Scott Paer, Managing Director, New York at Bladonmore, discusses the power of partnerships and outlines the benefits of building a vast partner network.
The global economic outlook remains uncertain, fueled by continued whispers of a potential turndown. According to the International Monetary Fund (IMF), we should expect to see slower economic growth globally with higher downside risks.
Marketing and communications agencies are grappling balancing economic uncertainty with the need to march forward and achieve sustainable growth, while continuing to deliver for clients.
As we keep an eye on various economic indicators and data that will continue to trickle in across Q4 ’23 and Q1 ‘24, agencies may be hesitant to jumpstart a new initiative or offering that will require additional resources.
Forming partnerships has become a logical method for many agencies to consider while establishing long-term goals.
Such partnerships can provide a robust network of professionals who collectively meet the evolving strategic needs of CEOs, heads of communications and investor relations, and chief marketing officers.
Road less traveled
Most marketing and communications agencies find themselves debating the buy versus build strategy when it comes to scaling.
Acquiring another firm requires extensive due diligence and often a substantial investment, plus the risks that come along with acquisitions. Still, there were 59 M&A deals among public relations agencies alone in the first nine months of 2022. That’s an increase of roughly 40% compared with the same period the year before, according to Davis & Gilbert.
Building requires the investment of both time and people. Outside of PR, the number of firms identifying as digital agencies has grown 54% between 2018 and 2023 across the US and Canada alone, according to a report from Promethean Research, signaling no shortage of new agencies entering the market.
While that is encouraging for the future health of the marcoms industry, we should not dismiss the benefits that partnerships can bring.
A partnership model will keep acquisition and hiring costs to a minimum while also avoiding the risks that may come along with building out an offering or making an acquisition. It allows agencies to lean on each other’s expertise and leverage complementary strengths while staying focused on their fundamental capabilities.
This means a creative agency that specializes in creative content, such as film, design and digital, can stay true to itself. Instead of acquiring or building a media buying capability or media relations offering, it can identify specialist firms who have those capabilities and who operate in similar sectors.
A natural flaw of marketing and communications agencies is that we often think our firm is competitive with anyone – and everyone – who provides a similar service. The truth is, while there may be some small overlap, firms are only world-class in very specific areas or capabilities, our core offerings. Shifting the mentality away from pure competitiveness could open the door to potential synergies and establish a foundation with an agency that could be an instrumental partner, helping create additional revenue streams for your own firm.
By teaming up, creating greater expertise and scale of services, a newfound partnership may give you a competitive advantage as you combine your strengths.
Entering new markets
Agencies who have ambitions to enter new markets face a daunting task. Not only will they need to develop a rolodex of contacts, but there are also potential cultural challenges and other complexities that arise when doing business in a new market.
Localized partners who can open doors in new regions will be crucial to capturing market share. Similarly, leaning on local partners who understand the regulatory landscape and talent pool in their respective markets will serve as a vital resource for those agencies looking to expand into a foreign country.
Having a partner make connections and provide insights will prove to be invaluable and may shorten the amount of time it takes to achieve profitability.
Whether it’s through cost efficiencies, differentiation in services and offerings or faster time-to-market, developing meaningful partnerships can be an influential tool. Marketing and communications agencies should continue to consider this in their respective strategic plans over the coming months and into the new year.
If you’re interested in discussing potential partnerships with Bladonmore, get in touch. We’d be delighted to hear from you.