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The Top 5 Signals That Should Be Keeping Digital Agency Owners Up At Night

Posted by Mike Lieberman on Apr 16, 2021 8:30:00 AM

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GettyImages-1158625027The Agency World Has Been Changing Faster Than Ever And It’s About To Get Even Faster

Having been in the agency business for over 18 years, you learn a thing or two. One of the things I’ve learned is the ability to see signals and position the agency to respond to those signals. 

Over 10 years ago, I saw HubSpot’s ability to tell me exactly what marketing was working and what marketing wasn’t. That insight caused us to tell ALL our clients, “Buy HubSpot or you can’t work with Square 2.” Just a few months later we were HubSpot’s largest partner.

I’ve seen a few other signals over the past decade. Some I responded to, and some I mistakenly ignored. Some I regret having ignored today, while others were less significant than I might have thought at the time. But today, there are some very significant signals that I think every agency owner should be aware of and be prepared to respond to at least in some way. 

Here you go. 

Signal 1 – Software Like Canva

I see this one pretty clearly. Software like Canva, Atomic Reach, and others are going to make many of the traditional agency creative services obsolete. If you listen carefully to the way Canva advertises and the story they tell, it’s clear to them that you don’t need a creative agency or creative people to do design work anymore. 

As an agency owner who does a fair amount of design work, I could pretend this doesn’t impact our business. This is low-end design work; we do high-end design work. This is basic design and it's nothing compared to what our designers do. 

Or I can look at this as the very first step in a process that eventually might mean that one day companies won’t need design services from agencies. 

These are two ends of the spectrum. Let’s assume reality falls somewhere in the middle. That’s still not good for my agency and design services in general. The trend over the next few years is that clients will be getting tools to do design on their own and our design work will be going down, not up. 

If this makes sense to you, the next question should be, what do you do about it? Let’s hold that question to the end because regardless of the signal, the answer to the question will be the same. 

Signal 2 – HubSpot’s Custom Objects

This is a very recent signal. HubSpot’s new custom object feature means what used to be a very simple tool has now become a more complicated tool. The more you customize something the harder it is to use, maintain, update or upgrade. Just look at Marketo. It’s a very customizable tool and we get paid very good money to keep it running for our handful of Marketo clients. 

This is already happening in the HubSpot ecosystem. New clients with more complex requirements are choosing HubSpot. Good for HubSpot. Also good for agencies, but what used to be easy in HubSpot might now be harder. 

This means big changes to HubSpot shops. Clients are going to ask for more technical help. They’re going to need help migrating, integrating, and dealing with their data. They are going to need more marketing operations help because their HubSpot instance is now more complex, it's been customized and it's harder to update and upgrade when needed. 

It means larger, more technical clients are going to be looking at and choosing HubSpot and those larger clients need different services than the smaller more traditional HubSpot clients. 

It means you’re going to potentially need different types of team members with different skills, different experiences, and different backgrounds. 

It means the HubSpot Partner Ecosystem is going to start looking a lot more like the Salesforce Partner Ecosystem. Less marketing agencies, more technical agencies. Less design services, more migration, and integration services. Less kids and interns, more senior people who have done complex projects before. 

Again, what you do about this is something we’ll talk about at the end of this article. 

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Signal 3 – Client’s In-House Hiring 

I thought the pandemic would shut this trend down pretty aggressively. Prior to Covid-19 we were seeing a very strong trend towards building in-house digital teams. Despite the virus, this trend has continued. In fact, this article highlights people working on e-commerce (which would include all of us) as the number 1 position people are hiring for on LinkedIn. 

My son recently changed jobs and had up to 10 companies interested in hiring him after just one week of looking. He had his pick of digital marketing roles, all in-house. As tools like HubSpot and Canva gain traction, companies are going to ramp up hiring. They’re going to think they can do what we do on their own. 

The only thing that could dampen this trend is a global recession and with the pandemic somewhat behind us, at least temporarily, it doesn’t look like that’s going to be an issue. 

I would expect this trend to continue aggressively which means you’ll be competing against every company for solid digital people for your teams, which brings us to our next signal.

Signal 4 – The Difficulty In Hiring Good People

You might have noticed, it's insanely challenging to find good people right now, especially people with HubSpot technical skills. As a result, there are new businesses popping up that give you their people for as long or as short as you need. 

Now you’re competing with other agencies, in-house digital teams, and outsourcing companies all for the same limited number of people. As you know I work with 20 to 30 agency owners at a time and right now they are all looking for new team members and all with a very similar skill set. 

Expect this trend to continue well into next year. Again, unless there is an economic downturn and people are downsized in mass, it's very likely that the scarcity of talent and the increased cost to hire someone with the skills you need is going to continue. 

Signal 5 – Getting Clients Real Results

This isn’t new news, nor is it a new signal. The ability to get clients results has always been very challenging. Today, it's getting more challenging. 

Not only are there more tactics to deploy, but digital transformation has also spread into sales and will soon spread into the customer service department too. 

Creating a single customer experience, orchestrating all the tactics across marketing, sales, and customer service, then deploying the right technology and analyzing data to optimize performance isn’t going to get easier. It’s going to be harder. 

In-house teams and agencies are going to be challenged to produce results, to justify their company’s investment, and to impact revenue in dramatic ways. 

“Great Mike, thanks for the insights but what am I supposed to do about all this? Running the agency is hard enough and playing whack-a-mole keeps me up at night already.  Now I have to deal with this stuff?”

GettyImages-1218223808Here are some considerations for dealing with the upcoming changes. 

Signal 1 – In short, look at the services that you are already seeing commoditized. These are the services that clients don’t want to pay top dollar for. They’re the services that freelancers often undercut you on and services that your clients need but might not value like design, copywriting, website updates, and even some low-end HubSpot work. 

You have to ask yourself:  Do you want to be in that business? Do you want to offer those services and if you do, then you have to actively work to compete against Canva and cheap freelancers. You have to find a way to deliver similar services for similar prices and still make money. 

If the answer is no, then you have to start planning now to supplement that revenue with revenue from other services and start actively building that part of your business to replace the revenue from these highly commoditized services. 

Signal 2 – Now that HubSpot is more complicated to set up, run and optimize, you might consider offering services that match this new need in the market. A lot of agencies are already moving in that direction. Some noticed the signals years ago and are not almost primarily technical shops. They’ve left the traditional agency services behind and only work on setting up, migrating, integrating, and keeping HubSpot working from a technical perspective. 

Do you want to be in this business? If so, then you’ll need new people with new skills, new processes, and new offerings. You’ll need an entirely new practice area for your agency. If no, then be prepared for some of your traditional marketing clients to use another agency for their technical work. 

This is neither good or bad, but you should be prepared for these kinds of situations to occur more frequently going forward.

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Signal 3 – Hiring in-house has been something we’ve dealt with for years. The key to managing this trend is ensuring that your agency does something no in-house team can do. It could be a skill set that is especially hard to come by. It might be a process that would be difficult to replicate. Or it might simply be solid marketing for the agency that positions your agency effectively against the in-house team. 

Either way, recognizing this trend will help position you to deal with it as it continues or even accelerates in the future. 

Signal 4 – Hiring is going to be a challenge. One way to deal with this is to be constantly hiring. We never stop looking for good people at Square 2. We review resumes daily, interview weekly, and are building a bench of highly qualified, culturally matched potential team members. 

This puts us in a position to hire quickly. This helps us with growth, and it helps us adjust our team based on revenue growth or decline. Most importantly it helps us make connections with the best and the brightest. 

If you have to ramp up hiring every time someone quits or gets fired or every time you go through a growth spurt, it's going to be hard to stay connected with the best people.

You also should consider your story. Why would someone come to work for you versus another agency, or in-house gig? You have to make sure your agency is more attractive. Don’t think your culture is going to seal the deal. Today everyone has a great culture on paper (or on their website and social platforms). 

You better look deep at what makes working at your shop better. For example, at Square 2, people come here because they get to work on one client at a time, not 10 or 12 at a time. That’s a big difference. 

Unlimited vacation and work from home are off the table too. Everyone offers that. If you don’t have a compelling reason why people would pick you over another agency or company, that’s a big action item for you to work on. 

Signal 5 – This is a tough one. You have to crack the code on getting results for clients. You have to know what strategies work, what tactics perform, what analytics to monitor, and what technologies deliver the kind of customer experience required to move the needle for each specific client. 

It's not easy, but it’s doable and you have to figure it out. The faster you do figure it out, the faster your agency will grow. 

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Start Today Tip – I’ve always been a fan of Wayne Gretzky's famous quote. “Don’t skate to where the puck is right now, skate to where it’s going to be.” As agency owners, we have to think like The Great One. Where is the agency business going to be in five years and get your shop in a position to do that work now. It’s the only way you’ll be in business in five years. Hoping things will stay the same is not going to work. If I’ve learned anything over the past 18 years is that change is coming, it's coming fast and my job as CEO is to get Square 2 in a position to take advantage of the change. If you feel the same way, I’m happy to help you too.

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Topics: digital agency trends, changes in the digital agency space

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