| ISSUE №201 · STRATEGY | MARKET CHANGES |
WTF Happened To All The Pepsi In Denmark?!?!
About 8 in 10 Danes want to order a soft drink when they get takeaway. When they use Wolt (a delivery app), only about 2 in 10 add one. And Pepsi products were added to orders only in 1 out of every 14 orders.
Pepsi saw this data and thought, "OMFG, we need to fix this." I bet that Wolt thought, “OMFG, Pepsi sees a big opportunity - let’s work with them.” They worked with WPP Media to organize the strategic opportunity.
WPP is awesome, for sure. But they are an agency, and tend to get paid for the “marketing execution” side of things. They got the inspiration from Wolt & Pepsi, but were charged with analyzing app user data, participating restaurant data, measurement data and more. WPP became the so much more than a media and creative partner. They worked to create external marketing strategy & execution (their normal charge), they worked with Wolt to improve Pepsi product visibility and conversion INSIDE the Wolt app, and worked with restaurant partners to insure product availability & visibility, PLUS they needed to coordinate their traditional media measurement, Wolt’s user experience, order data & delivery data PLUS restaurant order and fulfillment data to create a reasonable measurement paradigm. The cross-company strategic management by WPP worked - Pepsi orders rose from 6% of Wolt beverage add ons to 18%.
If you've ever tried to get people from three companies to agree on & cooperate on anything, you know WPP played a solid role as media campaign operator, but a HUGE role as the strategic architect of multi-surface user messaging & experience, multi-company coordination and alignment, and a unified measurement experience.
They weren’t just a media and creative agency - but rather an architect of cooperation, communication, in-flight adjustments & outcome-achievement.
What do you think Pepsi valued more? Creative & media or owning cross company orchestration, feedback & measurement? I’d bet 42 litres of Pepsi that it’s the latter, not the former.
From invisible to first in ChatGPT.
Bob's Your Uncle has spent twenty years helping challenger brands win their categories. But when buyers asked ChatGPT about their own category, the agency didn't show up.
With ChatFeatured, their AI visibility went from 7% to 22% in 90 days, and they went from invisible to first in ChatGPT.
They're not the only ones:
Vessel: AI visibility up 2,200%+
SCOJO: AI visibility up 160%
WikiSleep: brand mentions up 113%
ChatFeatured finds the questions where AI leaves you out, writes the content that gets you cited, and reports the lift every week. Your team decides what ships.
Most customers see their first citations inside 7 days.
Did You Sell Your Client A Drywall Crew & Then Give Them An Architect?
A drywall crew hangs the wall where you tell them to. An architect , on the other hand, brings the idea of the project to life. They decide where the walls go, of course, but they think about what it feels like to live inside those walls, how the materials in the building interact, and how the building works together as a sustainable ecosystem that will stand for decades or centuries.
Most agencies sell themselves like a drywall crew. "We run paid search. We do SEO. We handle retention marketing." Those are all valuable trades, but they are just tasks subordinate to the vision the client and the architect created together.
Those agencies often do architect-like work during their engagements. They help clients understand second-order impacts of marketing changes. They help coordinate leads and customers into forecastable pipelines. They help the client create a better vision of what's possible for their enterprise.
99% of the time, agencies are doing this architect-like work while getting paid for hanging drywall. I am certain that an architect gets paid way better than a guy who swings a drywall hammer and slaps up joint tape, even if they are a virtuoso.
Your suite of services like paid media & SEO are trades on the job. The influencer agency & the marketplace agency your client works with are just other contractors on the job, too. Even the client’s in-house marketing staff are just other subs on the jobsite.
I think you ought to think of your agency more like an architect. They create the gorgeous site drawings that make everyone gasp. But they also create the schematics that show how the land needs to be graded, where the plumbing goes, where the heating registers are placed and even where the electrical outlets get placed. All of these schematics are inside the gorgeous site drawing which represents the outcome of all the work.
The architect is the filter that decides what is essential to make the project a faithful rendering of the vision. The architect is in charge of organizing engineers, trade workers & artisans to make changes to the original schematics when the real world gives feedback in terms of building site, materials, labor, building code or financial changes.
The architect gets paid for design thinking, tactical schematic delivery, material selection, building code compliance and a million other things.
The drywall crew typically gets paid by the number of sheets of drywall they cut and hang.
OK Tim, Cute Metaphor, Why Should I Care Right Now?
Because the drywall model is getting its ass kicked, and I think it's going to get worse.
The Value of Time & Materials Is Collapsing: Forrester basically said that the “time & materials”, “we get paid for execution” agency model is dying fast. Digiday says that large enterprises and procurement teams EXPECT to pay less for creative & media buying because of AI.
In A World Where Outcome Based Thinking Rules, Incremental Growth Isn’t Cool: As retainers start to evaporate & the world is becoming more outcome focused, a trend that I started seeing in 2009 has really started to accelerate. At SpinShark & AdChemix, we would often see HUGE increases in client performance during the 1st year of an engagement - 30, 40, 50, even 150% year over year increases in performance. But in year 2 of an engagement, where you are no longer improving against a background of low-hanging fruit, and you are being comped against your own work, growth can sometimes slow down. 10% YoY growth in year 2 does NOT feel nearly as fun as 50% YoY growth in year 1. I had a client ask me why they should pay the same amount in month 14 as they did in month 6 when the relative growth was 10% versus 70%. Even if the work is EXACTLY the same, there is some kind of defensible logic where smaller outcomes should result in smaller pay, right? This has ALWAYS been the flaw in the retainer model, but as retainers start to fade away, incremental growth may not feel very valuable.
Strategy Is Treated As An Event Rather Than An Evolution: So many retainer-based agencies don't even do a clear strategy deliverable. The strategy just gets done bit by bit as part of the monthly retainer. Upfront projects are becoming a more regular feature in the agency landscape, but a strategy upfront is a one-time thing that doesn't get revisited. Strategy isn’t really delivered in any sort of ongoing fashion. It is likely given some sort of lip service during a quarterly business review where the agency is desperately dancing in front of the client, helping that the retainer will last for another one or two quarters.
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So WTF Do Architects Do After They Deliver The Schematics?
Real architects have a whole phase of work for staying on site after the drawings are done. It's called contract administration, and it's where they make sure the build matches the plan, and change the plan when the site throws them a curveball.
That’s what the future of the agency looks like. It isn't a one-time strategy or a quarterly business review. It is deep involvement in both the ongoing delivery of the service and continuous adjustments to the future direction of the project based on what's happening.
In agency terms, strategy becomes an ongoing line item, just like contract administration. It isn't a retainer necessarily, but it is a clear dollar value attributed to the thinking, the analysis, and the coalescing of an adjustment to the plan. Ongoing strategy work is completely commensurate with the wild changes that happen in advertising platforms, regulations, AI capabilities, and labor costs. The world is dynamic, and you ought to be charging for your thoughtful guidance through a dynamic environment. This kind of ongoing strategic thinking hasn't really ever been exposed to clients before. A client might hire a consultant to come in and do some sort of market assessment to define a direction that is likely to be successful. Then they may hand that plan off to an agency to execute.
For about 150 years, agencies have just bundled that thinking into either their media commission or their retainer. But as the world of commissionable media has, to my knowledge, almost entirely evaporated, and the ongoing retainer is under some significant existential pressure, you have got to charge for the things that matter.
Jumping back to my former client who wanted to pay less because YoY growth was lower - on a strategy level, we had to do more work to comp well against our own results than we did to improve the results when we first started the engagement. But we never showed the thinking and deliverable adjustments that needed to be made in this new comping-against-ourselves environment. We just did the work.
I think that we would have had easier discussions if we had exposed the amount of research, testing, and iteration that we needed to do to comp well against ourselves rather than continuing with our typical “Here is campaign performance, here’s what we learned, here are the things we are going to change, talk to you in 2 weeks…”
To be honest. I'm not sure that there is a one-size-fits-most model for charging for strategy yet. It may turn into something like the old-school “meeting fee”. Oh, you never heard of that? Meetings used to be billable items based on who was in the meeting and how long the meeting was… Or it could turn into some sort of “platform fee” where there is a minimum amount paid to the agency in fees so that they can perform the strategic analysis and the execution, and maybe there are success fees on top of it. Who knows? In a lot of ways, this is undiscovered country.
Same Client, Same Q4, Two Very Different Agencies
Let's say you've got an ecommerce client heading into the holidays.
The Drywall Agency runs the paid search plan from the October deck. Q4 CPAs go through the roof (because they always do). The agency reports the spike, writes a nice note about "seasonal competition," and asks for more budget.
The Architect Agency looks at where the buying actually happens in Q4. Amazon takes something like 39% of US ecommerce sales in the Q4. So the architect redraws the plan to take advantage of that sales concentration. Maybe they overweight Amazon, keep an tight rein on paid media CPAs, pause SEO work until late Q1, and use that budget to add some extra hands to the client’s in-house Amazon team.
Which agency do you think is more valuable to the client?
Here's a fun little nugget from our data at Agency Field Guide - under 10% of agencies sell Amazon or marketplace services as a standalone offering. So in many client engagements, Amazon & marketplace activity might be handled by an in-house team. They are probably completely segregated from other marketing strategies. Somebody has to design how that piece connects to everything else. It might as well be you.
"But Tim, My Clients Want To Be Their Own Architect..."
Some of them do, and some clients are amazing at overlaying a strategic layer across all of their agency engagements, especially enterprise level folks.
Big advertisers mostly run their own rosters: 81% manage multiple agencies individually from inside marketing, and only 44% use an integrated lead agency. And when integration falls apart, agencies blame stuff on the client side, like poor data strategy (52%), internal structures (51%) and lousy briefs (49%).
(Those numbers come from World Federation of Advertisers research on huge multinationals, and they're a few years old. Your $10M ecommerce brand is probably a lot more desperate for somebody to own the drawing.)
So no, you don't get the architect's seat by adding "strategy" as a service offering on your website or wearing a “WE 🖤 STRATEGY” baseball cap. You earn the architect post by stepping into that role with your existing clients. After they are delighted with the progress, you can adjust your contract to include this. For new clients, you have to build this as part of the marketing and sales process. You have to make that architect idea part of your whole Vibes Vision & Values approach and be thoughtful about how that agency positioning changes your target market, your fundamental value propositions, and your client experience.
Start with the clients who are small enough to need an architect and big enough to have more than one trade on the job.
The Architect Test (Grab A Pen. Yes, A Real One.)
Answer these about your three biggest clients:
Could your client name one strategic decision you made for them last month?
Do you know what the in-house team and the other agencies are building this quarter?
When things changed (Q4, AI Overviews, a new platform, whatever), did you redraw the plan before the client asked you to?
Is your strategy a living thing with a decision log, or is it a deck from onboarding that nobody has opened since?
If you got more than two "uh, no" answers, you are almost certainly being considered as and being priced as a drywall crew. And the clock on that client is ticking (thanks, Forrester…)
Start a strategic decisions log, ASAP. For every client, write down what you decided, why you decided it, and what happened. This is your proof that you are creating a living, breathing strategy.
Start to build a case around what had the biggest impact on your client - strategic decisions or execution. As you think about it, I am sure that in 3 months you are going to start assigning outcomes to strategy more than execution. In a proposal 4 months from now, I want you to put a strategy line item in the proposal. I'm still figuring out exactly how to price it (and I'll share what I learn), but I'm 100% sure that having the discussion with a prospect about the value of strategy will, in fact, highlight how important it is to their success.
You Can't Spring An Architect's Fee On Somebody Who Thinks You Swing A Hammer
DemandOS, isn’t just about positioning, team-led social authority building & go to market messaging, it’s actually the key to building the credibility your agency needs to step into The Architect Agency role.
If the first time a prospect hears you talk about the value of strategy is when it shows up as a line item in a proposal, I can guarantee that that is the very first pricing accommodation they are going to ask for… The value of your thinking has to show up in the market before the sales call, so that when the architect line shows up on the proposal, it belongs there instead of begging the question: "WTF is this?"
That's what DemandOS does. It gets your thinking out into the world where your future clients can see it, so they already know how you think before the first call.
Quick Note:
Agency Opportunities is still 100% free. New RFPs and signals every week. Go look at it. You can't win a deal you never saw.
WTF Growth Agency launches before Dec 1. If you want a newsletter like this one without the part where you stare at a blank page, LMK.
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