A Case for Silos

marketing silos

Let me preface this post by saying that I am cognizant of and a believer in the fractured customer journey to purchase. Multiple channels play a part in influencing a sale which has been proven and quantified through attribution and/or media mix modeling data for many marketers.

My case for silos is less about integrating the media and more about the manpower needed to manage the channels. And in this particular post, I am focusing specifically on agencies who service their clients — with a word of advice for the clients who use them.

At an agency, offering management of multiple services to clients is beneficial for several reasons. First is that some companies prefer that their channels be managed under one agency roof, so the agency can support this client need. Second is that by offering multiple services, an agency can increase its revenue by cross selling. Third is that agencies can provide a holistic view of the customer journey to clients — hopefully with supporting data — which is the purest case for providing integrated services.

Where the integrated service model falls down is when the agency lacks the manpower or domain expertise in one or more of these channels to service the client properly. If 90% of the client’s revenue is coming from one channel, there still needs to be focus on the other 10%. This is especially true if the big high-budget channel is one that heavily influences purchases in the second. The smaller spend channel may be a less significant media buy for the agency but is actually yielding a high proportion of sales. The common circumstance here is agencies who focus on TV media buying which is where they make most of their fee. Some of the digital channels may have smaller budgets but without them, the advertiser would potentially be losing sales since this is how many customers prefer to buy.

In many cases, the conversation around attribution (as it pertains to digital) is the opposite. The case trying to be proven is that the non responsive channels are actually pushing sales to the one that is. 

Every company tries to manage headcount and improve margins, and agencies are no different.  If 90% of the spend is coming from one channel, you can bet that that channel is getting more of the agency’s resources leaving the other channels spread too thin on resources and expertise. In this case, specifically, I would argue  1) against the client integrating their business with a single agency; or 2) ensuring the agency funds one team at a higher margin and the other at a lower one and then averaging the two so they don’t short shrift the client; or 3) writing (or editing depending on if you are client or agency) contracts that specify monthly manpower hours, by channel. 

The clients of integrated agencies need to take a stronger hand at deciphering the nuances of each channel, push hard for domain expertise, and ensure that their fee is being allocated to all channels — not just the one they are spending the most on.   Integrated agencies offer rolled up reporting which is great but can also mask the need for strategic direction where it may be needed most.

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