The fastest growing B2B agencies are embracing global operations and strategic consultancy services as never before, demonstrating unprecedented levels of confidence, relevance and market maturity. However, there’s no quick fix for the war on talent, which is only escalating. Joel Harrison reports.
In uncertain economic times, one of the first things that’s supposed to suffer is marketing – and to steal a phrase, ‘when B2B marketers sneeze, it’s generally the agencies that catch a cold’. So with the headwinds of Brexit, the US/China trade war and the conflict with Iran, it seems likely that the UK’s B2B agencies might be feeling the effects. But it couldn’t be much further from the truth – at least not for the agencies at the top of this year’s B2B Marketing Fastest Growing Agencies League Table.
Agencies have put in sterling performances during the period in question (financial year 2018-19). They’ve achieved significant year-on-year income growth – and what’s more, all are proud to report this has continued into the current financial year (2019-20). If there are flashes in the pan, you won’t find them here.
So what’s driving this growth? There are a couple of things that are particularly significant here, and it’s ironic that this is a ‘UK’ league table, because undoubtedly the most prominent is International growth – particularly in the USA.
“We opened three new offices in February – in San Francisco, Sydney and Singapore,’ says Chris Bagnall, CEO and founder of Transmission. “We didn’t really expect to see profit from them in year one, but we have. They are doing very well. I won’t give you the exact numbers, but it’s over 50%. We have seen decent year-on-year growth (for the agency as a whole).
The UK is still growing, but it’s hard to maintain the same pace when you have 100 people in an established office.”
The Marketing Practice (TMP), meanwhile, has a deeper-rooted international offering, with offices in the US (2016) and Germany (2015). They’re seeing a similar growth profile for the agency as a whole. David van Shaick, CMO and COO of TMP, comments: “We’ve seen strong growth in all regions, but particularly in the US and Germany where it’s over 50%, and we’ve won some very interesting new clients, as well as building up existing ones. It’s been a very good year.”
MomentumABM has an office on the West Coast of the US, which CEO and founder Alisha Lyndon believes has been significant in her agency’s growth. She says the US is an obvious opportunity for aspirational agencies and therefore a target. “Lots of agencies are moving into the US because they see the larger opportunity. The US market has historically taken ideas from the UK. We will definitely be investing more and continuing to expand our footprint.”
Normalising globalisation
It’s not just agencies with a physical footprint in the US that are benefiting from opportunities there. For example, Revere has a growing number of clients based in the US, but currently has no office there, or plans to establish one. “It’s increasingly feasible to work with US clients [from the UK],” says James Collis, MD and founder of Revere. “We see that in the rise of platforms like Zoom and [Microsoft] teams, which drive acceptance of remote and disparate working.”
“When we work with enterprise clients, they are often based in the US, and often have not ever met each other face-to-face. The prevalence of these platforms helps drive acceptance that we can just hop on a call and it’s no great issue,” he adds.
“Global campaign teams increasingly operate on a global basis. Our top three clients have campaign people in the UK, US and Europe. That makes it much more acceptable to have an agency here. Agencies in the UK are quite price-competitive based on salaries in the US.”
Likewise, Jason Talbot at The Crocodile says his company is working with a growing number of global organisations. However, its immediate client is just as likely to be based in Germany as the US – so it would be unclear where to locate a satellite office, or that one was needed in the first place.
Whatever approach it takes, the potency and size of the opportunity for UK B2B agencies working in the US is pretty clear. And the extent to which they are proactively addressing it is unprecedented.
Less is more
While in one sense it’s been the expansion of opportunity that’s driving growth for this highly successful group of agencies, in another, it’s the exact opposite. It’s also about focus, and in some instances actually turning away opportunities. This is particularly the case for Alisha Lyndon of MomentumABM. “The last 12 months has been about doubling down and having a bigger focus on a smaller set of clients. Rather than trying to be different people and absorb market demand, we’ve tried to stay true to our own business.”
This strategy is not always easy, although it is sensible for MomentumABM, which has seen a lot of players jump on the ABM bandwagon. Whereas Momentum was one of the few agencies offering ABM-related services, it’s now one of many in a very crowded marketplace (albeit, at the top end of this market, suggests Lyndon).
“We have qualified people, and been much more careful about which clients we take onboard,” she says. “We make sure we’re going into things with our eyes open, that clients are the right fit and meet our direction of travel. We’ve gone from 30 clients down to a core set of 12 globally. The top ten have all doubled in size for us. This is where our growth has come from.”
TMP has taken a similar approach. “We have a smaller number of clients for an agency of our size,” says David van Shaick, who explains its very clear set of criteria for the kind of clients it wants to work for. Likewise, it has a clear set or services: demand generation, ABM and channel marketing. “We’re very clear on what we can do brilliantly… and this allows us to ensure the quality of our product and not be distracted by other things. We’re not trying to be all things to all people.”
Strategic aspirations becoming a reality
Becoming laser-focused on a particular type of client isn’t the only way these fast growing B2B agencies are seeing success. James Collis of Revere believes his agency’s focus on increasing its insight and strategic services has, and is continuing to pay dividends. “We’re not selling activation as a standalone discipline, we’re selling it as part of an integrated approach. This leads to deeper and more valuable relationships and helps us move up the value chain in terms of the people we work with.”
A related, if arguably more radical approach, is being taken at The Crocodile, whose MD Jason Talbot explains is seeking to position the company as a challenger of accepted ways of thinking – both for clients and agencies. “We’re in the third year of a strategy to address the issue of complexity facing CMOs. Most other agencies are fighting over the same space – we’re trying to create an alternative model for marketers who want to do things differently.”
Talbot continues: “It’s a very interesting market right now – there are huge demands for short-term gains, but recently we’re seeing a lack of ‘big picture thinking’ – there’s strategic confusion. Marketing departments don’t want to look long-term.” In essence, rather than looking for a specific customer profile, The Crocodile is looking for a new kind of customer, and Talbot acknowledges that they aren’t necessarily commonplace.
“We’re focusing on the needs of the customer. So few B2B marketers concentrate on existing customers. [As an industry] we need to overcome this. Conventional wisdom persists with the notion of a one-dimensional, linear customer journey. We are challenging this – we don’t believe it exists.”
Talbot acknowledges that this approach won’t suit all marketers or all brands. “We’re challenging the status quo. It’s not for everyone, and it’s not for the faint-hearted.”
Opportunity knocks
While The Crocodile, Revere, TMP and MomentumABM have all profited from focusing their efforts, Transmission (the fastest growing of this group) had quite a different strategy.
“It goes beyond my nature to turn down business,” says Chris Bagnall. “That’s never been the way I’ve operated – not in any of the agencies I’ve been involved with. B2B agencies operate in a niche. What goes around comes around. You don’t want to say no to a prospective client, because they might go somewhere else. Relationships are long-term things. But you need to be mindful of the profitability of small projects – things don’t always stack up. It’s about understanding potential opportunities that could grow potential or international reach. But there is a minimum threshold, below which it doesn’t make sense.”
So is it better to be focused or broad? It’s likely the answer depends on what you’re trying to achieve. For different reasons, The Crocodile and MomentumABM are on a mission to do something quite specific, and reasonably don’t want to be distracted. On the other hand, Transmission has set itself much bigger goals, and that demands a more inclusive approach. It will be interesting to review next year’s league table to see if both approaches continue to pay off.
The ‘C’ word
One aspect of agency activities
that has risen in prominence in recent years has been the provision of more strategic services – in particular, consultancy services.
All of the agencies we interviewed talk a big talk around strategy. Once upon a time, strategy was something many B2B agencies paid lip service to (or at least had not formalised as a genuine discipline or service), now there’s evidence this group is taking it more seriously than ever.
As discussed, Revere has made insight a core part of its proposition, which James Collis believes is helping more strategic conversations and involvement beyond the executional layer.
Consultancy is a particular focus for The Crocodile. Jason sees this as another key differentiator in a sea of sameness. It also aligns with the agency’s (potentially unique) focus on CX. “Over the last few years we have built a consulting practice capable of helping marketing heads drive fundamental change within their departments – breaking down silos and helping to rewire the organisation with a more connected model. It’s a long-term strategy for the agency, where clients are now coming to us exclusively on a strategic consultancy basis. That’s now a key part of the business.”
The Crocodile is not alone in actively building out its consultancy services. Alisha of MomentumABM explains that this is a core part of her agency’s efforts to differentiate itself from the gold rush of agencies to have jumped on the ABM bandwagon. “Each client now has a consulting lead at the heart of its client team, they are directly focused on how we can drive change and help rally stakeholders. Clients come to us with a challenge, and the solution that we provide will adapt and evolve. Consultants will allow us to do that,” says Alisha.
Transmission has also been making efforts to strengthen this offering. “Consultancy is absolutely something we do,” says Chris. We don’t want to be seen as a tactical marketing agency. We have people and experience within the agency who can have conversations about stuff that makes a genuine difference to the business.”
Are consultancies redefining the game for agencies?
The interest in consultancy services is not just an opportunity for B2B agencies – arguably it’s as much a threat, with management consultancies such as Accenture and Deloitte showing a growing interest in, and aptitude for, marketing-related offerings.
“All eyes are on the big consultancies,” agrees James of Revere. “Where will they go once they’ve bought all the digital agencies? Maybe they are a threat. Historically they have been focused on the bits we don’t really do – for example, we aren’t a digital agency that’s going to build a new website for BA. But increasingly they are getting into delivering systems and tools focused on results, and there is a need to feed these tools with content, so [a move into marketing communications] might be an obvious next step. But whether it’s something they’d actually do, I don’t know.”
Alisha of MomentumABM believes it doesn’t matter whether agencies see a threat or opportunity – management consultants are framing the landscape for marketing and therefore determining the nature of client/agency engagement in the future.
“Marketing is becoming commoditised, and as a function is still figuring out its role. At board level, management consultants are helping to determine where marketing should focus, what approach to take and how to dovetail with sales. This is dictating much of the agenda that agencies are seeing downstream. The more they can move upstream, the more impact they can have on that process.
Agencies go where the growth is, so it’s no surprise they are consulting more. But it’s the management consultants who are shaping what the agency world will look like in 12 months’ time. How much implementation they decide to take on comes down to each consulting firm, and they are planning to grow.”
B2B marketing agencies are dynamic entities, which can make compiling this list more difficult and sometimes political. Omissions from the fastest growing table and analysis this year include:Gyro: It submitted post-merger figures that precluded comparison with the previous year's figuresOliver: It has been omitted from this report because its business model is so profoundly different to everyone else includedMRM McCann: It provided incomplete data and did not put forwward a spokesperson for an interview
People first
One thing that all agencies agree on is the growing pressure on attracting and retaining the right talent. This has always been an issue, but the consensus is that it has never been more difficult. It seems a ‘people-first’ culture is now a must-have.
“Talent is one of the biggest challenges,” says James of Revere. “It’s a very competitive market. We have hugely developed what we do for our staff, through all kinds of mechanisms – how we develop them, how we train them, the benefits we offer. We think our offer is very competitive with the market. It’s hard to tell, but that’s what the recruiters tell us. If you have a high turnover, that impacts on what you’re able to deliver for clients.”
It’s a similar picture at MomentumABM. “Undoubtedly one of our biggest challenges is talent, and how we drive talent from a development standpoint to remain market leader,” says Alisha. “We’ve invested in our people function, and we have a Head of People role now. We’re trying to bring in talent that fits with our direction of travel but also develop teams internally. We have an internal culture of excellence.”
Seismic shifts in the landscape
We’ve examined the various factors enabling and sometimes obstructing these fast growing agencies, but the $64,000 question is: ‘What’s going to happen to the agency landscape in the next 12 months?’ A new year often comes with the warning of choppy waters ahead, and this one is no different. There has been evidence of seismic shifts in the wider agency world recently. And in the B2B arena we’ve seen groups like Gravity go on the acquisition trail, while Unlimited Group recently bought Direction Group (see page 27 for recent acquisitions).
“We are certainly seeing consolidation of rosters,” says David of TMP. “Clients are getting smarter about how they set up and use their rosters – this has been a trend for a while and it we expect it will continue.”
“It’s a fair assumption that there will be consolidation,” agrees Chris of Transmission, who suggests this may result in more of the larger groups acquiring specialist B2B agencies. “If you look at the traditional networks, you’ll see they are already struggling. The indies are having a resurgence and rise to fame, and other people are looking at that and want a piece of it. It’s not surprising there’s a lot of movement in this market. We’ll see lots more consolidation in the next 12 months.”
However, Jason of The Crocodile has a more apocalyptic perspective on the medium-term future. That’s because he believes the market is already so commoditised with agencies that do largely the same thing. “In the short-term, there will continue to be a market for these ‘me-too’ agencies. Longer term, it will become much tougher for them. To survive, they need to add real value and differentiation.”
The future’s bright… mostly
David van Shaick of TMP, for one, is very positive about the future. “It’s easy to bitch about things, but I’m pretty optimistic. B2B marketing is making great strides, and there are lots of areas where we see that. Confidence has grown and it is flexing its muscles and doing bigger more ambitious things.”
“The profession itself is improving,” he continues. “I meet more and more good marketers who are educated and pragmatic. There’s less excitability around things that aren’t measurable. There is more focus on segmentation, targeting, and investment in good creative. There are fewer flashes in the pan.”
James Collis agrees that the profession has seen great strides, and that measurement has been critical in this. “There’s nowhere to hide today. Digital allows you to tell what’s effective and what’s not. Plus, today, you have many more ways to reach your audience.”
He shares David’s positive view of the future. “We’re incredibly optimistic right now. The market is very strong, particularly in the enterprise space, and for the kind of things we do, we’re not feeling pressure on budget.”
Chris of Transmission is slightly more cautious – although this might be a consequence of the extremely ambitious growth objectives his agency has adopted. “It feels like it’s getting harder to run a B2B agency. I’m sure people say that every year. Remaining relevant is always a challenge. When things inevitably commoditise, there is pressure from all areas. The challenge is to stay one step ahead. I’m sure there isn’t an agency in the land that would disagree.”
