The Agencies Winning New Business.

Happy Q4 of the financial year (for those who celebrate). In my last email I mentioned that agencies doing well v struggling seems to be a 50/50 split at the moment. Almost to illustrate the point, it looks like we've lost two industry stalwart agencies since then in Brother and CX Lavender. But also, two of my clients are struggling with a pipeline that's too busy and feels overwhelming.

After a couple of follow up calls and Qs from that newsletter, I thought it'd be a good idea to share what I'm seeing in agencies that fall on the 'good' side of that 50/50 split. Anecdotal evidence etc etc, but I think there's something there.

As always, book in a time if you want to chat agencies or argue about what's in this email.

Getting narrow

Most of the agencies performing well aren't trying to be everything to everyone. They've made a decision to be narrow somewhere.

That "somewhere" is the important part.

There are a few different ways this shows up, and they're not all equal in terms of risk or practicality - particularly in a small market like Australia. They either:

• Do less stuff
• Choose a lane (industry/business type/client problem etc)
• Communicate with narrow messaging

Doing less stuff

This is the most common one I see working well.

A small number of core services that the agency is known for. That's what they lead with, that's what they sell, that's what they build case studies around.

They might still do other things, but they're clearly secondary. Add-ons, not the main gig. Maybe even a secret-menu item for existing clients (I love this approach, personally).

The benefit here is pretty straightforward.

It's easier to understand what you do, it's easier to build a referral ecosystem (since you're stepping on fewer toes, and it's easier to build frameworks and repeatability into delivery.

Where agencies get stuck is trying to keep everything equally visible, usually because they don't want to say no to work.

Almost every agency I talk to that is struggling at the moment lean on being a 'full service' agency. Not saying that all full-service agencies are struggling, but most agencies that are struggling seem to be full service.

Choosing a client lane

The second version is being known for working with a particular type of client.

Most commonly that's industry, but it doesn't have to be. It could be business model, stage, or a specific type of problem.

The upside for the client is your depth of knowledge.

You build real domain knowledge. You understand how those businesses work. Your case studies become more relevant. Referrals tend to come more naturally because your clients know other businesses like them (don't get me started on the type of client that comes to an industry specialist agency and then complains about a conflict of interest because of other brands on the agency roster. Come on. Seriously?).

You do need to be careful here to choose a lane with sufficient customers to actually support your agency though. We start getting into risky territory when there's only a relatively small number of potential clients and for your business to be a success you basically need to capture the entire market. That's not a reasonable business case.

Narrow in how you communicate

The third option is more about messaging.

You might still offer a relatively broad set of services to a relatively broad group of clients, but you get very specific in how you talk to different segments.

So instead of saying "we do X for everyone", you're talking to a particular type of client about a particular problem, in a way that feels relevant to them.

Friend of OTTESU Alex James writes about this a fair bit. I was sceptical initially but I think I buy it. That being said, in my opinion this can be hard to execute well, and requires some fairly sophisticated messaging in your marketing materials.

It requires more discipline, as it's easy to drift back into generic messaging over time. It's also harder if your offer is genuinely broad.

But when it works, it can give you some of the benefits of being focused without actually restricting what you sell.

Don't do all of them

I'm pretty deliberate in saying one of these, not all of them.

There's a version of this where you try to be narrow in what you do, who you work with, and how you communicate, all at once.

We're getting heavily into my opinion here, but IMO that sort of rhetoric comes out of markets like the USA and isn't applicable here. You'll niche yourself to a TAM of 3 and go broke.

We simply don't have the same scale as the US. I mean, we have 8% of their population. It's realistic therefore to assume that any hyper-specific niche in the US has 12.5x more people (customers) in it than in Australia.

This is all back of the napkin but I think it holds true-enough.

So get clear on some level of positioning, but don't niche yourself into an empty pipeline.

Investing in marketing

It's not hugely surprising, but those still doing well have committed to always on marketing for their agencies. PR, advertising, newsletters, thought leadership etc.

Not perfectly differentiated, but distinct (and often) enough that when a client goes to market, they're already familiar. By doing this well, you end up on or skipping the pitch list, since the prospect is already interested in working with you.

Getting back-of-house in order

The other common thread is what's happening behind the scenes.

The agencies doing well generally came into this challenge period with their back-of-house in good shape. Which basically means that they understand what drives margin in their business, whether that's split by service/project/client/team etc.

Because of that, they're able to price in a way where work is reliably profitable from day-one, rather than relying on a land-and-expand strategy to offset winning by pricing low, or (even worse) pricing based on gut feel and then not measuring business outcomes.

Being reliably profitable gives a business options.

They can invest in marketing when things feel quiet, hire ahead of the curve when they see opportunity, and respond in a deliberate, considered way when challenges arise.

Okay, now what?

I left it 'til last, but the first thing I would do is get back-of-house in order. It's not sexy or interesting work, but if you've never focused on it before there's going to be significant opportunity for profit growth already hidden in the business.

Once you've done that, you'll be able to start cutting and dicing your data to identify if you are particularly profitable in specific services or by client types. That can give you a bit of direction if you want to start narrowing your focus as an agency.

I think the most important thing when it comes to 'narrowing' though is to not fall victim to 'niching' rhetoric. Australia (and NZ) are way, way smaller markets, and any strategic decisions like that need to be made within our market context. Not the one espoused by American gurus on TikTok.