Digital Marketing Agencies – How They’re Changing

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In this episode of the Rethink Podcast, we interview Kent Lewis, the president and founder of Anvil Media, a Portland-based digital marketing agency specializing in analytics, search engine and social media marketing.

I first met Kent about six years ago, after I got laid off from an electric vehicle startup. I was referred to him because he was connected to most everyone in Portland, and because he was a thought leader in the digital marketing/SEO space. I was also warned he didn’t really like MBAs (I was a recent graduate). We met in the same office as we would six years later for our podcast interview, and he basically gave me the roadmap for my professional career for the next five years.

Besides working for, getting fired from, founding or cofounding 10 agencies, Kent was also part of the group that founded the Search Engine Marketers of Portland (SEMpdx), where we both served as board members; and he is also the founder of pdxMindshare, a Portland-based networking group.

We sat down to have a conversation about digital marketing agencies, how they have evolved, how technology is changing them (good and bad), and how to manage and build a great team.

In this Episode:

  • How digital agencies have changed over last 5-10 years
  • How to keep your clients
  • How to manage creative brain drain
  • How to build a great team
  • How will tech change agencies, good and bad

Favorite Quotes:

This transcript has been edited for length. To get the full measure, listen to the podcast.

Nathan:

Can you tell me a little bit about who you are and about Anvil Media?

Kent:

Sure. My first foray in digital was in 1996 when I optimized my first client website. And I’ve been building digital marketing teams since then. I’ve been at nine agencies, co-founded two, founded two, fired from two, and decided I better do my own thing. Anvil’s 16 years old, with 40+ clients. We’ve worked with Fortune 500’s down to Ma & Pa startups around the corner. We enjoy just helping move businesses forward.

As a measurable marketing agency we’ve focused on marketing initiatives that we can control, measure and demonstrate success. It doesn’t mean we don’t offer full service marketing capabilities; we just tend to focus on what we know best, and that tends to be around paid and organic search, paid and organic social, and a layer of analytics on top of that.

The Recent Evolution of Agencies

Nathan:

How have agencies changed in the last 15 years?

Kent:

So I’d say in the last 15 – the Mad Men days are long gone – full-service agencies have compressed, retuned and pivoted as full service with digital being a core component. Wieden Kennedy tried for years to have digital arms, and finally in less than last 10 years have shown that they truly have enough digital DNA now to be effective for the clients. But it did not come naturally, and took many, many years.

What’s gone is back in the Mad Men days, the agencies lived on the media commissions, the 15 percent, plus they marked everything up, all the supplies another 15 percent, and they had agency billings for time. There were three ways to make money.

Clients have gotten a lot smarter. They’re saying, Okay, pick one of those. So markups have gone closer to zero on third-party expenses. Or maybe they maintain that, but at the expense of the billable hour. You either take a percentage of media as your fee, or you take a fee, but you rarely get both, or both are compressed. Clients have in my experience far more sophistication and much higher expectations.

The last 15 years, sure. The last five, it’s been a curve like this. They can read the same publications, they go to the same conferences now, and they’re hiring away from agencies to build in house teams.

The need for agencies is always going to be there because somebody needs to stay up on this stuff and be an advocate. And I found the most successful mix for the digital marketing agency and the company that wants growth is that our client contact is our advocate, and they block and tackle, and they let us do our thing. We help them look good. It’s a true partnership and a collaboration.

But it doesn’t mean the expectation isn’t higher. The budgets are tighter. The accountability is there. I love having savvier clients, but I still see that we each have our place. And theirs is to be absolute knowledgeable experts on their product and their brand, and we are the amplifier.

Client Retention – Best Practices

Nathan:

It seems there’s this expectation that you always have to be winning the client over again. In a digital marketing world, you can show some immediate gains pretty quickly. But then the honeymoon’s over. Can you address that as an agency?

Kent:

That is the hardest part. And I will say we have clients, like we have a university that’s going on a 10-year relationship with us, and that is a great example of when it works really well. There’s a degree of mutual trust and respect. They give us the leeway to test new things, but it doesn’t mean we are not absolutely accountable for the bread and butter, tackling the fundamentals. In this entire 10-year period, it’s been a month-to-month relationship. Either side can give a 30-day notice. And for our 40 some odd clients, 38 of them have that contract in place. The other exceptions would be some sort of weird contract where they want a longer term or it’s specifically limited minimum term and then it’s done, whatever the case is, that’s an exception.

And the way I look at it, the way we keep our relationship fresh with our clients is by having to earn their business every day, every month, to keep them on board. And we do that with pretty much all of our clients. So that forces us to be thinking fresh, be in our client’s seat, and figure out what it takes for them to be successful. We will support that.

The other thing is to have quarterly strategic planning instead of annual. In the world of digital it moves far too fast. So we like to look at even with SEO we have a cyclical approach, we analyze different aspects of SEO each month and then rotate and start over each quarter, so we can manage a smaller budget more effectively, but still go deep and stay broad. I think that methodology will continue to increase.

And the last part is just the competition. Anvil was one of the first in Portland. And then we were one of the best if not the best. Then we were an also ran. All of a sudden in the last 15 years all of that happened. So I’ve rebuilt this company completely in the last three to four years to maintain relevance.

One of the things that we do is we used to not care about competitors. There are arguments in different business books whether you absolutely ignore your competitors, do your own thing; or you watch them like a hawk, and look for opportunities. What I’ve noticed is they’ve all been paying close attention to us and they look at all our stuff. So we’re just more guarded about who we work with and what we’re doing.

Creative Brain Drain – How to Manage It

Nathan:

One of the things I’ve seen with agencies after you’ve trained them, your rising stars leave to start their own agencies. How do you manage that?

Kent:

With the millennial generation, the research shows that they see their employer as an extended parent, which means while they selectively may do what they’re told or not, they expect a certain level of support and appreciation and that unconditional love. They want it all and they want it now. That’s a real challenge to manage. I feel like the team we have now at Anvil is amazing. They may be millennials, but they don’t have necessarily the downside of the millennial mindset. They’re here to produce and they expect to be taken care of as producers, not as non-producers.

Yes, stars are not all entrepreneurs. And my goal has been to create intrapreneurs or hire intrapreneurs. So they want to innovate within Anvil. My theory is that Anvil could be the last place you choose to work. For the first three jobs I had, I assumed that was where I was going to retire. My grandfather, the day he graduated UW, he went to work for Boeing, and then he retired, and he never had any other job. My dad had two main jobs as an architect, two major employers for 20 years each, and that was it. And my mom was shifty at five years per job in the nonprofit space. Unheard of turnover back then in the 1980s and ’90s.

So for me, having technically 10 jobs in 11 years was ludicrous. Except, with the dot com boom, that was absolutely acceptable. It’s not completely unacceptable today, although when I see a resume with people that don’t have a job more than a year multiple times, I probably won’t hire them. It’s not always their fault. You try to understand the flow.

I even wrote an article recently on how to leave a job. Because I feel that a lot of millennials don’t know how to leave a job. We’ve had a much more stable employee base the last six to nine months, and we’ve had people leave much more productively. But three years previously it was rough. They’re cool with just blowing up their relationships. And in a size of a town like Portland, that’s a very dangerous thing. If you’re in New York, Chicago, LA, San Francisco, yeah, no problem, even Seattle, you can light bombs and go. But that stuff catches up.

I expect, if I hire the right people, if I can keep a meaningful percentage of them happy here, that’s a win. And the others that move on, I expect them to do better things. The cost of developing an employee with an average tenure of 18 months is not cost effective, nor is it sustainable for any business. There are people in my space that are totally cool with it. They’re like, that’s just the cost of business. Well, each employee costs you 5x when they leave for a mishire. I’m not in that business. I can’t afford it with the margins we have. I’m trying to find the right people that’ll stay for 3- to 5-year mark instead of 18 months. So far it’s been quite a bit better.

Building Your Ideal Team

Nathan:

You wrote about how you were inspired by The Boys in the Boat, and developing this idea of swing, and finding that swing within your organization as a business, and that pieces of that have expanded into Anvil University. Can you talk about that?

Kent:

You touched on Anvil University and I’m proud to say that name came out of a former employee reviewing the company saying that the first three months of their time at Anvil had been the best and worst three months of their time at Anvil. It was the hardest, it was the boot camp, but it was the most rewarding because it was the deepest learning cycle, the most challenging, the most exciting.

The other aspect, the swing, came to me because if you haven’t read Boys in the Boat, it’s like Unbroken meets Seabiscuit. I’m from Seattle, my parents and grandparents all went to UW, and even knew some of the key folks in the book. And the idea, if you’ve read Jim Collins, Good to Great is all about being on the right seat on the bus. And that metaphor is beyond broken to me because it’s absolutely passive. I’m going to get on a bus and it’s going take me wherever. I hope it’s where I wanted to go. I was told that’s where we’re going, but you have no active role in the guidance, direction and speed.

The idea of Boys in the Boat, I instantly realized, is about the swing of that moment of perfect harmony and bliss; of everybody working together going in the same direction. I was like that needs to happen in business. That’s how the ’36 Olympic team won the gold, hitting the swing more than any other team in history.

I wanted to see could if it be done in business. We’ve created a lot of structure and process. It’s the people, it’s the process, it’s the tools.

It’s been fun to build that into the structure over the last year. But the swing is something that’s never achieved, like in the boat. We feel moments of it. And the goal is to feel more of those moments. It’s built in the fabric at Anvil now. We talk about it at our staff meetings, Any good examples of The Swing? It could be as little as how to turn an email, into a blog post, into an article, into a presentation, into a retirement plan, through a movie option or something; to bigger moves on how we integrate our clients and our teams.

I suggest you read it, those of you who haven’t, and see if it can apply to your business or the way, even the way you live and work. Just creating more efficiency with more intention.

How Will Technology Change Agencies?

Nathan:

Let’s spend the last few minutes chatting about technology, and how will technology change, for good or bad, the work of agencies, and how you can use it.

Kent:

Well, in terms of the agency side and the evolution with client side is there will be a constant increasing trend of clients attempting to and becoming more successful in building teams in-house, which forces the agencies to move into more of a consulting role. The agencies that are high-production focused will have to shift and pivot. It’s a race to the bottom in the production side.

In terms of technology, I’ve watched marketing automation and sales automation mature rapidly, in terms of adoption and client sophistication, in the last three years. Four years ago, we decided to double down on sales and marketing automation. We’ve been working with Act-On for five or six years as our marketing automation platform.

There are also technologies that are the undoing for agencies, and the new opportunities for them. Ad blocking is a good example. Half our team uses ad blockers, the other half don’t intentionally so they can see the ad experience. And the answer is what I would say is where is the industry going – brands, agencies, advertisers, and the publishers – it’s to native advertising and storytelling.

GoPro, Red Bull have all proven that people love a good story. They love a good photo, they love a good video, they love the backstory, they love experiential. We’ve done some experiential work for a couple different brands. It’s a lot more work. It’s very intensive. But it can, through technology, have a longer lifespan with capturing videos and other experiences that are far more authentic than the standard big production TV commercial.

Brands need to understand, YouTube is their TV channel, iTunes is their radio network, and they need to be creating branded content, or be a part of the conversation much as you guys are doing creating your own programming. I think that’s where it’s going.

Millennials like to discover things on their own. They don’t want to be force fed anything. So creating these brands that are more about empowering the consumer, the customer, to experience it from their point of view, to help create the content, to create the products. There’s going to be happy ground in the middle. But we’re coming from 5 percent. It’s going to move this way to more like a 50 percent uptake in collaboration with the customers, the prospects, to create content and storytelling and products. And social media has really powered a lot of that.

Nathan:

We’ve covered a ton. Thank you very much, I appreciate it. What’s next for Anvil, how does someone learn more about you?

Kent:

Everything we just talked about, we’ve got a service offering or a way to engage clients to address all of these things. So feel free to check us out at anvilmediainc.com.

But I’m a big fan, and I’m not paid to say this, and Nathan can confirm, that I’m a big fan of Act-On, and not just what they’re doing with their product, but what they’re doing with their marketing. Talking to folks like me, bringing in experts to write papers, and for interviews, and for content, that they’re investing their marketing dollars to educate their customers on things that don’t directly – they won’t necessarily directly see a return on. It’s a bold move. And despite that being somewhat de rigueur for the competitors in this space, for being their size I think they do a phenomenal job. So honored to be here.

Nathan:

Thank you very much.

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