Everyone likes to do predictions at this time of year. I’m no different, especially since most people don’t remember these predictions from year to year. However, I’m willing to hold my predictions up to a higher standard. Here’s a link to the predictions I made early in 2018. Let’s see how I did.
Competition will increase and there will be commoditized pricing pressure on all agency services. Those were one and two and while maybe those weren’t the craziest prediction, they did both come true. This past year felt like there were many more agencies to compete with and major downward pressure on pricing due to the increasing number of agencies willing to do more work for less money.
Prediction number three was about consolidation in the agency market and that was true. HubSpot agencies got snapped up or merged, and agencies outside the HubSpot community are being purchased at very high rates, especially those that offer digital transformational services to large companies and major brands.
Inbound won’t be the same in 12 months was prediction four and that also has proven to be true. What once was the methodology of choice for smart marketers is now just “what everyone should be doing” and nothing warranting any special story, methodology or technology anymore.
Prediction five was that pay for performance would be more common and while I’ve seen a few agencies advertising on Facebook, I have not seen much movement in this direction over the past 12 months. I still believe that agencies will need to put money where their mouth is eventually, but that seems to be on the horizon for now.
Prediction six was that differentiation will be key and prediction seven was that manufacturing will be hot vertical, and both become realities this year. Square 2 spent the entire year creating its differentiation strategy just to separate us from the pack of other agencies and I’ve seen at least six agencies move all in on the manufacturing vertical further validating that this industry is ripe for a revised approach to marketing.
Finally, my last prediction came true as well. Clients need just as much help closing the leads as they do generating the leads, so sales enablement will be important service offerings for agencies who want to help their clients grow.
All in all, not bad, if I do say so myself! So, what’s on the horizon for 2019 and what should you be doing now to get ready for these big, bold and beautiful predictions for the upcoming year?
Prediction 1 – The economy is going to slow down
How can it not? December has been miserable on so many economic fronts and except for a 5% increase in spending during the holidays around retail there is hardly any good news going into 2019. What goes up must come down and with little or no leadership in Washington, it seems like we’re in for a rocky road economically in 2019.
This means your prospects and clients are going to be more cautious from a spending perspective. It means their plans to hire might slow down and that could mean their plans to engage with you could slow down too. This is bad news for all of us because prospects and clients are already confused by the mixed messages associated with technology, tactics and the massive amount of content out there telling them what to do.
Now the economy is going to be another factor in making them feel anxious and we know that anxious prospects don’t sign agreements.
Here’s what you should consider doing about it. First, you might have to change your message to one that worked well for us during the last recession. Companies still have to market in tough times, but instead of hiring, outsource to us. Keep your costs variable instead of fixed, make it an operating cost instead of a labor cost.
This might also lead the way for more aggressive pay for performance pricing models where agencies do the work and clients only pay for the results. If you’ve been thinking about rolling something like this out, now is the time to dust it off and get it ready for prime time. Hopefully you won’t need it.
Prediction 2 – The agency rollup trend is going to continue to pick up speed
If the economy slows down, even a little, agency owners are going to get scared and there will be a flight to safety. I’ve already seen an increase in the inquires to our agency regarding smaller agencies wanting to talk about selling.
The agency business is hard, and people are starting to get tired. Faced with a tough economy and promise of not getting paid, they’ll start looking for options.
In all honesty, the industry is badly in need of a rollup. There are far too many agencies who take any business that comes their way, at any price without any regard to their ability to deliver or get clients results. They’ll promise anything to anyone and deal with it later. This is poisoning the well for the rest of us who know what it takes to get clients results.
A rollup and a reduction in the number of average agencies would do wonders for our entire industry.
Here’s what you can do about it. If you’re growing and getting clients good results, then this has very little to do with you. If growth is your journey, stay on that path and remain focused.
If you’re struggling, now is the time to do something about it. Don’t wait until you miss three or four months of pay. Don’t wait for the economists to publicly admit we’re in a recession. If you do your agency will be worth far less than it is today. If you’re even considering joining up or selling and walking away, now is the time to act.
Prediction 3 – The Mega Agency will emerge
It’s already happening. Agencies are joining forces because they know there is strength in numbers. By the end of 2019, there will be at least one or two mega agencies in the HubSpot community. Agencies over $10 million in revenue will have extraordinary power to price out smaller agencies, offer advanced technology, and provide delivery at levels smaller agencies will struggle to match.
These agencies will likely be multi-national, which also means decentralized leadership, fragmented organization and they might be slow to systematize delivery for clients across time zones. These agencies typically don’t come with leaders who are experienced running bigger organizations so smaller more nimble agencies could take advantage of their weakness, but their size will bring far more benefits than challenges and they will have a significant impact in the community in short order.
Here’s what you should consider doing about it. It’s quite simple. Either get ready to compete or get ready to join. If you feel like you want to be on the side of big, then consider joining the mega agency in some form or fashion. If you have the stomach and smaller is better for you, then get your boxing gloves on and get ready for a fit.
Start differentiating your agency from the “big guys” today. What makes smaller better than big? What can you do that they can’t or won’t? Maybe it’s specialized services, maybe it’s personalized attention from you, the owner. Whatever it is, polish it up, test it and see how it works. Its likely in 2019, you’re going to need it.
Prediction 4 – AI and more advanced technology are going to require agencies to step up their technology game
The robots are coming. In fact, they are already here. I worked for a CEO who said, “you have to create the businesses that will put you out of business.” We’re already working on advanced artificial intelligence tools that will provide clients and non-clients insights and recommendations based on their goals and their own program data.
Isn’t that what an agency does? Yes, it is, but these tools can do it faster and never miss anything. These competitive threats are going to increase. We already see a handful of competitive products that are lighter than the software we’re rolling out on January 7th, but there will be more.
Here’s what you should consider doing about it. First, step up your technology game. It’s not enough to be a HubSpot shop. Marketing and sales tech is the hottest space in the software industry and your clients are going to be turning to you for help in understanding what they need, selecting the right tools for their companies, installing and configuring those tools and then optimizing the software to drive results.
If you don’t’ help them, someone else will and it’s very likely, they’re provide similar services to yours in addition to their technology help. These tools aren’t all easy to understand, use and leverage to produce better results. This is going to take time. The sooner you start the faster you’ll be in the game and able to help your clients with these challenging decisions.
Prediction 5 – The In-House Agency Will Take More Business Away from Traditional Digital Agencies
Yes, I’m hedging a bit with this prediction because this one requires the economy to continue to be healthy. But over the past couple of years, we’ve seen an increasing trend to hire in-house and build in-house teams.
This clearly has its challenges for most companies and for our clients who have started down this path, more than a handful have come back for help, assistance, guidance or to have us supplement their capabilities with ours.
What this means to agencies is that you’ll have to adjust your services and delivery configuration to be more complementary and less all inclusive. Clients will write their own content and we’ll optimize it, design it, and place it. Clients will build their own websites and we’ll design them. Clients are handling social media on their own, so what’s left for us.
Simple, strategy, consulting, guidance around technology and marketing operations for those clients whose tech stack is so massive and customized that there is no one around who knows how to change it, optimize it or fix it if it breaks.
In-house teams bring a different set of requirements, progressive agencies are already looking for ways to work with these types of clients and should this trend continue it will be more and more important.
What you should consider doing about it. Look at the types of services you provide. Copywriting, design and website optimization are going to be the first to go. Companies can easily find people with these skill sets and they’ll hire them, some of the will hire your people away from you.
But what they can’t do is deal with technology, they can’t come up with the overall strategy, they can’t look at overall program performance and come up with the optimization action plan to improve results month over month.
In addition, they can’t generate leads or at least enough leads to significantly move the needle. Services that include outbound, inbound and lead generation based on buyer intent will be very interesting even to inhouse team.
As you look down the road into 2019, take these predictions and factor them into your annual planning processes. I’m big believe in Plan As and Plan Bs, maybe you have your Plan A, but if any of these predictions start to look like they’re coming true, having a Plan B might just save your year.
Start Today Tip – Everyone wants to be in control of their own destiny. Knowing what’s coming helps you be prepared and in more control should conditions changes. I talk to hundreds of agency owners every year. I talk to technology partners. I talk to industry analysts and I’m active in a handful of agency communities stretching across all sizes of agency and a variety of agency types. It’s clear that the agency business is changing. Change can offer opportunities for those savvy enough to see the changes coming and make the necessary adjustments. Don’t let changes roll over your agency, be part of the group doing the rolling over.
Have a very happy new year and a great 2019.
