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Small agencies should beware the big brands

It seems so alluring to be able to put a Fortune 500 logo on your agency’s website. Many of us dream of the creative things that we can do for these household names.

Yet often these big brands end up being bad deals for small agencies. They are time-consuming to sell, difficult to service, and often subject to onerous contractual terms.

In this episode, Chip and Gini take a look at the appeal presented by these opportunities, along with the risk that they present.

Key takeaways

  • Gini Dietrich: “You would think that big brands equals big dollars equals fast growth, but it doesn’t.”
  • Chip Griffin: “I’m not going to tell you that every big brand is awful to work with. Or maybe I will. Most of them are pretty bad.”
  • Gini Dietrich: “You’ve had to go through the RFP process, the procurement process, the ridiculous payment terms, and now you can’t even use their logo to help you build your business.”
  • Chip Griffin: “You need to be intelligent and deliberate and intentional about what kind of business that you’re seeking and make sure you’re doing it for the right reasons.”

Related

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

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast.

I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini I think we need to get this show on, on ABC or, or CNN or something like that. That’s our mission, just to make sure that we get it on some big network, NPR. Absolutely. Okay. Right after this.

Ah, yes. Everybody wants the big logos for their agency. Yep. And I don’t think we’re going to be on NPR or ABC with this show anytime soon. I think it’s pretty unlikely.

Gini Dietrich: The audience is too small.

Chip Griffin: Yeah. It’s a pretty narrow audience. Right. I don’t think we would get the ratings that would, you know, light up the Nielsen book, so.

No. So I think probably we should, you know, be more realistic in our expectations and spend our time and effort in more productive ways. Right. Agencies should probably do the same thing. Correct. Particularly small agencies because I don’t know about you, but I talked to a lot of small agencies who just, they have stars in their eyes and they see these, these large brands out there and they put out an RFP and they’re like, Oh, I could do this for Coca Cola.

This would be great if we got this. Yeah, not a good idea.

Gini Dietrich: Not a good idea. No. And I, I will admit that I’ve been there like at the beginning of my business. That’s how I thought I was going to grow it right? Because I think you see big brands equals big dollars equals fast growth. And it’s an in your mind, I think it’s an easy way to grow fast without having to, you know, chunk away 5000 a month 5, 000 a month clients over and over and over again, which is true.

But you can do that kind of growth without going after the big brands and all the things that come along with it.

Chip Griffin: Absolutely. And it’s not always just, you know, big as in, you know, absolute dollar size, right? Because if you’re in a particular niche, you may be, you know, there may be certain brands that everybody wants to work with, even though it’s a small space, right?

I mean, in our space, everybody wants to work with Spin Sucks. So everybody wants to, you know, to pitch you on working with you. The problem with that is that everybody is doing it. And so you are now one of many who are trying to reach out to whatever that logo is, whether we’re talking about a Coca Cola or someone big in an individual space.

And so the work is much harder to get. Generally, the leverage, whoever you’re working to get the business off, they know they have the leverage. And I’ve worked with a lot of big brands over the years. And I can tell you that they’re almost uniformly terrible to work with because they know that they are big enough that that they are going to be the ones who have the leverage and can tell you to do anything they want and you will do it because you want to keep the business.

Gini Dietrich: Yeah, I think that’s exactly right. Who was it? Remind me who it was like earlier this year that, that did the RFP big brand and had like a year before they would pay anybody. Who was that?

Chip Griffin: I want to say it was a better, was it Dr. Pepper or something like that? Yeah. Someone like that. Yeah, yeah, yeah. I think it was someone like that.

And if I’ve maligned Dr. Pepper improperly here, my apologies. It was for some reason that’s what sticks in my head. So.

Gini Dietrich: But the, the, the thing is, is that They, they threw that out there. We’re not going to pay you for a year because they know that agencies are going to do it. And they, like, even though many of us were like, this is ridiculous.

And all of the PR trade said, this is ridiculous. They still found an agency to agree to those terms.

Chip Griffin: Absolutely. And it’s just, there is no brand that is worth it to work with under those kinds of terms. There is no brand that is worth it to be able to put on your logo page that, you know, where you talk about, Oh, we, you know, these are our clients.

None of them are worth it for all that comes along with it. Now, if you can find the exact right relationship that works great, they do exist out there. I mean, I’m not going to tell you that every brand, big brand is awful to work with. Or maybe I will, I don’t know. Most of them are pretty bad again, because they know they have the, anytime, you know, that in a relationship, anytime, you know, that you have extreme leverage over the other party, even if you have the best of intentions, you’re still going to end up taking advantage of it.

It’s just human nature to do that. And it’s human nature for the unlevered party to sit there and say, you know, even if they’re not asking me to, I’m going to do all of these things. And it’s why you get into over service. It’s why anytime I go into an agency and I see that they’ve got these great clients, I almost always sit there and say, you know what?

I bet these aren’t very profitable. And we dig into them and guess what? They’re not very profitable. And having that logo on your website isn’t generating all the business that you think it’s going to.

Gini Dietrich: But also, many of them won’t let you have their logo on the website.

Chip Griffin: Well, that’s the other thing.

Gini Dietrich: You go through all of this and then they say, No, you absolutely cannot put us on your website.

You cannot talk about us in marketing. You cannot speak of our relationship at all. And many of them do that. We have a client who works with very large brands. And not a single one of them. Not one. Will let them use their logo. No case studies, nothing. They can’t, they can mention it in a conversation like this where, where it’s one on one and you know, on the phone or on zoom or in person, they can say we work with so and so, but they cannot put it in writing anywhere and it’s in the contract.

So now. You’re being leveraged because you’re a business that wants to work with this big brand. You’ve had to go through the RFP process, through the procurement process, your ridiculous, terms, payment terms, and now you can’t even use their logo to say, we work with this company to help you build your business.

Chip Griffin: I’ve even seen crazy cases where the large brand works with the agency on a project, they then submit for some industry award, and we’ve talked about how I think awards are stupid anyway, but they apply for some industry award, they get the industry award, but then the brand won’t let them talk about the fact that they were part of the win.

Absolutely. Yes. So then the agency is left with either saying, We won this award, but we can’t tell you why, even though they submitted it to the other organization and it was part of that organization, but they can’t even talk about it, right? It’s bonkers. There’s no reason to do that. And so. You know, I, I don’t think that, that if you are a small agency, if you’re listening to us, that you ought to be going out there and actively seek these large brands, well, period, I just put a period at the end of that sentence, but it’s because it’s just, they’re not good arrangements in almost every single case that I’ve seen.

It just, it doesn’t make any, you’re much better off going for the middle tier players in whatever industry that you’re targeting. Because those are folks who are, they’re not having everybody beat down their door. You know, when they, when they put out an RFP, they don’t have 150 submissions. Right from people who are like, of course I can get in.

Why not? And, and so if you’re, if you’re fighting in those places and you’re doing it where you have a much higher probability of winning, you have a much better chance of having a successful, profitable relationship that will help you more than anything you will ever get from being able to say that you did work for Coca Cola.

Gini Dietrich: The other thing I would say is if you have relationships, so and this is very, this is not going to happen very often and not to very many of you, but there will be cases where you have relationships inside big brands, but certain divisions. So not the overall arching, but we’ve, we work with two of the Fortune 10, but we don’t work with corporate.

We work with like a division of that’s in the Midwest, for instance, of one company. And we do great work with them and they pay their bills on time. And like, we didn’t have to go through that whole process. So that’s how we’ve kind of wiggled in. And with one of them, because we’ve been a client for years, we’ve gotten another division and another division and another division because they talk to one another.

But still, we’re still not working with the chief marketing officer or the chief of corporate communications at the big corporate level. We’re doing it in, in divisions. And that has worked really well for us, but it’s been really specific. We’ve started with one relationship and built relationships, you know, as we’ve gone along and it’s taken 12 years, 13 years for most of them to continue to grow.

But that is the only way I’ve ever seen it work. I have one client who’s done the same with another big brand. She started with one division and has just slowly chunked off more and more and more and more.

Chip Griffin: Well, and you’ve just highlighted something really important there, and that’s relationships. Yep.

So, so the advice that, that I’m giving here is really focused on going in blind to these brands, right? You know, responding to an RFP or targeting someone just because of the logo. If you have a pre existing relationship with someone who runs a division, or even frankly the global CMO, right? If you’re good friends with the Absolutely, yes.

Then, then this advice would not apply. Right. You still need to be careful. Because even though you have the relationship, they may, you know, you can still end up in a bad place over time if you have to agree to standard contract terms and things like that. But at least it’s, I would say that it’s in the realm of consideration because of the relationship.

Right. It has nothing to do with the logo. Yes. So, you know, if you have the, and I have had relationships with individuals at big brands that have been very profitable and have been very successful. But it’s because I had the relationship beforehand. Right. In almost every case where I’ve been part of an agency team where we went in and we worked for a big brand and it was, there was no pre existing relationship, those are the ones we really get taken advantage of.

And, and sometimes even when you do have the relationship, just because of their standard policies and practices. Because a lot of these companies, it’s not just the payment terms that are problematic, they often have other requirements in there that make it, unpalatable to do work for them or unprofitable to do work for them.

And so you need to be aware of all of those things because I see too many agencies spending way too much time and effort putting together proposals and pitches and just, you know, even just the basic blocking and tackling of trying to build the relationships in some of these big brands that could have been much better spent winning two or three mid sized clients.

Yep. As opposed to just going for those marquee brands because they think that, and I think to me the biggest problem is, is the thought that there’s some aura around these big logos that will cause people to say, Oh, well, if you work for them, I definitely want to work for them. Now, is there some of that?

Of course, right? There are some people who will be swayed by that. But frankly, if that’s why someone decides to work with you, it’s probably not boding well for the long term nature of that relationship anyway, right? If I work for you, or if I choose you as an agency, just because I know you’ve done work for Coca Cola, and I’m not meaning to pick on Coca Cola here.

They’re a fine company. They’re a big brand. Everybody recognizes it. So if, if you think that that’s why they are working with you. How shallow are they? Right? They’re not really judging you based on the work that you’re doing because you can demonstrate your expertise your talent in many ways far beyond just that you have some logo on your slide.

Gini Dietrich: Absolutely. And the other thing I would say is that Some of the big brands to your point make things not palatable and will steal ideas Take them as their own. And this usually happens in the pitch process where you’ve like pulled out everything that you have. You go and you do your dog and pony show.

It’s creative. It’s smart. You’ve given away all sorts of ideas to try to win the business and you don’t win the business, but six months later, or a year later, suddenly you see a campaign or something in the news that was your idea. And they have no qualms. About taking those because you pitched it to them.

They didn’t pay for it, but they weren’t, you, they, they got the idea from you and they have no qualms doing that. And guess what happens when you try to sue them?

Chip Griffin: Good luck. Good luck Well, in fairness to the big brands, you know, in most cases where I’ve seen this happen, it, it wasn’t a malicious, it wasn’t intentional.

It was simply once you hear an idea, you can’t unhear it. And so. You know, if I hear a good idea somewhere along the way, and I’m in the process of doing it, and I choose not to work with one agency over another, I mean, it’s just natural. I mean, I know that I have plenty of ideas, and I can’t remember where I first heard it.

Sure. So, are there ones who are doing it maliciously? Yeah, probably. But I, but I think, I think more often than not. It’s more out of, of ignorance or carelessness as opposed to an intentional harming of that individual agency. And the difference with the big brands is they have the bandwidth to execute these things on their own.

So in general, my advice is don’t hold back ideas during the, no, don’t hold back when you’re in a pitch process because most, most clients aren’t really able to execute on them. And so. You know, it doesn’t really matter in my mind that much. And so, you know, if you start being a little bit too, too coy and too, well, you know, I can’t really share that until we’re actually working with you.

I think that just looks a little off. Big brands are different though, because big brands can and will, to your point, take advantage of those ideas, whether it’s malicious or not.

Gini Dietrich: Yeah, absolutely. And I’ve had that happen with an entire campaign. They, this one was malicious. They did it on purpose. They had agencies come in to only to get their ideas.

They didn’t hire an agency. And use their ideas. And it was 100 percent malicious. They’re out of business now. So that makes me feel better. But I mean, they’re a big brand. They were big, big brand.

Chip Griffin: Yeah. I mean, that’s unfortunately that kind of behavior does exist. but you know, it’s, it’s one of the many, many reasons why you just need to stay away from these big logos and at least as a default position, as you know, we always say it depends.

So there’s always, there’s always the exception to the rule, but I, I… my biggest concern is just agencies that are so fixated on whatever logo it is that they are willing to compromise all of their standards, right? And, and so we see it in a lot of different ways. It can be agreeing to awful payment terms.

It can be underpricing. Because, I mean, I’ve seen this one a lot. You, you know, you go into the big brand and you’re like, Well, we want to make sure we win this. And so you, and so you’re like, We need to sharpen our pencils and come up with the best pricing we can. And the best pricing you can usually means that you’re taking a loss on it.

Yeah. Because most small agencies aren’t good at pricing to begin with. So even in your best relationships, you’re generally not, you don’t have huge profit margins. So if you’re starting to shave stuff off, you’re already starting at a deficit in working in that relationship. And it’s only going to get worse from there.

And so, you know, we need to stop this mindset that the big logos are how we will measure our success. Because as we’ve talked about many, many times, you only need about 10 good clients to run your agency well. And those ought to be 10 good clients. They don’t need to be the marquee clients. They need to be ones that you produce great results for that you do with a solid profit margin and that treat you with respect and you can treat them with respect.

And if you find those kinds of clients, you’ll be fine. And again, you only need about 10 of them. There’s a lot of companies and organizations out there that you can work with without having to compromise at all, just to get that, that logo that someone’s going to love when you share it at a cocktail party.

Gini Dietrich: That’s why, and this is a completely different subject that we can talk about later, but that’s why I really love these emails that are coming out now of, Hey, I understand you run a PR firm. Let us help you get 10 to 12 new clients a month. I’m like, I don’t want 10 to 12, I would die with 10 to 12 new clients a month.

No!

Chip Griffin: Almost no agency can actually on board. I mean, even large agencies typically are not, I mean, unless you are an Edelman, you are not bringing on 10 new clients.

Gini Dietrich: Not even then. I don’t think.

Chip Griffin: Yeah. I mean, I guess it depends on how you, cause I Edelman does take on some, to my knowledge, at least in the past took on smaller clients.

Periodically. And so those could add up globally, you know, anyway, it doesn’t matter that. But if you were listening to this podcast, you cannot support taking on 10 to 12 new clients per month. I mean, even most of the high volume SEO or PPC agencies out there would have a very difficult time taking on that many new clients and servicing them well.

Yes. So you, you really need to be intelligent and deliberate and intentional about what kind of business that you’re seeking and make sure you’re doing it for the right reasons. And that is because you can produce great results and because you can turn a profit. If you cannot say yes to both of those things, then you shouldn’t be pursuing it.

And most times when it’s that big, impressive logo, those things will not be true.

Gini Dietrich: Yep. Totally agree. It’s all headache, headache, headache, headache, headache. Headache.

Chip Griffin: And you know, it’s the holidays. We don’t need more headaches. The eggnog will do enough of that for us. So on that note, we’ll let you get back to your eggnog or whatever it is that you’re doing.

So this is, well, I mean, I think it’s probably the best way for people to get through the Agency Leadership Podcast.

Gini Dietrich: Maybe that’s what we’re doing. I mean, we should start drinking eggnog.

Chip Griffin: I mean, that would be fun, you know, ALP cocktail hour or something like that, you know, we’ll just, we’ll sit here. And actually, I remember, years ago, I was listening to a talk radio program out of Boston and the host was, trying to, to demonstrate what it was like at different breathalyzer levels.

And so he just started drinking at the start of the show and kept doing a breathalyzer throughout as he became more and more incoherent because he was just pounding alcohol in order to just sort of like an experiment, you know.

Gini Dietrich: I like it. I like it. That’s amazing.

Chip Griffin: On that note, we will not be doing that on this podcast, at least not this episode.

Keep listening and you never know. Never know. It’s a reason to subscribe. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.

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The Hosts

Chip Griffin is the founder of the Small Agency Growth Alliance (SAGA) where he helps PR & marketing agency owners build the businesses that they want to own. He brings more than two decades of experience as an agency executive and entrepreneur to share the wisdom of his success and lessons of his failures. Follow him on Twitter at @ChipGriffin.

 

Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, the lead blogger at Spin Sucks, and the host of Spin Sucks the podcast. She also is co-author of Marketing in the Round and co-host of Inside PR. Follow her on Twitter at @GiniDietrich.

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