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Why Boutique Agencies Are Bulls**t

Size Does Matter, But Not in the Way You Might Think

30Nov

Recently, I got a call from a potential client who told me he'd just been talking to a local boutique marketing agency that knows our company.

"They said you've scaled way too fast and can't handle the workload," he told me. "They say you only have junior people working there, and you're just too big now."

I had to call bullshit on this valiant effort on the part of the competition. In reality, these arguments don't hold water. Boutique agencies are on the rise, but successful big agencies will always be a good option for marketing clients.

Size Will Always Matter

There are definitely a ton of boutique agencies out there because many new business owners operate under the misguided notion that you can't build a large agency and still retain talent. The most common idea floated is that smaller agencies can get the best talent and can focus only on you, the client.

But then you look at amazing companies like Bain & Company, Accenture, BCG — some of the very best consultancies in the country, and they're huge. Accenture, for example, has 425,000 employees all over the world. But its reputation for doing quality work means that this enormous agency gets hired by Fortune 500 companies all the time. That sort of success doesn't come about with subpar talent that sees no results.

If we look at the stats, there are 50,000 digital agencies in the United States (68% of which employ five or fewer people). From what I've seen, about 49,900 of them are mediocre, at best. Probably only about 100 are decent to great.

Here's the real deal: If an agency hasn't been able to build and grow a solid business, take that as a sign. You know an agency has done a good job in marketing when it's scaling its business along with its clients. With the amount of data being employed in the industry, in general, things are too transparent these days to fake your way to becoming a large company.

The hype might sound great, but that's all it is — hype. If a boutique agency isn't growing itself, what does that say about how well its marketers can help grow yours?

Separating Boutique Hype From Reality

If you understand how agencies work, you will understand why well-run large agencies are a better bet. Here are a few myths that small agencies are peddling in an effort to siphon business away from larger competitors — and why these myths aren't true.

Myth No. 1: Boutiques get to know you better and help you scale faster.

The truth is, small agencies can't even do for themselves what they say they can do for their clients.

The proof is in the pudding: When a business hasn't been able to grow, its leaders sometimes use the excuse that they never wanted to, but let's be real. It's rare for founders to be satisfied with just maintaining a small business. And if they are, is that the type of company you want focused on growing yours?

If you're going to partner with a company to help you scale your business, do you want to partner with a company that doesn't believe in scaling itself or with one that has proven that it knows how to scale a business?

Myth No. 2: With a shortage of good marketers, the best ones prefer boutique.

In reality, there ismore thanenough marketing talent to go around, and the very best have varying preferences.

The perception that an agency with more than 100 employees has to employ junior people because there aren't enough advanced marketers in the world is just plain wrong. Employment in advertising and marketing management is projected to grow around 9% in the next 10 years — which is about the average rate of growth for all professions. Essentially, this means there is plenty of marketing talent out there, and many talented marketers probably work in larger agencies.

These talented people don't share one distinct preference for boutique over large agencies. That's a ridiculous assumption. In my experience, many of the best enjoy working with the high-profile brand accounts commonly found at larger agencies.

Our agency — which has grown well beyond the size of a typical "boutique"— offers month-to-month service with no long-term contracts. Think about it: If our people weren't talented, how would we be able to retain clients and keep growing with such a unique business model?

Myth No. 3: Boutiques are more affordable.

Truth: For the same price, you'll see less success.

Sometimes it may seem as if clients save money by working with a smaller agency where the overhead isn't as high, presumably. But in reality, that's just not the case.

We haven't really changed our pricing structure from when we were a seven-person shop. There has been a slight increase to account for inflation, but our head count wasn't a factor in that decision. That's because when we hire the best people (which we do), we get more business, and this allows us to continue to hire the best people.

If you can convince an email marketer to work on the side for $1,000 a month, you might be lucky enough get $1,000 worth of quality work. But you have to stay on top of freelancers and manage them. Sure, it can be cheaper, but what about redundancies? That's its own can of worms.

If your freelance email marketer quits, you're back to square one. On the other hand, if a larger agency loses an email marketer, it will just put another one on your account. In the end, you get what you pay for.

Despite the hype, boutique agencies usually remain small because they haven't been able to scale. They compensate for having five people by faking it and churning through clients constantly.

However, do you really want to work with agencies that operate that way? The stronger play is to partner with bigger agencies who have proven they've got what it takes by growing their own companies.

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