The SMG business model: Marketing or PR? Both – and more.

maggiefox, April 7 2008

We’ve been lucky enough to be getting a lot of ink lately, both in The Globe and Mail, one of Canada’s national newspapers, as well as Report on Small Business magazine, which ran a profile in the Spring issue. This has of course been great – it’s really nice to be recognized for your work, and I know the whole SMG team feels that way (as they should – they consistently pull together truly amazing stuff for our clients, and I am very, very proud of them and their work).

But something very interesting has emerged from all this press – no one seems to know quite what to call us. We’re referred to variously as a marketing or an online PR agency, neither of which is a particularly accurate or complete description. The truth is that SMG, and we believe, social media agencies in general (or at least the good ones), are an entirely new breed altogether, blending the best of business consulting and the traditional agency model, but leaving all the “bad” stuff behind.

Together, we’re defining an industry.

The Business Consulting Model
This is basically bringing in subject matter experts to help you solve a business problem. The consultants come in, they research, investigate and explore to determine what your needs and realities are, and make recommendations based on their expertise that will allow you to meet your objectives.

Pros

* Consultants have an amazing opportunity to get to know your business from the inside out – recommendations are based on hours of research and exploration inside/outside the company, and should ideally be completely aligned to your business objectives.

Cons

* Solutions can sometimes be unrealistic (there’s no obligation to make them work – implementation is someone elses’ problem)

* All the money is made in the consulting phase – the longer it is, the more money the business consulting firm makes

The Agency Model
Creative agencies pitch clients on ideas, and if the clients like them, they buy them (the initial idea is often created before a business relationship has been established). The agency then produces the idea (web, print or broadcast). Interestingly, agencies do not make most of their money on production, but rather on purchasing the media, or placement, for things they make, i.e. television commercials, newspaper ads, etc.

Pros

* Creative ideas generated by creative people in a creative environment, with (ideally) limited constraints

* Full-service implementation – they’re not going to suggest anything unless they know they can deliver it

Cons

* Initial solutions and ideas are generated often without an official business relationship. In other words, the tactic comes before the strategy and sometimes without the context of the clients’ overall business objectives

* Large profits generated from media buys means agencies are reliant on them, whether they reflect the new reality of media disruption or not. This creates an actual disincentive to explore non-traditional methods of communication, like social media (which has no media buy and often limited production costs)

So where does the SMG model lie in all of this? Squarely in the middle, both by design and experience.

The SMG Model
All engagements begin with a strategic consulting phase – we get inside your company and interview key stakeholders to determine business objectives/strengths/opportunities/weaknesses/threats. We look at important areas outside your walls (you don’t do business in a vacuum) and ensure that our recommendations are also well integrated with what your other agencies are doing (both from a branding, timing and objective standpoint). Then we tell you what we think you should do with social media, based on your reality.

Instead of walking in the door with the “big idea”, we take the time to develop the “right idea”.

Then we implement. SMG is full-service, but we don’t do anything but social media generated projects – no banner ads, no website redesigns (except as they relate to your social media programme), no print or TV ads. Just social media.

Because we’re responsible for implementation, we’re both realistic and honest – we have to live with what we propose. We don’t make any money from media buying (there is none), so what we recommend is what you need, not what we need.

We take the best of both worlds – the thorough, process-oriented practice of business consulting, used to uncover real needs and business objectives, combined with the creative, exuberant energy of a top-flight creative design shop (many of us are refugees from that world), with the added bonus of being solution agnostic – we don’t have an old-media business model to prop up. We’re going to tell you what we think is the best way to meet your marketing or communications objectives. Period.

This has both ethical and practical roots – we do it this way because it’s right and it makes sense. I’d like to borrow a few value statements from a colleague named Susan Goodman (who runs an amazing Marketing consulting firm in New York) because they perfectly encapsulate how we do business and the value that we bring to our client relationships. We strive to always:

* Champion innovation over complacency

We do it this way because it’s right and it makes sense. It’s who we are as a company (as all of our clients will attest) and, I hope, as an industry. It is a very exciting time to be us!