Question
How can I define my marketing agency's competitive advantage?
Answer
Nothing special about marketing agencies in particular. Competitive advantage is always to be found in the same few areas:
Notice two things that are missing: brand and skills. Skills are not a sustainable competitive advantage since they can be reverse engineered and learned by smart people very, very fast (I do not count the "secret sauce" added by special people as "skill" like say the intuition of a Don Draper type; in my experience though, by the time such "secret sauce" elements become famous, they've already lost their potency).
If you want to differentiate based on skill, go into the education business, not the direct operations business. That's the only way you can stay one step ahead in a skill-based race, by making the skill itself your business. Market Motive is an example. They specialize in analytics skills, but their business is based on education rather than selling their marketing services directly.
Brand also does not matter, curiously enough. The brands of major and successful marketing agencies are among the least well-known in the world. Marketing helps other companies win through branding, but they do not themselves rely on branding to achieve their market positions (Al Ries makes this point in "The Fall of Advertising and the Rise of PR" as an indictment of marketing and accuses them of not buying their own methods, proving it is bullshit, but I think that's unfair; it's just a paradox that marketing as an industry is not one whose own promotional needs are best met by marketing).
The reason brand does not matter is that brand is a proxy for trusted relationships at larger scales. Most marketing agencies do not have the level of scale that needs to rest on a strong brand. Even the biggest marketing agencies (okay, "ad agencies" since that's what they come down to) that treat marketing as an assembly line mass production game, do not have the scale of a big manufacturing or software company.
- Unique data: In marketing this might be unique segmentation data sets, like Nielsen-Claritas PRIZM or Hitwise (Web traffic trends)
- Unique market expertise: Steel or fashion? Early stage companies or late? China or Brazil? An example is Underhill associates (retail)
- Unique relationships: Who do you know that competitors don't, and at what level of trust?
- Unique people: Who do you HAVE who others don't. Do you have a Don Draper in your ranks?
Notice two things that are missing: brand and skills. Skills are not a sustainable competitive advantage since they can be reverse engineered and learned by smart people very, very fast (I do not count the "secret sauce" added by special people as "skill" like say the intuition of a Don Draper type; in my experience though, by the time such "secret sauce" elements become famous, they've already lost their potency).
If you want to differentiate based on skill, go into the education business, not the direct operations business. That's the only way you can stay one step ahead in a skill-based race, by making the skill itself your business. Market Motive is an example. They specialize in analytics skills, but their business is based on education rather than selling their marketing services directly.
Brand also does not matter, curiously enough. The brands of major and successful marketing agencies are among the least well-known in the world. Marketing helps other companies win through branding, but they do not themselves rely on branding to achieve their market positions (Al Ries makes this point in "The Fall of Advertising and the Rise of PR" as an indictment of marketing and accuses them of not buying their own methods, proving it is bullshit, but I think that's unfair; it's just a paradox that marketing as an industry is not one whose own promotional needs are best met by marketing).
The reason brand does not matter is that brand is a proxy for trusted relationships at larger scales. Most marketing agencies do not have the level of scale that needs to rest on a strong brand. Even the biggest marketing agencies (okay, "ad agencies" since that's what they come down to) that treat marketing as an assembly line mass production game, do not have the scale of a big manufacturing or software company.