With the explosion of options available to marketers today, it’s impossible for them to be experts at everything. As such, they’re often looking for partners to help solve very specific problems. While big agencies claim they can take care of everything, the likely reality is they can either do specialist work without too much depth, or they can’t do it at all. This presents a major opportunity for independent agencies like us. Smaller players are never going to compete with the end-to-end resources of big agency groups so, why should we?
In this fast-moving complex marketplace we can no longer afford to be generalists. I believe our future is niche. As agencies we tell our clients all the time ‘, yet few agencies do it for themselves. Why? Because it’s hard for agencies to say no to business – it’s tough out there.
Across the agency landscape the major holding groups have made it clear the key brands in the next five years won’t be standalone creative or media agencies. The holding companies themselves will be the brands to watch as they continue to engage global clients and create consolidated teams to handle them. In the midst of all this backend bundling, independents can flourish if they choose a focus.
Whether it’s a vertical-based niche such as healthcare, government, finance, or recruitment; a demographic niche in the vein of a female, male or multicultural-focused agency, or a service-based offering that hones in on social, content, digital, performance media, if you have expertise in a specific area and can demonstrate that with depth (and genuine proprietary tools and planning approaches), you're more likely to win over the client's confidence.
A niche doesn’t have to be limiting to the business. In fact, it can help reduce competition. Think of it this way: if you’re a pure digital shop there are hundreds of agencies out there all looking for the same brief, the same opportunities. Whereas in a niche such as fintech, there are only a handful of competitors because the barrier to entry is quite high.
Your niche doesn’t have to completely define the business either; you can be a social, technology or media-led agency that does creative. You can also evolve your niche. Lavender and Mercerbell are examples of agencies that have done this well. Each began life as a direct response agency which then evolved to CRM and now CX. They have taken on niche areas that are in high demand and high on the value curve. And the niche doesn’t have to be the only thing you do. Use it as a base to start from and tackle all of your briefs from that angle.
The beauty of nailing your niche is that you can rightfully command a premium (in a low margin world) for your services – we’re providing context and consultancy that’s more than the head-hour rate in terms of value provided.
Of course, niche agencies are not without their obstacles. Top of mind is handling conflicts. If you want to grow the business, one solution is to create conflict shops that have their own purpose and position. We’re seeing this in other markets where agencies are breaking their operations down into four or five companies of 40 people that have their own clients, P&L’s and largely run themselves.
Similarly, any work that is repetitive in nature presents challenges. There’s a risk your output can become same-same, however, any agency is in danger of being formulaic in their solutions or art style. To prevent that, you need different people leading the brief as you continue to push the envelope.
There are also internal trials for niche agencies. The recruitment pool for specialists is much smaller, they cost more and the government isn’t doing us any favours with the 457 visa situation. It’s great for staff, though, as specialists get paid a flat premium in terms of salaries because of the lack of competition. It makes becoming a specialist a viable long-term strategy that will accelerate your career.
At the end of the day, the people benefitting most from niche agencies are marketers. Once a marketer goes niche, they rarely go back. Those that do venture out into the mainstream again experience unexpected hurdles, particularly in highly regulated sectors. Without a solid working knowledge of the requirements of a specific niche, in extreme cases, agencies can get their clients into legal hot water while marketers find themselves doing an education job which is frustrating when you've got deadlines to meet. This experience undoubtedly leads marketers back to the experts in the sector.
As independents, by definition, we have to be more nimble. We require a point of difference and we have to be known for something. If it’s going to benefit marketers and agency alike, why not make that a niche?
By Orchard managing partner Wai Kwok