Does size matter when it comes to PR agencies?

The relative merits of big versus small firms
Agency Leadership Podcast

SUBSCRIBE:   Apple Podcasts    |    Google Podcasts    |    Stitcher    |    Spotify    |    RSS

A recent post in the members-only forum of the Public Relations Society of America (PRSA) discussed the benefits of small versus large PR agencies. It stemmed from a remark an agency consultant made on a recent webinar where he referred to small ad agencies as “two guys and a bong.”

While we can assure you that Chip and Gini were not smoking anything when they recorded this episode (OK, at least we think we can), they do stand up for small and mid-size agencies. Not that there’s anything wrong with being big, since every size and shape of PR firm has its pros and cons.

Chip also reminds agency owners to understand the difference between punching above your weight and fighting in the wrong weight class.

Resources

Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

CHIP: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin,

GINI: and I’m Gini Dietrich,

CHIP: and we are very professional

GINI: we are we are very professional. In fact up right before this, well,

CHIP: we didn’t have to, you know, wave our hands in front of our face to get a straight face going so that we could dive into this. We are your

GINI: all buttoned up serious professional.

CHIP: Right?

GINI: Yes.

CHIP: But, you know, that’s, that’s why you enjoy listening to this podcast because we have a little bit of personality. Not a lot, but a little bit.

GINI: I will I will tell you that. During the Inside PR recording this week, Joe Thornley said, I really enjoy listening to you and Chip because you have a conversation. And you play off of one another really well. And it’s fun to listen to you. And I was like, thank you, Joe. So, Joe,

CHIP: well, it’s good to know that we have one listener so at least one episode.

GINI: Well, we have more than one listener because we know that Shane Carpenter also enjoyed the one where you felt like you went off the rails. And I felt like it was hilarious. So

CHIP: yeah, so I was a little concerned when when you typed on Twitter that I was frisky on that episode because, as I say, I’m not sure that word means what you think it means.

GINI: It does.

CHIP: Okay.

GINI: There are multiple meanings to many words.

CHIP: Okay.

Well, but it’s certainly it’s not the cat food so I can, I can assure you because I’m not a cat person. So I don’t have a bag of Friskies sitting next to me. And I don’t snack on that. I smell all sorts of weird things. But anyway, Alright, enough of this. It is time to get into a very important discussion. And it actually kind of plays off of what we’ve been doing here because one of the reasons that we can do this and have a little bit of fun is because we’re small, we’re not a big corporate podcast. We are a small scrappy one, sometimes even frisky, but we’re going to be talking about big versus small agencies today. That was quite the Segway. Wow. Well, you know, I really worked at it. It’s I think it’s the three hours of sleep that I had last night. Is is really Helping me

GINI: Yeah. Wow.

CHIP: Okay. So big versus small. Why and why did we come up with this topic tonight?

GINI: Well, a blog post on the PRSA, or maybe,

CHIP: I guess it was applied to the forum

isn’t a forum members community and

GINI: there was a conversation about big versus small PR. And apparently on a recent ad week webinar, the author heard an agency consultant refer to smaller agencies as two guys and a bong

CHIP: was that Eugenie? Were you that we that was not me? No, it wasn’t me either.

GINI: I would never refer to it is too good. I’m yeah, it’s not accurate. And then he goes on to say if it wasn’t offensive enough to the smalls on the call the actual critical points he mentioned go to the favor of small agencies. And he has worked both larger agency life and the solo life. Like I like him. I have worked the larger agency life and I’ve built my own agency. And there are certainly pros and cons to both. And there are things that are fact. And there are things that are not and are things that are left, I guess to translation. But I think it’s a good conversation to have, because obviously, we all everybody who listens to this runs, runs agencies or maybe small businesses, and there are advantages to it because you can have expert senior level experts, consulting, essentially, that you may not necessarily get in a large agency.

CHIP: You know, and I come to it from the perspective that that neither one is necessarily better than the other. They’re just they’re different, differently, better fence for certain conditions, because, you know, like you I’ve, I’ve worked in a range of firms, I’ve worked for one of the largest independence in the US and I’ve also had my own solo shop. So you know, it’s Yeah, and it each one, there are certain advantages, obviously, you know, the big ones have some advantages of scale have access to resources that some of the small ones, you know, may have to work a little Heart wrap. But as this post points out, there are a number of specific benefits to the small firms. I think that’s where we’ll get started on the conversation.

GINI: Yeah, and some of the things he said that the there were some observations shared by the agency consultant on this webinar, and a few of those things were bad projects results in worker fatigue. Sure. So that I think that’s across the board, no matter no matter what size the agency is. In America, intermediaries or the account managers often create accidents, accidental disruption, usually without intent, but intend to cover up mistakes with lies can certainly follow. If you take your clients along on the journey, they’ll be forever grateful. And don’t just store it or reduce your relationship to a commodity. So those are the four things that were shared by the agency consultant. And I think that that applies across the board.

CHIP: Yeah, I think the you know, the having the different layers and you know, we’re talking about the accidental the Peace. I think that’s an important one to look at, because the larger you get and the more people that you have involved, the more likely it is you’re going to have someone making a representation that maybe it’s not backed up by the facts on the ground, usually, because they just don’t have as much of the facts them. Sure. And so they’re always going to present it in the most favorable light, whether it’s defending their own team or telling you that they have a capability or expertise that maybe is exaggerated, shall we say? So you know that, as you get bigger, you start running into those issues.

GINI: This reminds me, I had a boss, who, probably one of the smartest people I’ve ever worked with, we would go into new business meetings, and he would, he would be talking to the prospects about Yeah, we can do that we can do this and he’d have all these amazing creative ideas, but I knew the resources that we had internally at the agency couldn’t there was no way we could execute on half the stuff that he was, you know, telling the club We could do. And so I would spend most of my meet at most of the new business meetings kicking him under the table, and he would like be swatting my foot away if he was espousing all this, but it’s true, like, you can have great creative ideas, but if you aren’t thinking through the return on investment, or what the outcome is, they’re just great creative ideas. And if you’re not thinking through, do we actually have the resources to be able to execute those, again, they’re just great creative ideas. And so that is, those are the kinds of things that also, you know, result in worker fatigue or over servicing or unhappy clients or whatever happens to be?

CHIP: Well, I, you know, I’ve got a story here as well, I, my co founder at custom scoop years ago, used to do a lot of the business development activity, and I headed up the product development, and that was sort of the split that we used in the early days. And so he would go out and he would have these meetings with agencies and other big folks. And then then he’d come back In the end, he would, you know, come back to the office or he’d give me a phone call. And he’d say, okay, so. So this is what I told them we can do, we can do this right? And then he would just start laughing, because he knew that. So then it was my job on the product side to try to figure out how the product so that we could with half a straight face say, Oh, yes, this is what he was talking about. Hi, yay.

And sometimes we’d be in meetings together. And and he would say something, and he would just kind of glance over at me and he would know that he had, he had gone over too far. So then he would walk out after the meeting, and he returned to me with kind of a grin on his face. And he’d say, Did you like that? But he’s, he’s still a good friend. You know, we just, it was it was healthy tension in the relationship. Let’s put it that way. Yeah,

GINI: to be fair, I would do stuff like that to you just to see your head kind of pull

CHIP: in a meeting. Well, you know, the problem is that I have I have a habit of being able to shoehorn things into products and, and and make things in At least seem as if they are, what they were presented as. So in the reality is, and a lot of us, I think have that particularly in the small agency world. Yeah, you know, yeah, you over perform, and then people start to expect Oh, well, I can always do that. Right. Right. And it’s, you know, that and that’s, that’s part of, as we’ve talked about, on the show many times the the importance of setting expectations properly with clients, you know, whether that’s things like responding to emails at 3am, or whether it’s promising what your capabilities are, so you always have to be cognizant of that the expectations you’re setting.

GINI: Yeah. And it’s, I mean, yes. If you’re going to promise something, make sure that it provides not only success, but a good return on investment and that you truly understand that this is a relationship and you’re asking the right questions and you’re learning the client’s business. You’re not just lobbing out ideas verbatim, right?

CHIP: Right. But to mildly steer this back to the big versus small piece. After there are nice little side trip there. You know, I think that one of the benefits is that, you know, small agency, the key people are always in the room. Right. And, you know, going back to my customers group story, you know, when I was there, you know, I was doing product development, and my partner was doing business. And we were the we were in the room. And so this wasn’t, you have to go back and work through seven layers of people in order to get something approved. And to do it, you have the decision makers there, which means that from a small agency perspective, there’s a much tighter relationship between what you tell the client you can do and the execution, things aren’t going to get lost in translation, for the most part, because you’ve got everybody right there around the table or on the phone or wherever.

GINI: Yeah, and that’s certainly an advantage. You know, and we’ve also talked about some of the disadvantages to that, especially as the agency owner, your name is on the door. So clients prospects expect you to be in the room and you can’t, you can’t like if you’re scaling an agency, you can’t be all things to all people. So you also have to start to prioritize and figure out Okay, what is the what are the processes that you have to have in place internally so that those things don’t happen as you scale so that you’re not getting the same. You’re not becoming just another large agency that the, you know, really senior expert, senior level experts who have great creative ideas and have vertical expertise are in the room selling the business and then the 22 year olds are executing, you don’t you don’t want to become that. But you have to figure out how to do it so that you don’t have to be in the room for everything.

CHIP: Right. And and there’s real advantage to not being in the room to just from the perspective of you, it gives you more time to think about decision. So one of the things in all the businesses where I’ve had partners, we’ve always had a rule that you don’t you don’t put all of the partners in a single meeting, because then you don’t have any way to sort of punt from that conversation and either come up with a new strategy or you someone else. Stop. Yeah, and that’s you know, and obviously You know, for day to day client servers that may not be nearly as important but if it’s, you know, if it’s working through a deal with a prospect or a potential partnership or joint venture or somewhere down the road, and m&a, if you can have someone who’s involved in the decision making process who is not in the room, it allows you to buy time and have some additional leverage in the conversation that you lose if everybody’s there because then, you know, the whoever you’re on, who’s ever on the other side of the table says, Well, we’ve got all the key people here. So right, why can’t you just commit now? I can’t you Yeah, yeah. So something something to think about. And it’s interesting. I like that. Yeah. And even in a small agency, there’s, there’s benefit to you know, even if you don’t have a partner, if you can be out of the room, and and your number two can be handling a conversation. So they always can say, you know, that sounds fine to me. But you know, I really need to check with Jenny about that and see Yep. And then you know, lo and behold, Judy may raise some issue and she may raise legitimately or you may come up with another one just because there’s there’s some purpose in that conversation to move it to different place.

GINI: Yeah, I like that a lot. That’s a really, I do that once we do some of that once a client becomes a client, like we charge more if I’m in the room, and sometimes clients are like, yeah, we don’t need you there. And sometimes, like clients are like, yes, we absolutely need you there. So, but I like that on the new business side of things to where you because you can, and it allows you to see the forest for the trees sometimes because you weren’t privy to all that conversation.

CHIP: Right? And even, you know, even if it’s, even if the person is not in the room doesn’t see something, the person who is in the room, upon further consideration and thinking it through may realize, oh, there were some gotchas I didn’t think about in that, yep, maybe where they are, I had an idea for a better way to solve it. You know, so it just it gives you that flexibility. And you obviously, you know, you want to be careful that you don’t overuse that capability, because then it makes whoever’s in the room look weak, but of course, you know, but the but if you use it strategically, it can be very beneficial. And it’s, you know, and one of the things that this post in the forum talked about was you know how smaller firms benefit from having a lot of FaceTime and, and building better relationships. And a piece of that is figuring out who to put in the room when. And because they’re going to know everybody, right? They’re going to know who’s doing their client service, they’re going to know the owner of the agency, if it’s a small one, but you know, putting them in the right place at the right time is really how you maximize that relationship.

GINI: Yeah, and it’s funny you say that because I have a client who I actually just had this conversation with her yesterday, she, she does exactly that, just, you know, once a month, she tries to be in a client’s office. And then what essentially what they do is six times a month, there’s somebody from her team in the client’s office, but she herself tries to be there at least once a month, just to see how things are going and you know, all of that and it’s, it’s created an opportunity for her to have massive long standing relationships because they consider her and her team part of their team because of the face time,

CHIP: but I think I think what I’m saying small, small agency owners need to be very careful out there too, is that they’re not effectively emasculating their staff in that process, because for sure, because there’s a real tendency for clients to try to play off the owner, you know, get commitments to things. And and you need to make sure that you are in, you know, not necessarily in lockstep with your team, but you know, you’re that you’re, you’re consistent with them, and that you’re not making promises that they can’t back up or you’re not undercutting them, you know, by by appearing to be the one that they need to have in the room in order to come up with the big idea. So, so make sure that you’re you’re using that properly to empower your team members and not to, you know, to make that monthly meeting with you the the place where everything really happens.

GINI: For sure, for sure. For sure. That’s I would say that that is one of the most challenging things I think, because we as agency owners have to face is when you when you’re in a meeting with your team, and you have to just shut up and let them do their thing and you’re thinking I would have handled it that way. Oh, I wouldn’t have said that. And then use that off. opportunity to coach them later. But really to keep your mouth shut during those meetings so that they they are seen as the experts and it doesn’t you’re not in there sort of saving their butts when they may or may not may make a mistake.

CHIP: Yeah, it is insanely difficult, particularly if it’s very challenging like me, and I suspect you who just have a difficult time keeping your mouth shut, period. That’s, that’s one of the reasons why we do a podcast because right, so you can actually both of us do multiple podcasts. Because why do one episode a week when you can do three or four? Exactly. It’s a lot more fun to do out. But but it is, you do want to make sure that you’re having those conversations behind the scenes, because the other thing to keep in mind is, frankly, your team may not have as good an idea as you do, although sometimes they have better ones. But it may be 90% good. So you know, right? Why are you counting them for that? Yes. 10% Yeah, absolutely. Making it now if they throw something out and it’s a you know, only a 10% good idea or a straight up bad idea. Well, then that’s that’s what you should step in. You know, this is we’re not encouraging you. Watch the house burn right here and say, Well, you know, the firefighters have this and you’re in Europe isn’t just turn on the water that they forgot to turn off. You know? I don’t know where that came from

GINI: you do turn on the fire hydrant if you have to. But yeah, that is super challenging. And, and I agree with you. I mean, I always use them as coaching and mentoring opportunities. And I, I take notes and people can see that I’m engaged in from that perspective. But unless it’s something like my former boss who would promise all sorts of things to all sorts of people, I, I try and keep my mouth shut.

CHIP: Yeah. A lot of people over the years who the word know is not in their vocabulary. And that is that is problematic at times. You know, so you, you do always want to make sure that you know, the folks that you’re you’re working with have that ability to figure out where to draw the line and not just commit to everything that the client or prospect request. Yes, yes. You know, what one of the, I think probably the most common one, wouldn’t you agree that people describe as a benefit to a small agency is that they’re nimble? I mean, I think that that’s, that is the common perception. I think it’s I think it’s largely true. But, you know, I think it often comes down more to the individuals, I think large agencies can still be nimble on a project level, they can, it’s very difficult for them to be nimble at a business level, you know, to make a real pivot in their business on a project level, I think it comes down, frankly, more to the individuals involved. But there is something to be said for that that nimbleness that you have when you’re small, you don’t have the bureaucracy to deal with.

GINI: Well, and I think to that small agencies are often born out of large agencies, I worked for a large agency you are I mean, lots of you. There are some exceptions to the rule for sure. But you know, large agencies place emphasis on profitability and billable hours and you got Dr. If you didn’t get your time in on time, like I mean that that’s where they place their emphasis and in smaller agencies, we Focus on the client and the results that we get for them. And you know, of course, we want to pay attention to profitability and billable hours and not over servicing and those kinds of things. But we that’s not not that’s not the emphasis, where in large agencies, it tends to be run by the bean counters who are saying this is how you have to do things, even if it means it’s not the most creative or the most results driven program.

CHIP: Right. And I think what you’ve just touched on, there is one of those things that’s, that’s a benefit to a small agency from a client perspective, but potentially a negative for the agency itself, which is the cost issue, right? Because by and large, small agencies charge less than big agencies, not 100% true all the time. And there are reasons for that, you know, there’s often higher overhead costs with larger agencies and all that, but a big piece of it is because a lot of small agencies don’t charge for their value. They are they are underpricing what they do and they while big agencies may be You’re too skewed towards Towards the bean counter side, small agencies often don’t pay enough attention to profitability, particularly at a project level and understanding how to make sure that they’re getting the right balance between providing excellent service and also generating the revenue and profits that they deserve. So, you know, you want to make sure that you’re not turning an advantage from a client side into a real disadvantage from a sustainable business perspective.

GINI: For sure, yeah. And I mean, I, you do have to pay attention to those things. Absolutely. But you can also and I think this goes to the nimbleness, go back to a client and say, Hey, we had, you know, we were working through this, and we saw this challenge, or we saw this opportunity. We had this idea, and I think we’re in this is just a massive gross generalization, but in larger agencies, the people who are executing the work aren’t experienced enough to be able to do that yet. And so you have you have an opportunity because you are born out of a large agency or you do have experience and know that you have a better way of doing things, which is why you have your own agency. Because of that you have the experience to look at challenges as opportunities or opportunities to grow or, you know, you have the ability to do that. And I think with the larger agencies, because they have, you know, the 20 year olds, new college graduates working on the business, there just isn’t the expertise yet.

CHIP: Right. Right. And you know, and you know, I don’t, we shouldn’t just trash big agencies, because they actually they do have some benefits. And there are places where they do work better. I mean, a large agency is typically going to work better with a larger enterprise, for sure. And part of that’s because large enterprises, as clients are generally dysfunctional in some fashion, because they’ve gotten big, and that means they’ve got a lot of bodies that they throw at it. And if your client has a lot of bodies, and you don’t, that creates a mismatch,

GINI: right,

CHIP: leads to a lot of wasted time. And I think that it’s important, you know, small agencies always want to punch above their weight, and that’s good, but you want to make sure that You’re also not fighting in the wrong weight class. And so you want to take a look at the business that you’re fighting for and saying, Is this really business? That is good for me? And and that comes down to things like, you know, if I win this project, you know, it’s going to be great to say that I worked for a fortune 500 company, yes. But is it going to be too high a percentage of my revenue? Is it going to require me to go and add 20 or 30% to my staff, if I went it, you know, there are a lot of things that you need to be careful of as a small agency when you’re investigating those things, which is, as a large agency is much easier, you know, it’s it. It doesn’t take as much for a large agency to work with a large client.

GINI: And I would say one of my favorite things to do, especially with larger organizations like that is because we’re small we can’t, for all the reasons you just described can’t go after all of the business at one time. So one of my favorite things to do is to start in a region or start with a project and Right now seems to be because everybody’s talking about the R word, and the economy. That right now I know, right now that that tends to be a good, it tends to be a good time to do those kinds of things because clients are either, you know, doing only project work and removing retainers from agencies or they’re bringing everything in house. For what for what they can, because they’re, everybody’s a little skittish about the economy. So I love to do that, like, give me a good project to show you what we can do and let us grow from there. And it may take three or five years to become agency of record or to win all the business away from a large agency, but it’s a better investment and a better way to scale your agency in a way that makes sense for you and your team.

CHIP: Absolutely. And, and, you know, anytime that you can sort of, you know, eat something gradually, you know, you’re going to have a lot less ingestion then you feed it all at once.

GINI: And that works in many more ways than one. And

CHIP: it absolutely does. And, I mean, frankly, most agency should, I mean, even if you’re a big agency, you need to be careful about trying to bite off an entire giant project all at once. It’s, it’s often better even even at a larger size to figure out, you know, what is my way in with this client? How can I execute the heck out of some, some project or some region or whatever, and really demonstrate expertise and grow from there. Because the problem is even even if you’ve got tons of staff and, and lots of internal expertise to throw it at a project, you know, if you’re trying to do it all at once, it becomes very challenging, particularly on some of these larger client relationships where you probably have someone who’s full time in your agency who’s just traffic copying that project. Right? And, and so you know, that process alone takes a while to gear up. So if you can start by biting off individual projects where you can just shine, it will build a much stronger, deeper relationship with that client. Over time. Absolutely.

GINI: And to go back to your point at the start, which was there’s no right or wrong way to work with the earth. There’s there’s no right like, agencies of all sizes are great for certain for every situation. I loved, loved, loved, loved my time at Fleishman Hillard, I learned a ton. I was given way too much responsibility for my, my age and for my number of years of experience, and it empowered me in a way that did eventually allow me to go out on my own and, and you know, for various reasons, but I loved my time there. So I definitely am not dissing large agencies. And I think you’re right there are, you know, in most cases, they are great for large enterprise clients, but I also of course, have a soft spot for soft, soft spot in my heart for those of us who are running small and mid sized agencies.

CHIP: Yeah, and it’s, you know, and some are better at different points in your career. different stages in your life, Sharon was a client. So you know, so whether you’re an owner, a client or an employee, you know, big or small can work at different points in time, and just you have to understand and appreciate what the benefits of HR I mean, you know, like you I loved being with a very large team and having, you know, a lot of the interactions that you have, that you, you often lack when you’re in a small group. And so, you know, finding those, you know, it’s sort of like, you know, I’ve loved running businesses where I’m the sole owner, and I’ve loved running them with partners as well. Yeah, there are pros and cons to both. But you know, as long as you are attuned to what those pros and cons are, you’ll be in a much better place to be successful.

GINI: I agree.

CHIP: And so hopefully, with that, we’ve given you the listener some ideas as to the pros and cons of big versus small, and, you know, you can decide at what point you want to, you know, maybe curtail your own growth or probably you’re not going to I mean, frankly, I most of the agencies I know, unless they’re really small and just want to stay Really small once you start getting up to, you know, say, most just want to keep going if they can’t, yes, yes. Oftentimes whether that’s a good idea or not, but that’s true. Yeah, for a different show, because nobody really wants to listen to us for more than 30 minutes. So we are creeping up on our expiration date for this episode.

GINI: That was great. Yeah, you’re too hard on us. Okay.

CHIP: All right. I’ll be nicer to us. We’re great. We’re excellent. We’re awesome. Everybody should listen, go tell more people listen to the show.

GINI: There you go. That’s right.

CHIP: Very good. And once again, we will cream into the end of this show, because I’ve yet to figure out how to bring them to a smart close. It’s always just this rambling, never ending end. So with that, I’m Chip Griffin,

GINI: and I’m Gini Dietrich

CHIP: and it depends

Like this episode?