The Three Questions Every Ad Agency Should Be Able To Answer

There are more than 89,000 advertising agencies in the United States. This is great for clients, as there are a lot of creative and strategic capabilities available for hire. For agencies, it's a crowded room.

I have seen how this can play out: agencies often appear interchangeable to clients (even though we think we’re not), agencies don’t have a lot of bargaining power (which leads to downward pricing pressure), and living in a state of anxiety-inducing uncertainty (are we going to get the next project?) is not ideal. Nor does it create an environment for creativity, and creativity is the whole point.

I’ve worked with and at a lot of agencies big and small, and there is a surprising similarity: the cobbler’s kids have no shoes. Not all the time but enough, agencies are so focused on their clients that they don’t have enough time to spend on themselves.

As such, three important questions can go under-explored. Or they may have been answered when the agency was founded, but need revisiting. Or perhaps, they were never answered at all.

Why do we exist?

I first became aware of this framing in Simon Sinek’s TED Talk, and again in Hubert Joly’s The Heart of Business. Can this idea be applied to agencies? I think it can be applied to every organization on the planet. 

For agencies: are you here to launch a campaign for a client? So is everyone. Are you here to help a client advance their business? Same. Winning awards? Okay I guess. Making brands famous? A little closer. Changing the world? Possibly - at least on the right level but likely too broad. We’re not here to build boats, we’re here to sail oceans. What is the point of our creativity, anyway. Is it art?

Two agencies who I think have explored their answers to this question are Mojo Supermarket and Cashmere.  

Who are we for?

Agencies are busy by design. For years as an agency leader, I was dancing as fast as I could. In terms of who agencies were for, well most of the time the answer is “whoever comes in the door.” It’s a perfectly fine answer; if you are an agency with buzz, you will get the RFPs. Entire agencies can thrive on this model, as long as they stay hot.

The harder path is to first (or in parallel) determine who you are for. Is there an ideal client size that is your sweet spot? A certain vertical? Or output type such as branding, or packaging, or “TV” spots, or influencer campaigns, or…?  Client mindset, such as tech-start-up vibes, or old-school packaged goods? 

If you are for everyone, you are like everyone. That’s a red ocean. But knowing who you are for gives you the ability to use one of the most powerful words in the agency business: no. In fact, my favorite agency pitch I've heard starts with “we’re not for everyone.” 

What are we great at?

Knowing what you do and don’t do well takes a great deal of self-awareness, and sometimes a battle with your ego, especially when there’s money on the table. I’ve been in situations where we’ve taken on a project knowing we might have to “fake it till we make it” for a given skillset. Sometimes it works and sometimes it doesn’t. It’s not fun when it doesn’t.

What an agency is great at is often based on the skills of founders or leaders. New agencies are often founded this way: we’re great at social, or we’re great at packaging design. If you know what you are great at, you know which projects you can take on and which projects might kill you. 

As agencies grow, they will most likely be forced to take on new things. Or should I say, for agencies to grow, they will need to take on new things. In these instances, you will also have to be great at launching a new or expanded service, which means identifying the talent you will need to make it a success.

This is the principle SUPR, Inc. was founded on: helping companies harness their superpowers and identify their kryptonite to increase the value of their organizations.

In summary

These questions matter, but your exploration of the answers matters more. The exploration may force other tough questions. And your answers may change over time. But your teams will want to know. There’s nothing worse than ducking the question because you haven’t put in the effort to figure it out. And if you have it (somewhat) figured out, you can rest at night in your blue ocean.

And for what it’s worth: the success metric is not having three perfect answers; the success metric is that you are asking the questions. It takes a million things to keep an agency alive, and this is a good place to start.

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Todd Lombardo is the founder of SUPR, Inc. and an ad leader at both independent and holding company agencies for over two decades, responsible for winning pitches and retaining clients worth well over $50 million.