Hey, what day is it today? It's Friday. It's time to be on the move, Robert. Absolutely. On the move. Up bright and early and on the move. Welcome to On the Move, this time with Robert Johnson and Steele Rasmussen. Robert, we talk about this a lot, but let me go straight to the call with a simple question. How much money is the average agency leaving on the table through its partnerships with tech vendors? You know what? I really don't know the average, but I know the potential is huge. You know, when I think back about my own agency and consulting experience, the highest partner contribution that I've seen was 27% of total agency revenue. And over a course of a five-year period, I witnessed an 88% growth coming from partnerships and productization. I think that's something really worth perking your ears up about. Yeah, but it's also why we need to have this conversation, right? Because most agencies are really good and disciplined about managing their business and looking at clients and measuring hours and everything. But partnerships are often a blind angle in the sense that it's not treated with the same discipline. It's a side hustle. It's just a thing that's there. You know what? The reality hits hard when you start to understand that partnerships are not free. Agencies have to invest in certifications. They have to do training. They have to pay for specialist time. So the question really isn't about do we have a good vendor relationship? It's really about what we're investing. What are we getting back? And is there room for considerably more? Yeah, because I guess that's where the experience comes in, right? Because we've been doing this a long time. I guess we have barely between us 40 years working agency technology in hindsight. You know what? Yeah, and that's what On The Move is about. It's these short conversations. It's drawing on those different perspectives. And today, the topic is about making agency partnerships profitable. Robert, we have a subject that we feel a lot about, right? Yes, absolutely. It's been something that personally I've been working through this throughout my entire career and fascinated with the subject about partnerships. And how much partnerships, how much we rely on partnerships, no matter where we sit in the ecosystem. And that's something that's just, literally, I'm obsessed on that area about the observations from every side of the table, whether it's been on the brand side, on the agency side, or on the vendor side, about how important that each of those partners are and recognizing that that ecosystem exists. Yeah. And then why do you, so, and then that's probably what the audience is thinking now saying, so, why are these guys talking about this? So, what qualifies them? Well, you want to start or should I give a question? You start and then you counter me with the question. Well, I've been in the business for about 30 plus years. And I would say more than equally on each of those sides of the table, I've been on the tech vendor and media side. Same, same, because what I relied upon was agencies and clients. And I've been on the agency side for, oh, a good chunk of time, whether marketing consultancies or media agencies for whatever, 12, 15 years. I've also been on the client side. And the roles that I've had also on the client side was managing partnerships and that ecosystem. And, boy, have I learned a lot along the way. And what about you, Stine? I mean, you are no, you're not a newbie to the branch and the ecosystem. So, what's your touch? Yeah, I'm not a spring chicken on this farm. So, for me, I've been working in the industry for more than 25 years now, really having this focus in relations to working as an agency with vendors and different vendors and trying to understand the dynamics and the relationships, right? So, it was first a long time. I don't even know how far to go back. But where it really struck in was my 20-year tenure at IH Nordic. But even more crystallizing it afterwards, after I joined on a more permanent basis brand leadership community and working in these triangulations of agency vendors and brands. So, having this story and being able to go in and understand the dynamics. And I think with the changing, yeah, understanding the changes that have been there, because that kind of leaves us into the big provocation, right? How could agencies not be seeing this, right? Because you had a really good opening that was kind of the core of it, saying... How do we know what we don't know? What's being left on the table? What is that... Why is this ecosystem so valuable to understand and tap into? Yeah. And let's not forget... I mean, and that is the big question that we're going to be discussing for the next 15, 20 minutes or so. And that's... If there's one thing I think that we want people to get out of this is to raise awareness that, holy cow, this is a valuable topic. And something I would like to just spit into the pot about why is it so valuable. And that is based on my experience through the agencies where I have worked that up to 27% of all income, the entire agency income I have seen coming from partnerships. And how I know that is because there was... I had the P&L responsibility and I made it my business to go in and understand what was the cost, what was the earning, and what was the profit, particularly what is coming in from partnerships. And we're going to define that throughout our discussion and later on through our masterclasses. 27% is... And I also saw, and quite recently, growth rates of that particular area when the mission is coming into an agency which had less than 5% of that area as an agency income contribution to move the needle across a period. And that's a period of 80% increase. So the point is, if you focus on it, you can deliver. Yeah. And I think it's really... One of the big questions here is saying it's this story about saying normally we do not see partnerships as a P&L area, right? That's kind of one of the big things. People... We have a lot of resources when we look at the most people managing partnerships. They manage partnerships on a professional level and they're super good at it, but very few has broken it down to saying this is a profit loss area. This is actually something that we need to monitor because it's also about money. Yeah. I think... And this is not about putting down the great partner managers that are out there. No, no. I think there's a huge value in keeping up the good relations. But the... I think the curse or the blessing, depending on how you look at it, of the experiences that I've been through, is that to have that capability to talk to the head of finance and have an intelligent conversation about what are the partnerships that we need to keep and groom and grow? And what are the partnerships that maybe we need to get out of and begin to change and look elsewhere? That is a continual conversation. And having that, just like business is never static. You need to keep reinventing both yourself, your value proposition, because everything... The changes. Things change every day and you need to ebb and flow. Yeah. And I think also in this time and age we live in where agency margins is under pressure, it's kind of a... Then everything gets... It gets valuable to revisit everything. And things should be too for granted that you could just spend money on this and this was kind of an open thing. It would just make sense saying, if this is a P&L area, well, what the heck is my P&L in this area? How can I understand that? So... And then we really ask, hey, listen, go at least to this. What is the really... The cost and what comes back? Yeah. So having this huge challenge in relation to... Is your partnerships good? Are they a profit drain? Yeah. I think that topic of what is... What is the cost and what comes back? So that's absolutely the first tip. I think that we can try to incentivize or inspire people to go out and say, undertake... An effort to go out and have a look at what are the cost of your certifications? What are the... What does it take to train your staff? What are the types of fees associated? Are you putting on events for new customer acquisitions or keeping up relations? And all of that adds up at the end of the day. And it might be a noble idea. And I'm sure I remember engineering teams having deep curiosity to want to examine more and more of the hottest vendors out there. They're doing their job. They're keeping on top of who's hot and who's not. And it is economical. It's a financial investment to say, how do we... Do we go in to bed and start forming a partnership, economically binding ourselves to each other? And it is such a risk if we don't know what are the consequences in terms of financially. Will we earn money from this? Or will it just be a continuous drain? Yeah. Just having that conversation in the organization saying, okay, hang on. There's both a cut side to this and something that comes back. And then... But trying to break it down because very often you only see like the revenue, the margin, the leads, the referrals, the credibility and the access, right? So these are super important things, but they're not free. Absolutely. Absolutely. No, they're not free. I think a good example is what I've heard takes place in organizations. Someone going around saying, hey, we can't... I'm not picking on Adobe here for any particular reason, but I worked a lot with Adobe in the past. And someone would say, Adobe is extremely important to us. It's a 1 million euro partnership for us. Right? And has anyone actually broken down that statement? You know what I mean? In terms of... Yeah. Is that cost of revenue or profit or... Exactly. Exactly. It's... What does it really mean to have a 1 million partnership? Until you actually look at the entire... The input equation, look at the value and then say, what is the output in terms of profit or new client contribution or revenue earnings over time, customer lifetime value? It's... Those are the boring economic side, but it just has to be done. And I think it's interesting because it's kind of besides the work we've been doing, especially you've been doing in the last 18 months, right? Saying, well, how often have either of us actually seen an agency calculate this properly, right? Because it's a rare bird indeed. Honestly, it does amaze me that as I go around and visiting and speaking with agency directors, And this question is hot on my mind. I ask it in every single meeting that... And I get a response to say, yeah, we should. We know there's probably something there, but it's a sensitive topic. Or I don't have the resources to hire someone for that right now. And, you know, to avoid going into deep arguments on the subject, I tend to have a few comments about the statements. But it's a subject that I just feel like many agencies have not really taken the time or interest to go into. And I'm wondering, will 2027 be the year? You know, when will an agency get squeezed enough from all sides of the table to say, oh, we better turn over this stone? Yeah. And it leads back to this question saying, because that is the question when I talk to agencies, right? I get this question saying, okay, where are the money we're not seeing? What is the money you're talking about? And then trying to explain the dynamics of partnerships to them from that perspective. Going in and saying, well, this is part of what we've been talking about, this entire, the profit part of it. Saying, what is it that we're talking about? And you can basically say, well, like everything else in business, you have like, you have an earning side, but also a saving side. Saying, are we actually spending money on being partners with somebody that is not bringing anything back? Yeah. Yeah. And there, I mean, just as a teaser, there are different categorizations that one can go into by examining this. And I'll give one, the two biggest buckets that I've seen be most valuable is dividing partnerships into say, one is looking at the actual partner themselves and looking at all of the costs associated with maintaining that partnership. But then is, how are you using the partner's products? And the concept of productization is something, again, that belongs in the bucket of partnership management or partnership monetization. Say how you're using a partner's product within your service every single day. And an agency is maybe even building some features around that product that make it activate or bring value to their clients. But you have to keep reinventing the wheel every single implementation. And the concept of productization is just avoiding reinventing the wheel and begin to see it as a subscription that an agency can earn an income source 24-7 or provide a value to a client 24-7 and 365. And that concept of productization in one way, shape, and form takes place every day. But unless you actually recognize it and act as a product manager, you won't be able to seize the right value or benefits from that category. But it's super interesting because it also loops back to one of the discussions that we will be having much further that is basically a subject on its own. But part of one of the things we will be covering further down the line is this entire big question as well. We're not taking kickbacks. And that is such a huge thing because sometimes it's not about the kickback. It's about the business. But we're not going to go into that now by saying there's an answer to that as well. That is a valid conversation. But does this mean, Robert, that I should just have 1,000 partners? I don't know. I think I would actually argue the opposite. It's not about more partnerships. It's about getting more value from the right partnerships. Because I think once you understand what each relationship costs and what's coming back, you begin to ask a lot better questions. What partners deserve more investment? Which ones are more strategic? Helping us both connect us with the right types of customers. Even if the direct revenue is relatively small, you've really got to understand which ones are consuming resources without contributing enough. So basically, it's not aligning with the vendor. It's aligning with the agency business strategy. Kind of flipping the entire narrative, right? Exactly. So if the partnership doesn't strengthen by trying to go as an agency, there's no reason to continue investing in it. Exactly. You know what? And partnerships change. You know, I've experienced relationships that, you know, once upon a time, they were really valuable. And then suddenly the vendor changed. Especially on a global scale, that happens quite often. And what was once a great partnership isn't automatically a great partnership forever. No, no. So it's not about the quality of a relationship. The question isn't simply, do we have a good relationship? It's still the, do we have the right partners for our business more than are we friendly? Exactly. And you really can't answer that based on chemistry. You need signals telling you whether to invest more, fix something, or walk away. It's not necessarily a relationship problem. Sometimes it's a governance problem. Yeah. I think that's the biggest thing about when, you know, when someone's looking to say what really causes a partnership breakdown. I agree. It's, it's, it's not about the relationship. It's good. It's about the management. And do we actually know and having the signals or setting up a system to recognize signals, such as just having the right reporting infrastructure to say that, can we see that a partnership is going south? And when do we pull out? How long do we, you know, live in this marriage? Unhappily. Sorry to go. I couldn't help but throw that in. But, or how long do we, what can we, can we, can it be repaired? And you need to have the signals. And I think that's something important just to throw a little teaser. We'll be actually coming into those signals at a later time in a masterclass. We want to go in and use that, take our experience and then come out and share what are the signals about ways to set up your bookkeeping, ways to, you know, kind of self audit your own business to be able to understand, is this profitable? Is it not? Should I be looking to expand or contract my partnerships that I have today? And who could be the best fit for me in the future? And that really understanding your agency DNA and what is the ideal partner profile, the IPP. Yeah. Right. But seldom do we do that. Right. As agencies. Right. Yeah. And why don't. And very often, why do, why do 60% of the agency has the same partner stack? So I'm sitting here now listening and I'm an agency leader. I'm sitting there saying, okay, that's, this is all good and fine, but how the heck do I get started? What is the one question that I need to answer? What would you suggest? I think the most important question is what is our partner portfolio actually worth? Yeah. And I guess, because that is the crux of it, right? In a time where agencies need to refocus on the money, that is, that is actually the call we need to flip back to. And if you can't answer it, it's really difficult to optimize something because you don't know what, what you're actually working with. You know, it's like another example of the shoemakers kids having the worst shoes. And agencies spend every single day looking for opportunities to optimize their client performance. And I think maybe it's about time that they turn some of that expertise onto themselves. And the challenge is that sometimes it's not a new dedicated partnership manager or a new fractal support that can fix that. Maybe it is. Maybe it's somebody internal, right? So, so it's really about understanding what, what, what chess pieces you have to move with. Exactly. You know what? Come to think of it. I think that's just one of many topics on this category that we'll be exploring at the upcoming agency leadership forum on October 1st. That was a sneaky soft pitch there, Robin. It's true. We will be talking about it there. We'll also be going even deeper into it at the following masterclass if I can add a little soft pitch. So, we kind of have the opportunity to help people go dive deeper into this subject if they're, if they're interested. You know what? And if they're feeling a little shy, they can just reach out to us one to one. We would love to compare notes. Yeah. Been a wonderful morning. I enjoyed this conversation, Robert. And this is Stine and Robert signing off and saying thank you for joining us on the move. It's been a pleasure.