Over on Ad Age this week, editor Jonah Bloom did an excellent column on what ad agencies need to do to avoid the dreaded "commoditization." (Don’t you love that word?!) It was a good discussion on a serious, vital topic. Certainly vital for marketing agencies like my own, THUNDER FACTORY.

Here is my two cents to add to Jonah’s great discussion:

The most effective way for agencies to avoid becoming me-to commodities in today’s fiercely competitive marketing business is to know their clients’ business as well — or even better — than they do.

Now, that may sound self-evident. Agencies are already supposed to have a strong understanding of their clients’ businesses…don’t they? Not always. Marketing agency people tend to prefer being generalists, believing that they can "learn" anything in a week or two. If they specialize or go deep on anything, it is usually in a particular marketng or communications discipline (branding, online marketing, media, research, analytics, PR, etc.), not in a business area or sector.

In my experience, that is the wrong way to "specialize."

The era of generalist ad agencies proudly being "an inch deep and a mile wide" is fading fast. That old superficial approach worked fine in the glory days of advertising (which were largely driven by creative TV and print advertising), but clients today really want and need marketing partners who truly get and understand their businesses. Demonstrable, irrefutable expertise in a particular business area is what gets clients excited today (of course, you need to know your marketing, too, but I believe that is more table stakes in an increasingly commoditized industry).

When my firm THUNDER FACTORY competes in multi-agency pitches, the reason we win invariably is that we really, truly, deeply understood the client’s business, and then demonstrated that knowledge to the client in spot on strategy recommendations and relevant creative ideas. In those instances, clients frequently would say, "you seemed to know our business and needs/challenges/opportunities better than we do." 

If you can get a client to say that, you will never lose a pitch. And, you will have a long term client.

Recently we pitched and lost an insurance company account. Now, we have some insurance expertise as a firm (even more amongst our senior team), but I would not say it is our leading business expertise area. Where we really shine is in financial services. In that broad sector, we are as deep as the Marianas Trench (a little hyperbole there, but you get my point).

You might note here that insurance is part of the financial services category, so that should have been a no-brainer for our firm. But, the fact is that to this insurance client, our deep banking, brokerage, card payment and asset management industry expertise did not really mean that much. Insurance is its own species of business animal, with very particular terminologies, methodologies, problems, perceptions, regulatory challenges, marketing opportunities, etc. Insurance people think their discipline is very different than any other form of financial services. Their perception is, of course, the only thing that matters.

As such, we did not win the business because we could not connect with the client on that very personal and deep level of truly knowing their business at least as well as they did. More importantly, we should have been able to show them that we could provide insurance industry insights that they might not have even thought of yet. We didn’t deliver on that, and it hurt us.

We thought that our overall marketing brilliance and general financial services expertise would carry the day. But, to a client who lives and breathes their particular business, and wants their marketing partner to do the same, our overall marketing expertise was just a commodity that was available anywhere.

We did not really differentiate ourselves around an area that was truly essential and urgent to our target audience: the client. In short, we broke our own first rule of effective brand positioning!

Point taken, lesson learned. If you can demonstrate to a client that you know their business as well as — or even better — than they do, you will never be a commodity in the marketing agency industry. You will be sought after and successful.

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