For Agencies, Technology Is an Arms Race: Only the Strong Survive

In Part One of this series, we looked at the growing movement among independent media agencies away from in-housing to outsourced media execution partnerships. In Part Two, we explored, through interviews with several agency executives, the impact outsourcing partnerships have had—and are continuing to have—on their people. In this installment we take a look at how these partnerships can affect an independent agency’s access to technology—and how that access can dramatically change their business model.

For many years, while Marc Stryker, vice president of channel management at Salt Lake City-based Penna Powers, and his team were building their agency, Stryker says, “I wanted to build all the capabilities in-house. As digital technology was evolving, I wanted to stay with it. It was our top priority: to be ahead of it. And we found, early on, especially as mobile technology grew, that we were ahead of other local competitors. We were very proud of developing all these things and being ahead of it in-house, and I wanted to hire a big team.”

But eventually, Stryker says, he realized that building this technological base—and hiring the team of people necessary to keep it up and running—was “very expensive and capital intensive.” That raised a critical question: “How do we continue to take care of our clients and give them the best marketing tech stack and all the other things they deserve but that maybe we don’t have—and where can we look for that?”

That dilemma, Stryker says, was complicated by what he calls “the problem of reverse scale, where we hear about all these great technologies and we call up the vendor and they ask us what our footprint is and when we tell them it’s mostly Utah, they say, ‘Well, that’s too small for our technology to work,’ which is code for ‘You don’t have enough money. You can’t hit our minimums to serve you properly.’”

The answer to reverse scale, Stryker says, was developing an outsourcing partnership with a firm—in this case, Pathlabs—that had a large enough footprint to provide the access Penna Powers couldn’t get on its own. With Pathlabs, he notes, “I don’t have to go and try to pretend to build up an expertise in two weeks. We’ve been able to bring in the added technology when and where we need it.”

Winning the Arms Race

Echoing Stryker’s frustrations, Sam Burn, principal at the Birmingham, Alabama-based agency Cayenne Creative, says that in this “arms race for technology,” cost and access are among “the hurdles keeping small and mid-sized agencies from being able to compete against the media giants of the world.” And, Burn notes, “it’s not just the direct technical cost—which can be significant—it’s also the ongoing training and development of your talent in the use of these new tools.”

But without these tools, Burn adds, an agency like his can end up falling into a trap they’re trying hard to avoid: selling only what they have. “We don’t want to be a company that just sells what we have,” he says. “We want to be a company that sells what our clients need. Just because you don’t have it doesn’t mean they don’t need it, and our not having it shouldn’t prohibit us from selling it. We just have to find it.”

Not being able to provide what a client needs, Burn believes, undercuts the agency’s overall value to the client. “If a client needs something but you don’t want to tell them about it because you don’t have it and you can’t afford it, are you really being a consultant?” he asks. “Are you really being their partner? How are we going to walk that walk?”

Meeting Client Needs

For Burn and Stryker, building a relationship with Pathlabs provided them with access to technology—and people—that clearly enhanced their ability to meet client needs. Expanding on that theme, Ly Tran, founder of Austin-based Stiletto Collective, says that “As an agency, we always try to be ahead of what’s next. That’s our role. But as a bootstrapping startup, we have to be careful about how we spend our capital.” Working with a number of outside partners, including Pathlabs, she says, helps Stiletto compensate when “some of our clients don’t have the level of spend that can access certain things.”

It also, says Brent Barbee, president of Atlanta-based media agency Conquer, not only introduces the agency to new technologies, but “gives us access to more resources that we would otherwise have had to subscribe to but weren’t embracing because of budgeting reasons. There are so many enterprising solutions that they had in their arsenal that we could take advantage of.”

In addition, notes Barbee’s colleague, Evann Bishop, executive vice president at Conquer, Pathlabs has already done the research on platforms Conquer might want to use. This proved especially useful recently when Conquer found itself struggling with a platform that wasn’t providing the support the agency needed. “It was time for a reevaluation,” Bishop recalls. But Pathlabs’ “intel” on platforms meant that “instead of going from A to Z, we were already halfway there.”

For Bishop, having access to both resources and proprietary information means “we’re able to collaborate to service our clients in a better, more intelligent way. And we can be flexible because we know the market needs that.”

Collaboration is Key

It’s the collaboration between the agency and the outsourcing partner that William Lapointe, CEO of Pathlabs, believes is key to making this level of client service work. It’s critical to make sure, he says, that the agency, working with its partner, can “pull it all together to make sure it works on the inventory they have—social platforms, search campaigns, running through reporting properly. Integrating all the tools into a single point of entry that works seamlessly every time.” It’s critical, too, he says, to have “a scaled team of people who know how to operate the pieces of technology in concert, time and time again, no matter how agile you need to be—having the bench, having fully researched technology, and then scaling the resources to deploy it all effectively: a single solution that really shines through.”

For an independent agency, adds Pathlabs Chief Service Officer Cortland Fondon, it’s important to not only own the relationships with the vendors, but to be able to “orchestrate the communication between the groups”—something he suggests can only work effectively if there’s a collaboration in place. Otherwise, he says, “this adds a level of workload and complexity that an independent agency just doesn’t have the time or capacity for.”

Sam Burn proves Fondon’s contention with a recent example of a client with needs Cayenne might otherwise not have been able to meet.

“We have a client who really wanted to understand footfall traffic,” Burn explains. “They wanted to know how many people saw their ads and then came in and ordered a meal. This particular nuance is not necessarily required for some of our B2B audiences. To invest and train that technology for just one client would have been impractical financially. And, frankly, impossible if we didn’t have the team to execute and manage it. Our relationship with Pathlabs makes it practical and also brings those ideas to fruition when we need them.”

Given the impact that outsourcing partnerships have on an agency’s people and on its access to technology, the logical next question is, how does this play out in terms of growth and profitability. In Part Four, we’ll shed some light on that important issue. 

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