well that the new industry buzz-word is “Word of Mouth” with its variations – I am afraid this is just plain and simple reluctance to admit that we have been telling brands to shell out on the likes of Facebook and Twitter with no visible results and now we found a quick getaway behind “building an engaging brand”, the power of “w-o-m” and other Web 2.0 catalysts. This might be just another bubble ignited too early, when the financials could not digg out enough resources to sustain it.
I agree very much in the power of mastering social media as part of a small agency’s business model. Our agency’s success is due in part to our desire to always be relevant. We made it through the dot-bomb by forming alliances with influential bloggers when very few our our large agency partners knew what blogs even were. In more recent years, we’ve maintained our edge by bringing our expertise with social media to our B2B clients. Now, on the dawn our 10th anniversary and a celebratory major re-brand of ourselves this July, we’re adapting once again to stay on the edge and challenge ourselves to lead the next movement in digital marketing.
With that comes the commitment to develop the ROI of social media for our clients AND continue to increase the value of engagement. So many times I see brands throw themselves up on Twitter and Facebook while making the assumption that they are now participating in social media. That’s only one of three elements needed for success. What is the business engagement and how are you developing a relationship that will drive conversions? It’s back to marketing 101 with social media folks: deliver a message that will create genuine interest relevant to your audience then illustrate how your product meets their need. Visible results can be illustrated if you measure everything (even it seems irrelevant) and understand how back your strategy into your pre-determined finite objective before you start. We predict measurement should become easier, not harder.
I’m thrilled to hear of agencies like The Russo Group who have also found a business direction they can own, and more importantly that their customers value. What’s more, it’s great to see that as marketers we’re all practicing what we’re preaching by contributing to the collective intelligence of our field and working hard to ensure it’s reputation and longevity.
Marcelle is the president of MindComment headquartered in Orlando, FL. I would encourage you to review her agency’s website at http://www.mindcomet.com
Marcelle, thank you for your insights!
Actually using social media tools is important for ad agencies. But enjoying success with at least ONE of the tools is also key!
I continue to be amazed at agencies that pitch social media to clients when the agencies a) barely use any of the tools themselves to build, organize, or grow a community and b) have no agency self-marketing success stories to demonstrate.
The kicker: many clients have more experience and success with social media than the ad agencies that are doing the pitching! This is really an eye-opener for clients: many of whom realize that these ad agencies are carpet bagging.
Brava to agencies like Russo that demonstrate success first — before they pitch the client on their “expertise”.
Thank you Laura. I totally agree. It will be easy for clients to spot the carpet baggers.
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