Learn how to find the right PR agency for your company with our guest Drew McLellan, CEO of the Agency Management Institute.
Our episode guest is Drew McLellan, CEO at the Agency Management Institute. For almost 30+ years, McLellan has been in the advertising industry and advised hundreds of small to mid-sized agencies on how to grow and become more profitable.
The one with Drew McLellan on how companies should hire and build a relationship with a PR agency.
Five things you’ll learn from this episode:
Why are marketing managers scaling down their outside agency resources?
Can a PR agency be a full-service integrated advertising agency?
What makes a client decide to delegate work to agencies vs. bring the work in-house?
What’s the process of hiring a PR agency?
Should brands market during a recession?
“A current trend is most clients have more than one agency relationship.” — @drewmclellan
“Clients prefer to work with an agency that has a depth of expertise in their vertical, industry, or audience.” — @drewmclellan
“Unless the person who is making that buying decision has been around the block for a while and has a deep background in marketing, nobody’s quarterbacking the game and making sure that everybody’s efforts are moving the ball in the same direction.” — @drewmclellan
“The more the agency knows, the more a good agency can help you get the most out of your time and money that you’re buying.” — @drewmclellan
“One of the mistakes that clients make is that once they hire an agency, they only talk functionally about the work. They don’t step back and talk strategy.” — @drewmclellan
If you enjoyed the episode, would you please leave us a review?
About Drew McLellan:
For almost 30+ years, Drew McLellan has been in the advertising industry. He started his career at Y&R, worked in boutique-sized agencies, and then started his own agency in 1995, which he still owns and runs. Additionally, McLellan owns and leads Agency Management Institute, which advises hundreds of small to mid-sized agencies on how to grow their agencies profitability through agency owner peer groups, consulting, coaching, workshops, and more.
COVID-19 resources: https://agencymanagementinstitute.com/covid-19-agency-survival-tools/
Presented by: ReviewMaxer, the platform for monitoring, improving and promoting online customer reviews.
- Welcome to the show everybody. I'm Jason Mudd with Axia Public Relations and you are joining On Top Of PR. Today We are joined by Drew McLellan, of Agency Management Institute. Someone who has been a big friend to my agency, Axia Public Relations for years now. Somebody who I really look up to and really get a lot of good information from. And you are gonna enjoy your time with Drew today also. Drew, welcome to the show.
- Thanks for having me. I'm excited to be here.
- I'm glad to be here too. I know our audience is really gonna enjoy our conversation today. Drew, normally you are talking to agency owners and helping them run a better agency. I have definitely turned the tables on you today as we are talking to mostly an audience of corporate marketers who are often hiring and firing and working with PR agencies, advertising agencies, marketing firms. And so I thought it'd be interesting to kind of get your perspective on, you know, good, bad and ugly client and agency relationships. What your research you've been, you do annually in the marketplace tells us about those relationships, and kind of some of the pain points may be you're hearing from agencies so that ultimately we can improve those relationships and make them more productive and profitable for everybody involved. Does that sound good to you?
- Sounds good, and you know, remember I wear two hats so, most of my time is spent at Agency Management Institute but I still own and run my own agency. We're 25 years old this year, in 2020. So certainly have been on both sides of this conversation for many years.
- Yeah, absolutely. Congratulations on 25 years. Whatever you're doing works because you seem to do it all seamlessly Drew. So, keep up the good work there.
- What do they say about the duck looking calm above the water and then left frantic paddling underneath? And that's probably more accurate.
- That's a great illustration for sure. And real quick, I just wanna also shout out that I think you are at your very best right now as you and I just talked about, we're recording this kind of, as there's some return to normalcy after you know, the COVID-19 pandemic and economic response. But I'll tell you, I feel like you've been added 24 hours a day, seven days a week helping agencies and I just appreciate all that you've done in the last several weeks and maybe even a couple months at this point.
- Thank you. It's been a challenging time for everybody and certainly our position was, it's our job to get the agencies we serve through this as seamlessly and smoothly as possible. And that certainly required a lot of long nights and weekend work, but it's been gratifying because the agencies we serve are doing well, so it's paid off. Yeah.
- Yeah, for sure. Okay, well let's get right into it. So our listener, our viewer at home, Drew, is probably going to be working in a corporate marketing department, probably the leader of that marketing department. And as I just listened to your podcast yesterday, it sounds like a lot of times these folks are managing multiple agencies as opposed to having an exclusive relationship. Do you see that more being agency relationships based on discipline, like PR, Digital Web, Paid Media, or do you see it more as relationships based on unique engagements or like a special project needs, Drew?
- Yeah, you know, most large clients today, well with reports that we've been doing research talking to CMOs, business owners, anybody who buys agency services for the last six or seven years. And one thing that we've seen as a consistent trend for all of that time is that, most clients have more than one agency relationship. And typically what they're doing is they're hiring agencies for their subject matter expertise. So they're gonna have a PR firm, but they might have it also have an SEO firm or they might have a Web Dev shop, might have a Lead Gen Agency. But one of the things we are seeing, we've seen in the last couple of years is the fatigue factor. So CMOs are starting to say, you know what, managing these six or seven or eight or two or whatever it is, relationships takes a lot of work and coordination. And so, I'm not really sure I'm getting as much benefit as I am putting into all of these relationships. So, what we're seeing is a consolidation. They're typically not consolidating down to one, but they are consolidating down to a smaller number.
- Interesting, and when you say big clients, how do you define, give us some parameters in your mind, what you perceive to be or how your research shows what's a big client, big company, and maybe work down the scale a little bit just to help our audience understand.
- Yeah, so for somebody who's got a budget of, let's call it you know, $10,000 a month, so 120 K a year, they typically are gonna work with one agency. They don't have the bandwidth and they don't have the budget to spread it out over multiple agencies. If somebody is, I would say over 150 or $200,000 a year, then they're beginning probably to work with a couple of agencies or three. And when you get you know, to the half million dollar mark or more in spending, you know, they're typically juggling three or four agencies.
- Yeah, and of course that would be what you would define as AGI, assume where it's the true spend with the agency, not just the out of pocket costs for media and materials?
- No, in this case it's, this is their self-defined budget. So from their perspective, from the client's perspective, from their, from your viewers and listeners perspective, this is, they're all in budget. So AGI is sort of an agency centric term. Right, yep. So no, this would be their total spend.
- Okay, okay. And so when did you start to see the trend maybe of you know, you know in my career I saw where it was all about integrated marketing and then it went to specialized disciplines, then I went back to integrated marketing. And then I sense in the marketplace that we're currently in a time where it is unique to the specialization discipline that they're currently at. Do you feel the same way?
- Well, it's interesting because specialization goes a couple of different ways of course. So one of the things we know is that clients prefer to work with an agency that has a depth of expertise in their vertical or industry or in their audience. So if I'm a pharma company that sells to 55 year old women, I wanna work with an agency that understands the mindset of 55 plus women. Right? Or if I'm in Egg I want an Egg agency. So that's one kind of specialization we've seen. But to your, yeah but to your point, the other thing we're seeing is as marketing, you so you and I've been doing this for a while, and marketing used to be a lot simpler. The channels were fewer, that, you know, it was just easier to know what to do because we didn't have as many options. And so I think as options have multiplied, so have the, so as the expectation or the belief anyway, one of the things that we see in our research is that most clients do not believe that an agency can be a full service integrated agency anymore. They find it hard to imagine that anybody can be good at everything. And so I think that's what's driving the desire to cherry pick agencies based on where their expertise really lies and really counting on them to be super good at Amazon marketplace or whatever it is. You know, if there are so many specialties now within agencies that clients can cherry pick. The problem is, that for many clients that what's missing in the, I'm gonna choose this agency and that agency and that agency is that unless the person who's making that buying decision has been around the block for a while and really does have a deep background in marketing, nobody's quarterbacking the whole game and making sure that everybody's efforts are moving the ball in the same direction. And so I think that's one of the reasons why agencies have, or clients anyway, have shifted to choosing a lead agency who drives the strategy and then may do some of the execution as well. And then a lot of times that lead agency is the one who's sourcing the specialty agencies underneath them, because this is a group of agencies that have worked well together before they play nice in the sandbox and it takes away a lot of the hassle for the client.
- Well, I've got a couple of thoughts there. One is obviously that's where clients are leaning on us to be good at playing well in the sandbox. And as soon as we're not you know, just like in school, if there's two of you and somebody is misbehaving, one probably has to go or one gets penalized or you both get penalized. And so, you know, I've certainly been involved in an environment like that where it's like, we got to get along, or else the client will move along, you know, to somebody else who will.
- Yeah, absolutely. That's one of their biggest complaints, is that when the agencies sort of try and throw each other under the bus or steal each other's work or bad mouth each other behind their backs, clients don't have time for that. That's like junior high behavior. I'm over this. Just be professional, stay in your lane and help me accomplish my goals. And the agency that does that best is the agency that sticks around the longest.
- Right, that's good, that's good. That's good. And then the other thing that was very interesting to me watching or listening to your research episode that I mentioned to you earlier, which was very good, was this idea and I kinda did a double take as well, but it really resonated with me that your research shows that a lot of the money that's being spent on agencies and marketing decisions is being made by folks who are, you know, maybe under 40 years old now. And at first that gave me pause, but then as I thought about it and looked at the landscape, I think that's absolutely right. So talk a little bit about that and maybe give me at the end some, give us some perspective on why you think that's where we are today.
- Yeah. You know, it's funny when I saw that too, I sort of did a double take and then I was like, well that's my age bias, right? That's, I've been doing this a long time. I'm assuming that everybody who is in a leadership role is my contemporary age wise. But the reality is, you know, for a long time, I was younger than all of our clients and then I got in and got to be the same age and now in a lot of cases I'm mentoring our clients. So on the agency side, when I put on my agency owner hat, I'm mentoring clients who are 10 or 15 or 20 years younger than I am because they've earned their way up to those positions. So I just, I think for many agency owners and professionals, who've been doing this for a long time they, it's sort of like when you look at your kid and you're like, I don't understand how you could be driving? Or I don't understand how you can be getting married? Like, how is that possible? I think we do the same thing to our clients. And the reality is that, you know, there were always people under 40 managing those kinds of budgets. It was just, we would used to be under 40 too, right?
- Well, and I've heard you say that, you know, marketing is kind of a young person's business, so you either get energized by surrounding yourself with younger professionals or maybe it burns you out and you start to transition into a different role.
- Yeah, you know, and I think that's more true today, than ever before because marketing, again, when I started in my career, it was pretty simple. It was outdoor radio, television and print. And print was newspapers and a couple of magazines, right? And I don't mean to sound like I'm a caveman but, you know, today it's even more exhausting because if you're not learning something new every day, you get left behind in a hurry. So if you're somebody who is North of 40, who thrives on learning new things, challenging yourself, grow, continuing to grow and learn, you sort of that lifelong learner that everybody wants to hire, then you know what? You can stay energized in this business until you're in your seventies. I have agency owners that I work with that are super energized, super knowledgeable, very kind of into current, you know, they're talking about AI and all kinds of technology 'cause that's how they're wired. But I think if you're not wired that way, on the client side or the agency side, it can be exhausting in a hurry.
- Yeah, for sure. Yeah. I completely agree and I see that in, you know, my experience also. Drew, I don't know if you recall, but you were able to put in your research kind of clients in three categories. And if I can catch you off the cuff on that, I'd like to kind of explain to our audience who would be those three types of people, kind of that different profile, and so they can kind of self identify which one they think they're in.
- Well, actually every year, so the research that we do is called segmentation research. And so what we do is we ask a series of questions and people based on their responses sort of fall into buckets. And sometimes it's three buckets or four buckets or five buckets. So depending on the research study that you're looking at, they, we have people in these different buckets. So you're talking about the research that we did most recently, which is why do clients bring work in house, right? Yeah.
- Yeah, yeah. Why did they hire agencies? I think the report was type
- Right, which was triggered by the reality that a lot of agencies were noticing that more and more work that used to be given to agencies was being brought in house. So the question, the basic premise of the research was what makes an, a client decide to farm work out versus to do it in house? Like what triggers that buying decision to give it to an agency? And it was interesting because for some, so the three groups were one of the groups was, these are typically younger CMOs or decision makers who had a staff underneath them, but quite honestly wasn't all that impressed with their staff. Their staff was too slow. Their staff had insider thinking, they couldn't really think out of the box. And this marketer needed to get a lot of stuff done and couldn't really count on their agents, or on their in house team to get it done. So they were going to an agency really to just crank out work. And one of the interesting things about their attitude was, you know, marketing is not rocket science. So I don't need to have a big discussion with my agency about strategy or whatever. I just wanna place the order and get it done. That was one group. The other group was, a marketer who really had their act together. They had a good internal team, they were doing good work, but this marketer hads very specific needs, which required an outside expertise. So they would look at their own staff first and go, you know what, I don't have someone, with this depth of experience, let's say in SEO, so I might go out and hire that. So these were people who were cherry picking partners to fill in gaps that they had on their internal team. And really this was just, I wanna place the order, they'll fill the order. Right? And then the third group was a group that really wanted somebody to help them think strategically about the business and what really wanted them to sit more at the strategy table than the other two groups of prospects or clients. They appreciated the agency's ability to have a different perspective on the work, on the client, on the communications, and they really did want a more of what agencies want, which is that sort of partner relationship. They really did want somebody that they could sit at the C suite table and have discussions and help make decisions. So, you know, in some cases, people really just wanted extra hands. In other case, which was that first group, the second group was I want specific skills that I don't have in house so, I'm gonna be really like razor thin slicing the work and just hand out what I can't get done in house. My team is awesome. And then the third one is, some a group of people who wanted them a more traditional what we think of as a traditional, more full service agency relationship where the thinking and the doing go hand in hand.
- Okay, yeah, that makes sense. Let's go through the process and I think we'll have to do this quickly, but let's say I'm a corporate marketer and I'm starting to think about bringing in an agency on, and maybe I've never used an agency or we haven't used an agency here and, so kind of walk through if you would, what should be my thought process if I'm gonna start, begin to start thinking about an agency relationship, what should I do first? And then we'll then we'll go kind of through the whole process if we can, Drew.
- Yeah, I think it starts with, you know, I'm thinking about all the places where an agency client relationships gets derailed. Either in the romancing section of the relationship or the ones we've already gotten married section. And a lot of it, not unlike any other relationship, a lot of it is around candor in communication. So I think it starts with me the client thinking, why do I think I need and want an agency? So do I really need, do I want a thinking partner? Do I want somebody who is sitting at the strategy table with me? Do I really just want as an extra set of hands? Like really defining the value you want the agency to bring? And being really clear about that as you start to reach out to agencies. It's okay to say, "You know what? "I'm sure you're great strategic thinkers, "but I don't need that. "Here's what I need." Agencies would love for prospects to just be honest about what they need. And the other thing is realistically how much money do I have to spend? And being very upfront about that. Look, you know, I've got, in my budget for 2021, I've got $200,000 that's all I've got and here's how I've got to divide that money up. Again, the more the agency actually knows, the more a good agency can help you get the most out of your time and money that you're buying. So I think it starts with knowing what you want. Then I think it starts, then I think the next step is, sort of defining what you want that relationship to look like. Do I want to talk to them every week? Does it matter if do, it doesn't matter if they're in the same town. Am I gonna do all of it by Zoom anyway because I'm on the road all the time? Like what are my must haves in terms of the agency? Do I want somebody who understands my industry or my audience or whatever? Like what put together the wish list and then, you know, go shopping. And I think one of the big things is, you know, don't be shy about asking hard questions. Don't be shy about asking for case studies or examples. But really it is about, I mean, at the end of the day, when you hire an agency, you're putting your job at risk, right? 'Cause if the agency doesn't do their job you might lose your job. So there is nothing wrong with making a very thoughtful decision 'cause the stakes are high. Right? So, you know, typically the way this works is you would identify a subset of agencies, five or 10 or whatever. And then, again depending on if you're doing this all yourself, if you're using a search consultant, whatever. But you would then reach out to those, let's say eight agencies and you would you would have a series of questions that you want them to ask or to answer. And so, you know, in our world we call that an RFP or an RFI or Request For Information or Request For Proposal, you'd gather up that information. That information would then lead you to sort of probably rank those agencies based on their answers. You might drop a few of them off, so now let's say you're down to five. You might have a phone call or two with each of them kind of to do a long distance chemistry check, verify some of the answers, things like that. Then in most cases you're gonna get down to three. You're gonna wanna meet them in person and honestly, by the time you're down to three, the reality is if you've done your homework, if you've checked their case studies, if you've talked to some of their clients, odds are any of the three can do the work that you need them to do. But the final question, and actually I believe the most important part of whether or not this is gonna work is the chemistry text, test, right? So by being in a room with them, by having lunch with them, by chatting with them for a couple hours, you're gonna get a vibe from one of them that is different than the others. Then you, these are people that you have to rely on, you have to trust, but you're also gonna spend a ton of time with them. So you want to like them, you wanna trust them, you wanna feel good about being with them. And then, you know what? I would give them a test project and see how that goes. And if it goes well, then I think you can move into a full engagement.
- Yeah. Yeah. I like all that. I agree with all of that. I personally would probably start with maybe window shopping and then kinda narrowing it down to three before I would do the RFQ. But that would just be me. And you know how I did things when I was client side for a long time. You know, kinda go into that process. But I think the other mistake that agencies, some our clients sometimes make when picking agency just like they, we might make or they might make, in hiring somebody, is they're like, well, "Bob's no longer with us. "And the things I didn't like about Bob were this, "this and this. "So I got to get that fixed." And then you focus on the fix versus the holistic need and you kinda go down the wrong path there. But other than that, so you, you've now you've hired the agency, Drew, what do you do to make sure that relationship gets off to the right start?
- Well, I think it, again, I think it comes down to how do we talk to each other? How often do we talk to each other? And do we only talk about the work? I think one of the mistakes clients make is once they've hired an agency, they only talk functionally about the work. They don't step back and talk strategy, even if the agency isn't developing the strategy, they sure need to understand it, right? So I think stepping back and talking about the strategy, but also stepping back probably quarterly and talking about the relationship. How is this working? How is our communication? Am I available to you in the ways that you need me to be? One of the biggest frustrations, on the agency side, is that clients ask for all this stuff and then they're impossible to track down. They don't turn work around in a hurry, they don't give you their feedback. And then the agency is really held accountable to what now has become an unrealistic deadline. So I think having dialogue about, like how are we working together and what's working and what's not, and really creating a safe place for everybody to be honest is what comes after, you know, you say I do.
- Yeah. That's really good. And I hear that from my team also. You know, the client has these high expectations of a timeline, but we're still at, you know, phase one of the three phase program because we've received zero input, zero approval and you know, and different agencies have different challenges. They are like in our space, you know, do we just go ahead and distribute that content even though it's not fully approved? And you know, some clients just say, yeah, just do it. Where other clients are probably, you've spit their coffee out when I just said that, right? So it just depends on the culture. And the other thing is, I think when you're hiring agencies to produce a lot of content, you don't think about the idea that someone's got to review and approve all that of that content.
- Right, right. And again, that, that's partially an agency, right? So in the onboarding conversation, the agency should also be saying to the client, now remember, we can absolutely produce all of this stuff, but who on your end is gonna fact check it, verify it, approve it? What approval process do we need to go through, in normal times, in crisis times? Like these are all conversations that you should be having on the front end and you should use your agency to help you define what is reasonable, right? Like how quickly can, like when you think about all the work you do with all your other clients, how quickly do they turn around a media release, a newsletter, a white paper or whatever? And be realistic about what you can do.
- Yeah, absolutely. For sure, yeah. Now Drew, I, I'm sure our viewers would be very interested I think in seeing kind of your annual research that you do and what they're, you know, kind of their peer attitudes are towards agencies and things like that. Are there other resources you might point our audience to that would be helpful that they could either find from your website or in your resources or just recommendations that you could think of?
- Yeah, so, certainly the research, the executive summaries for every research project we've done are on the AMI website. And those are free to download so you're welcome to and grab those. We certainly have some Webinars and things like that, they are also free to watch. That would be valuable. Right now, depending on when someone's listening to this, if they're listening to this in a real time versus you know, two years from now, we have a ton of COVID specific, like how do you know when it's time to go back and market? What happens if I don't market during a recession? Things that are very client centric. On our website we have a COVID resource page, that has a ton of data that your clients, that client side folks would appreciate. So that's probably the for the first place. And you know, for some who are really wanna know what it's like to be on the agency side or understand agencies there are probably some podcast episodes that would be value valuable for them to listen to, yeah.
- Yeah, so give us the URL for both your organization's website they can check out. And then also you know, mention plug your podcast 'cause I'm a big fan.
- So if you go to agencymanagementinstitute.com, that's sort of the hub of everything. And there's a resources tab, which is where you'll find the research. And then there's main navigate, main navigation tab says as podcasts. So if you go there, there's a list, an archive of where at about 250 episodes down. And you can just scroll through and look at the topics and cherry pick the ones that would be valuable to you so. And then the COVID page is just agencymanagementinstitute.com/covid, so pretty simple.
- Cool, well we are running out of time, but I would love to have you just maybe give us a quick summary. If I'm that corporate marketer, if I'm that CMO and I am asking myself should we be marketing in a recession? Can you give us a quick answer, I know that's not really fair, but tell me what your thoughts would be?
- Yeah the data's really overwhelming. For every recession that we have ever gone through, the brands that market through the recession and absolutely do you have to change the conversation? Do you have to change the messaging? For sure. But every brand that stayed present and visible during the recession gained market share during and after that recession. And in many cases their competitors went out of business. So there is no question that all of us should be out there talking to our customers, reassuring our customers, our prospects, helping them figure out how to navigate through the recession this case, you know, topped off by a pandemic. But we should be out there and we should be talking. We just have to talk with sensitivity.
- Yeah, yeah, that's good Drew. And you're reminding me that that resource is available and something I think that all of our audience should definitely check out, whether they're on the agency side or the client side to prepare themselves because, you know, the recovery whenever it starts, if it hasn't already started, is going to take time. And you know, and these are questions that we can expect to be asked from our leadership team and the folks that we're accountable to. And so to have that informed information and independent research we can site versus our gut or what is perceived to beneficial to us, is certainly a good way to arm yourself so.
- Yeah there was a ton of research projects done around this question and so a lot of that data is on the site.
- Yeah, that'd be great, okay. Drew, thanks for joining us today. I really appreciate it. And like I said before we record it's an honor to be interviewing you since I'm usually listening to your podcast and so the tables have turned my friend and it's always a pleasure to see you. I look forward to seeing you at your next workshop and the upcoming conference.
- Sounds good, thanks for having me on the show. I appreciate it.
- Yeah, my pleasure. Thank you Drew, have a great day. And, so that wraps up our episode for today. I wanna thank Drew McLellan from Agency Management Institute for joining us. And if this was helpful to you in any way, I hope you will share this episode with a colleague or leave us a review on whatever channel it is you listen to or podcast or our vodcast.