Profitable growth. Mirage, Miracle or Method?

Final Transcripts of David van Schaick on Unicorny Podcast 

PLEASE NOTE: This transcript has been created using fireflies.ai – a transcription service. It has not been edited by a human and therefore may contain mistakes. 

00:03 | Dom Hawes 

Welcome to Unicorny, the antidote to post-rationalised business books. Welcome to Unicorny, the antidote to post-rationalised business books. I'm your host, Dom Hawes. This is a podcast about the business of marketing, how to create value, who's doing it well, and how you can help your business win the future.  

Unless you were very blessed, doing business in 2023 was a little bit like being a camel in the Kalahari. Firstly, it was hard. Hard for camels in the Kalahari, because apart from anything else, they are not a native species. So they don't know where to find waterholes. Hard for us in business because tougher times are new to many of us. So we too struggle to find metaphorical waterholes, budget to sustain our activities, but we did make it, and that fact alone makes us stronger. Now the economists are telling us the year ahead is stagnant.  

00:55 | Dom Hawes 

Growth in the UK will be under zero 5%. Bloomberg tells us the US will be 1%. The OECD puts Germany at zero 6%. So just like the indigenous species in the Kalahari, we in business need to adapt to survive the harsh conditions we're facing. Because it's a desert out there. As marketers, we are the entrepreneurs of our businesses. It is our job to create and build value through creative ideas. Towards the end of last year, weighed down by arid markets and dehydrated budgets, I posited that marketing might be in crisis. And that was where we started today's conversation. But actually, as Shane Redding pointed out to me in an earlier episode of this podcast, marketing's doing just fine. We might feel like camels in the Kalahari, sometimes out of place, a little lost, short of supplies.  

01:46 | Dom Hawes 

But we're entrepreneurs at heart, so we adapt and adjust, kinda. In short, hooray for us today, while the conversation's framed round a looming crisis. That crisis is not in marketing itself, but in the businesses that are seeking to market. Society is changing very quickly. Technology is changing even faster. But we poor humans, our habits and our systems, they're slow to change. And there's the friction. Marketing isn't the problem, it's the solution. And today's guest is going to give us some hints about how we, how you can make a difference. Today, I'm delighted to welcome David Van Schaick to the Unicorny project. David is now an independent consultant, but until recently, he was chief marketing officer at the marketing practice, or TMP. David, welcome to the show. How are you today?  

02:36 | David Van Schaick 

I'm very well, thank you.  

02:37 | Dom Hawes 

Well, it's very nice to have you here.  

02:38 | Dom Hawes 

It's extremely exciting to have another agency person in the room, because I think you are actually the first ever agency person to come on to Unicorny.  

02:47 | David Van Schaick 

That's an honour.  

02:48 | Dom Hawes 

Very excited to have you here, David. Let's get in context. Talk me through your career to date.  

02:51 | David Van Schaick 

My career to date is synonymous with the marketing practice, really. 18 years there. We grew from, I think I was employee number eight. We grew to. By the time I left, were sort of four or 500 people. We got from less than 1 million in revenue to more than 80 million in turnover in that time. I started as a graduate very quickly worked my way up to running the creative team, and then the whole operational side of the business reported into me. I think what I was good at in those early days was building a team and giving them a vision and giving them a way of working and getting them to be a high performing team. And the business grew through that period. We doubled the revenue and the profit in three years.  

03:30 | David Van Schaick 

I became sort of increasingly obsessed, I guess, by the practice of marketing and how we could create great marketers in the marketing practice and the discipline itself. And that's what I ended up specializing in. I then took on the CMO role over the last six years, became increasingly a b two B marketing nerd, and saw the power of what that could do for our clients and for the growth of the marketing practice. We went from, I think, 8 million to about 20 million from the space of 2014 to 2020. So we're adding about 2 million a year organically and then the big buy and build afterwards.  

04:04 | Dom Hawes 

We're going to come into that in a little bit. I particularly want to talk to you about the practice of marketing because I'm slightly obsessed by that too. The last two years, I mean, there must been a whirlwind. So you grew up to 20 million and then horizon stepped in and then horizon, yeah, and from there on, it's been like a tornado, I guess. I'm interested to hear a little bit about the pressures on senior leadership when you're scaling at that speed.  

04:29 | David Van Schaick 

So we could probably do a whole podcast on that. But I think what might be interesting is a couple of things. I think, firstly, is the lens which private equity look at the business through. So they're holding the business for a defined period of time, typically three to five years. They want a return on their investment and so they're very focused on value creation. And that, I think, might be a topic we come on to talk more about, but is actually a very useful and constructive lens and pressure that puts on the business. One of the other interesting things was we're scaling a services business. In fact we're scaling six services businesses, coming together and bringing them together and scaling them. So there's a lot of heterogeneity in the product. The client brief is different every time, but you've got these six different businesses.  

05:11 | David Van Schaick 

How do you make sure that when we're doing ABM for in Australia, in the States, in Europe that they're getting a relatively consistent experience, it's going to look and feel similar to them. How do you capture that IP and crystallize that IP so that it can be repeatable and trainable and scalable? Because that's a big part of the way that you can create value in the organization. And so that was a big focus of ours. We spent a lot of time on that.  

05:41 | Dom Hawes 

What does the next chapter look like for you?  

05:43 | David Van Schaick 

So I guess it's going from the marketing practice to the marketing in practice maybe. For me, as I said, I've become a big advocate for marketing, proper marketing, strategic marketing. It's about applying that to other businesses that are looking to grow like the marketing practice. Some of that might be other agencies, also smaller businesses. I think it's less likely to be at this stage with some of the very big clients that we had, Salesforce, Adobe and so on. But trying to prove the value of proper strategic marketing by doing it and helping other businesses do it.  

06:18 | Dom Hawes 

Well, I applaud that. That sounds great and if I can help I will.  

06:21 | Dom Hawes 

Now there's been a hell of a.  

06:22 | Dom Hawes 

Lot of change over the 18 years you were at TMP. Like marketing has changed enormously, not least because we now have this digital thing. There's been a transformation. Tell me a little bit about the way that you've seen marketing change over that time. And I think that might bring us into where we're going to start today, which is what we've penned. A crisis in marketing. Give us a little bit of background.  

06:48 | David Van Schaick 

Going back to the start. I think when I started 2005 it was a nascent industry. B to b was a nascent industry. We were just getting our first magazine with b, two b marketing and Joel and James there. It felt very subservient to sales. It was very much a sales support function. That's what were doing. We were delivering brochures and websites and events and leads for sales. And over time I've seen it grow steadily and gradually I think in confidence and in stature. We've been through a lot of trends and changes. We maybe had a sort of slightly teenage hormonal period where we're going through inbound marketing, content marketing automation, all those latest trends, ABM and it's felt to me in recent years that there is increasing maturity and sophistication amongst the marketers I talk to and confidence in the markets I talk to.  

07:39 | David Van Schaick 

And we can talk a bit perhaps about why that is and where that's come from. But it's felt like b two B marketing has stepped out of its adolescence into its maturity. But there is this crisis, the looming threat to marketing and its role.  

07:53 | Dom Hawes 

Well, I think there is a threat, and I'm really encouraged to hear that you've been having some good conversations, maybe because I'm still very overtly on the agency side and therefore I'm seen as a cell bot, always in cell mode. I don't get to have quite as many conversations, but I'm increasingly worried.  

08:12 | Dom Hawes 

I look at b two B as.  

08:13 | Dom Hawes 

A whole, and there are clearly some companies that are doing things really well, and there are clearly some super smart agencies out there supporting clients. But I'm also seeing a lot that isn't great. And for the CMO, I think that role is really tough. It's the shortest tenured C suite job now, officially, and I still don't think that marketers are really respected for who they are in many organizations necessarily. And so I think there is a crisis looming, but that's my view. Where do you see the issues at the moment?  

08:49 | David Van Schaick 

If you look recently at the growth in confidence and reputation in marketing that I would see a lot of, it's been led in technology, in the technology sector. I think it does vary by sector, but almost the fetishization that we've had of technology companies, and particularly SaaS companies, and if you look at that, what we've had is a sustained period of low interest rates, which has meant high investment in technology and a lot of excitement about the potential value in technology brands. And that investment has often focused on a model that's been growth first and we'll figure out how to make profit from it later. And it's really been focused on market share, new customer acquisition. At the same time, you've had the changes in the customer journey that have gone much more digital.  

09:31 | David Van Schaick 

Customers are doing much more online, to the extent that some tech companies can go as far as product led growth, but even in the enterprise sale, you've got a very hybrid journey now, and marketing is therefore no longer just behind sales and serving them to help them deal with the customer journey. It's a collaboration on an equal footing. I think so. Marketing is now is a place that you turn to find that growth, to find that customer acquisition. And I think the third thing that's then happened is the consultancies. A lot of the b to C networks have started to look at b to b and they see potential growth there. And so there's more media retention on it. There's things like the LinkedIn B two B institute.  

10:15 | David Van Schaick 

Rory Sutherland is headlining b two b ignite a couple of years ago, so they're starting to see interest to that. And that's raised the profile of b two b marketing, all those things. But I think what we're seeing now is a change in the environment. The interest rate thing has changed, the investment model has changed, so the cost of money has gone up. We're now looking at profitable growth instead of just growth at any cost. And marketing is still, and perhaps even more so because the attentions of b to c very much associated with comms. That's where I think the threat comes, is if we're just too narrowly, our role is too narrowly defined as comms and short term sales support when there's so much other stuff in long term value creation that we can and should be doing.  

11:05 | Dom Hawes 

Your point about the external influence is really interesting. I went in with both feet first, looking at the internal reasons that there may be a crisis coming. You've done what a marketer should do. You start it outside. You're looking at the macro environment, high interest rates and investment. I'm not a massive fan of using the phrase investing when it comes to talking about marketing, necessarily because the output from marketing is an intangible asset, not necessarily tangible asset, unless you're a product marketer. Why don't you tell me where you see the risk when we're talking about interest rates and investing in marketing?  

11:42 | David Van Schaick 

It's an interesting area. The correlation between interest rates going up and reduction in marketing spend isn't necessarily a direct one in the sense that people are just saying, well, the cost of capital has gone up, so therefore it doesn't make sense to invest in marketing. I think it's generally, marketing is seen as discretionary spend, and the tightening of belts means that marketing is one of the areas that you can cut, and people see the optionality there to cut it. So how do we think about the way that we frame the value of investing in marketing when the mindset is shifted towards more profitable growth, for example? And I think it is really important that when we talk about long term value creation and the role marketing has to play in that we are able to quantify that.  

12:26 | David Van Schaick 

So we can talk about future revenue streams and we can put numbers on future revenue streams and there'll be a projection and a hypothesis, of course they will, but no more say necessary than forward forecasting your PNL. And we can also, I think, talk about things like resilience and the fact that if you have an idea like revenue quality, for example, you might be able to grow the top line 5%, but improve the quality of the revenue. So the predictability, the longevity, the type of the recurring nature of the revenue by 20%. And that would add a lot more value to the business than growing the top line by 10%, but the revenue quality decreasing.  

13:04 | David Van Schaick 

So there are ways, I think, that we can think about this, and it's really important that I think we put it in those commercial terms and actually kind of almost start in that place.  

13:14 | Dom Hawes 

That's very much a private equity mindset. Start talking about quality of revenues rather than volume of revenues is very PE focused, I guess, because that's going to drive multiples and therefore that's going to drive enterprise value. I guess PE backed businesses are aware of that and are consciously marketing towards it. But I think it's an interesting concept to look at the long term outputs of marketing and then try to measure them in genuine value creation for the business, not just revenue and or profit.  

13:41 | David Van Schaick 

Yeah, exactly. You look at the b to C companies, for example, and it's an area were looking at is adjacencies to the business. So we are strong in this sector. What are the adjacent sectors that we can be potentially moving into next? And that's a smart strategy in the current time, because again, it's going to build resilience in the business. And whether you value that in terms of enterprise valuation or just the fact that you have more confidence in your ability to do business in three to five years time, either way, it's a smart strategy and you can quantify your contribution to that just by saying, look, actually we can target a certain number of customers or a certain type of deal, and we can show those as milestones, but we can talk about it in a commercial frame.  

14:26 | Dom Hawes 

And ABM plays really well into that kind of think. You know, if you're looking to enter adjacent markets, ABM could be a good strategy to try and pick off a few landmark customers.  

14:37 | David Van Schaick 

Very much so, yeah. And another key area where we can use ABM is, and a lot of tech companies, and I think a lot of other companies are doing this, is looking at the shape of the deal. They're trying to swim upstream, they're trying to shift the revenue model to more recurring or as a service model. And again, you've got clients that can beachheads to that. And so the revenue that you capture from that client is worth a million, 2 million. But the value of that client is significantly more. 

15:04 | Dom Hawes 

Binet and Field. Everyone talks about the long and short of it, but there's often a shorthand when it comes to talking about their work. And also kind of some of the output from Ehrenberg Bass and the LinkedIn Institute, no less, because they all bang pretty much the same drum. But the shortcut, I think we're really guilty of this as a business. We take some really good work and then we dumb it down, polarize it, and say it's got to be one thing or the other, and we forget that there's and Bennett and Field, where are you on their work? And do you see the concept of the long and short of it being applied in b two B?  

15:40 | David Van Schaick 

There's a lot of talk about Bennett and field. I think it's a well trodden path. It's great work. So I don't want to add unnecessarily to that. But the thing that frustrates me about it is how quickly we go to advertising. And I think that's partly because a lot of the media and a lot of theory in marketing comes from FMCG, consumer retail, where advertising has an elevated position. It is a very dominant lever, and that's true in some b two B businesses, but not all b two B businesses. And so the long, particularly the long and also the short, but particularly the long. And for the long and the short, there's so much more to it than just advertising. We often talk about building brand salience, using emotion, distinctive brand assets, Esov, all these things that are about at best, comms, really advertising.  

16:31 | David Van Schaick 

And that to me is a bit downstream of the conversation of what does the business look like and what are the customers that we're going to be serving and how we're going to be serving them and how we're going to be making money out of them in three years time. And if we're just living at that level, downstream of the conversation, that's when we might become less relevant and we lose what I think is really fun stuff about our role. That's about market development and product and price and positioning, and the partner ecosystem and distribution. And however many p's you want to put in there, it doesn't matter but it's about getting into that upstream strategic conversation that marketing should be in. I think.  

17:11 | Dom Hawes 

Do you think that barring the biggest enterprise clients, and obviously you used to work with some guerrillas there with Adobe and Salesforce, but when you come away from those sorts of companies, do you think that the marketing function in b to b is given the full range of power?  

17:31 | David Van Schaick 

I think it's very varied and I guess that's maybe the challenge with generalizations. But I do think there are different challenges in the different scales of businesses and marketers on the ground are dealing with very different challenges and a lot of what we get in the media and I think that's part of the point of the podcast, right. The unicorn podcast is to actually bring more depth and realism to a lot of marketers who are working with smaller companies or even marketers who are working in the big companies like Salesforce and Adobe and so know they're not the CMO and so they don't have the control over should we be building brand through advertising to the whole addressable market. And a lot of those smaller businesses simply don't have the budget.  

18:13 | David Van Schaick 

And marketing is such a highly contextual discipline and there's so much more to it than advertising that it seems a shame to me that we can't find ways to put the spotlight onto some of those sort of more quotidian experiences that people are having with marketing in their smaller businesses.  

18:32 | Dom Hawes 

And I think this goes to the heart of the crisis for me anyway, that if you take away what you're talking about, the market development work, if you start the famous graphic that goes around on LinkedIn every so often with most companies start here, real marketers start here. And I think the proper marketing society I think did it. I'll link it on the show notes. But if you take away the fun stuff and you just turn your marketing department into a promotional communication department, then I think we are in full cris because marketing just ends up taking orders and actually not developing the long term. Who is there then is the voice of the customer? Who is there looking at or thinking about adjacency when it comes to markets or strategic growth? In my experience, it's not necessarily the CRO.  

19:16 | Dom Hawes 

The CRO is there for the clues in the job title.  

19:18 | Dom Hawes 

It's about revenue right now, next quarter.  

19:21 | Dom Hawes 

The quarter after that. That's the heart of the crisis. If businesses don't take marketing properly and if they don't give their marketers room to grow, to learn and to think frankly and get away from this daily scrabble for leads and short term revenue targets.  

19:36 | David Van Schaick 

I think marketing is more than advertising and it's more than just revenue. Even you say the chief revenue officer increasingly might be there and sit above marketing. I noticed that the $0.06 CMO she recently moved to be the CRO, which she would see, know the way she was talking about it, and know that she got better remuneration. Everything. It felt like a promotion. I guess that's a good thing because it's a CMO moving into that role, but typically it would be a salesperson. Marketing is not just about revenue. It's about profitability. It's about price elasticity. There's lots of other things that create value that marketing can be doing.  

20:11 | Dom Hawes 

And that's the bit that I think we are in danger not of losing because it happens elsewhere. I mean, it's something we've covered a lot on this podcast, and we call them untitled marketers. It's a different thing than shadow marketers. Shadow marketers are kind of shadow communicators, but untitled marketers are those people who are taking the peas and doing it. So I talk sometimes about a network I belong to, and were at dinner, I was there with 25 other businesses and were talking about price. And I asked everyone around the table who included their CMO in pricing discussions to put their hand up. And out of 25 ceos, three put their hand up. That was a real eye opener for me.  

20:48 | Dom Hawes 

So I then went out and started speaking to CFOs of private equity backed businesses to understand within their organization who was accountable for value creation. And almost without a doubt, it was the CFO that is accountable for value creation. It is the CRO who is responsible for delivering that. And somewhere down the line, you've got the CMO who's being given instruction. And my concern when you have that kind of setup in the b two B is that if you don't have one view of all of those important things, like we all know, you start with market orientation and you've got to do your segmenting, you got to do your targeting. You've got to understand who the customer is, what their compelling need is, how you can answer it now and in the future.  

21:26 | Dom Hawes 

As you say, partners and alliance, what do you need to do to create the whole product to satisfy client needs? If you've got that in bits around the organization, it's very hard, I think, for that business to do anything other than focus on short term revenue. And then if no one's doing the long term work, you might make a bump in your numbers now, but what's going to happen in a year or two years time?  

21:46 | David Van Schaick 

Training might be an interesting.  

21:48 | Dom Hawes 

Training is key. I think it's really key.  

21:51 | David Van Schaick 

And that was a big thing that I became certainly an advocate for at the marketing practice. If were going to be an agency that was doing great marketing for our clients, then we had to have great marketers and we ended up building an academy of our own, a training academy, which I wrote the syllabus for with one or two others. It was a kind of comprehensive end to end, b to b marketing training program that started with strategy, market orientation, STP, all those things, because we just couldn't find anything really that was out there or anything that wasn't going to be prohibitively expensive for us. But more broadly in the industry, I think I'm not a trained marketer.  

22:31 | David Van Schaick 

For example, like most people came into marketing and have educated myself, done the mini MBA from marketing week, but I'm now trying to figure out can I afford to do the time and expense to do sim training? But I think that is a challenge, that there is such patchy levels of training and chartering that when we want, in a moment like this, when we want to make a stand and say, look, the marketing should be about this, it undermines our argument that we don't have more of a robust chartering and training process throughout the industry.  

23:12 | Dom Hawes 

How much are you loving this conversation? I thought it might be a good idea to comment on some of the things that have made a mark on me so far. Firstly, I thought it was really interesting.  

23:23 | Dom Hawes 

That David commented that business to business.  

23:25 | Dom Hawes 

Marketing has grown in confidence to a level that it's now on a par with sales. Because in my mind, I'd never even considered that it was anything but. But then again, I wasn't in agency ten or 15 years ago. At that stage, I was running an ecommerce wholesale business. And while marketing sat at the core of our business, I never really saw any clash with sales. Everything was joined up, it was seamless. It was all part of a spectrum, with long term development at one end and daily sales targets at the other. But this isn't an issue with either sales or marketing. Increasingly, I'm realizing there just isn't a crisis in marketing. But there is a crisis in business organization. Like why do businesses continue to think departmentally about their functions?  

24:09 | Dom Hawes 

Well, many of today's enterprise scale businesses were born in a completely different technology environment back then, available and joined up technology, well, that was low and friction was high. So it probably did make sense to have different and autonomous departments working on different parts of their value chain. Marketing and sales kind of needed a physical handover because they operated discrete systems. But today, when we have joined up, cloud systems, underpinning a customer journey throughout the whole lifecycle, silos don't make sense. Organizational design basically hasn't kept up with technology and a lot of the politics, inefficiency and, well, frankly, the things that piss us all off about our jobs, they just don't need to exist. The old fashioned pyramid, the command and control culture, the hero leader. These things are not fit for purpose anymore.  

24:57 | Dom Hawes 

So while I'm pleased to hear that marketing is gaining confidence and influence, we need to stop thinking about sales and marketing as separate things. And I think I'm going to come back to that in future episodes. Next up, I hadn't even considered that there might be a correlation between ultra low interest rates, essentially free money, and businesses attitude to investment in marketing, particularly in long term value creation. But I guess it makes sense. Not only did we have almost free money for ten years or more, but the tide was rising for all of us. In that environment, we can all afford to be a little more gung ho. Mistakes get washed away by the rising tide, and inefficiency is masked by availability of more money.  

25:38 | Dom Hawes 

Warren Buffett's well known for telling us, only when the tide goes out do you learn who's been swimming naked? Well, the tide has turned, so now we're all more risk averse. Money's more expensive, and mistakes, well, they're harder to handle. Maybe that's why we've seen such a stop start approach to marketing over the last 18 months. We're lacking confidence and the firepower to take decisive action. I'm going to come back to a couple of other really good points David made in the first half at the.  

26:04 | Dom Hawes 

End of today's show.  

26:05 | Dom Hawes 

But right now I want to get back to the studio because this is a conversation that keeps getting better. So, David, we've talked about marketing in businesses, but most marketing is actually a partnership between in house team and one or more agencies. And we've acknowledged that marketing is changing. So now talk to me about where you think the agency market is right now and where you think it might need to go, because the relationship between agencies and clients, well, it's interconnected, but it's also morphing.  

26:34 | David Van Schaick 

Yeah, I would agree. And specifically, I talk about b to b agencies. That's what I know. But I think obviously you've got these big general external threats stimulus, whatever you want to call it, of Gen AI and general levels of automation. And a lot of the agency model has been about doing some creative and some strategy work and some consultancy work, perhaps initially, and then that is done to win a bigger chunk of production work. And clearly the value chain for the production work is changing. Clients are going to want to see some of the benefits of the automation and the technology in their cost in the short term and in the longer term, it perhaps changes the value equation. In housing. That's a big pressure.  

27:14 | David Van Schaick 

The other pressure at the moment is obviously the economic environment and the fact that agency spend particularly is going to be seen as discretionary. And so a lot of agencies are finding it tough. Budgets are being paused, delayed. It's quite unpredictable what a client's going to spend and when a client's going to spend it. So that's creating more short term pressure. How do they adapt? I think you're right that there does need to be some changes in about how agencies think about their relationship with a client and position their relationship to the client.  

27:43 | Dom Hawes 

We're talking about it funny enough, just a few minutes ago when were talking about the in house marketers journey being more about value creation. Their agency partners must have the same journey, they must share the same journey. If you can switch an agency off and not damage value, they're probably doing the wrong thing, in my opinion. And if it's all about production work, as you say, we've got this upside down business model where we do all our best thinking up front. We give that away for free, we pitch it competitively against five other people who've got brilliant ideas too. Four of them end up in the bin, and then we end up doing the really low value work and getting paid for that. It's completely back to front.  

28:16 | Dom Hawes 

It seems to me that somehow agencies have got to find a way of tying themselves to their client success closer to client success rather than outputs.  

28:25 | David Van Schaick 

I think it's a really interesting area. You've got a couple of things there. The incentives is a really interesting area in the moment. An agency's incentive will often typically be to do the work on time, under budget, if they can, and get to the next piece of revenue, whereas actually that's just going to create an incentive to do things faster and cheaper. And there's a lot that can be done there with technology and so on. But a lot of agencies are going to have to think about how do we, as you say, shift that focus towards value. And I don't think the clients are going to do it for us. So the agencies have to be making those first moves.  

29:02 | David Van Schaick 

Do you then if your marketer, that your client isn't accountable at the moment for that value creation, how do you help them become accountable? Or do you go kind of up and round and start talking to other people in the business?  

29:18 | Dom Hawes 

That's a hard one.  

29:19 | David Van Schaick 

Yeah, it is.  

29:20 | Dom Hawes 

We all know the unwritten role of an agency is to make their client look fantastic and get promoted. Going round them is right. Really dangerous.  

29:27 | David Van Schaick 

Yes, exactly. But I think there might be interesting ways that you could start to look at that. I mean, the fact that you've got people like Accenture and some of the bigger network agencies coming into this b to b space Accenture, particularly in the consultancies, they're going to have those relationships at the senior level, so they've got an advantage there. But I have seen some of the big network agencies set up, for example, separate consultancy arms so that they can have a different kind of relationship, at least in the early stages when those two conversations are too hard to join up.  

29:59 | Dom Hawes 

It's an interesting conundrum because as the agencies, we've got to try and change our engines in mid flight. A lot of agencies are making a lot of money out of production at the moment and their model's got to change. We don't yet have. There's a really good podcast about this, actually called the 20% podcast. It's all about marketing, procurement, things I listen to in my spare time. And they're talking about exactly this conundrum there. It's like there isn't yet a good commercial model that procurement and a client and an agency can all get on board with, that remunerates and rewards activity. And at the heart of the problem is that agency models are not scalable because it's all human labour. If you need more, you've got to add more humans.  

30:43 | Dom Hawes 

And there are agencies like huge in New York who are productizing to try and get around some of those challenges. But I'm not sure that's a panacea. So I don't know what the new commercial model looks like. My instinct is we have to move upstream, we have to move towards more strategic input, and we have to put.  

31:05 | Dom Hawes 

Our own commercial future on the line.  

31:08 | Dom Hawes 

If we believe in the work that we do.  

31:10 | David Van Schaick 

We did some work going back a little while at the marketing practice, looking at outcome based contracting and models around that. And we spoke to some of the people in the BPO industry because they're a couple of steps ahead of us in that space. And one of the things that were talking to them about is their experiences. It's very hard to get clients to commit to outcome models because of the control over the spend levels and who sets the benchmark for where we are now and who gets to have the voice in just setting the levels of here. And I think above that, we're going to get paid for. That's an interesting challenge, an interesting area. But I think also when you look at the b two B landscape, there are a couple of different sort of elevations that you can look at.  

31:55 | David Van Schaick 

And at the larger end, there's a small number of what are now very big agencies who are consolidating and bringing together lots of different disciplines. And actually they're looking at the likes of the Cisco's and the intels and so on of this world who've got very big budgets and very big media budgets particularly. So just global was just media. Now it's added creative and it's just global. Merkel B two B was DWA and Gyro and research b two b I the research firm, the marketing practice where I was, our specialism was really ABM and demand. We added media, we added brand and creative capability. So bringing that together and when you've got large media spends, we know the big things that influence media effectiveness are reach. So we've got your global businesses and creativity, and you're bringing to get creativity and media closer together.  

32:47 | David Van Schaick 

And you're increasingly adding this account based view of the world, which B two B needs to take. So that makes sense, I think. And those businesses are going to battle for market share at that end of the market, and there'll be more consolidation. But there's some really interesting challenges for the long tail of businesses then that sit beneath that. And I think one of the areas that they need to look at is how do they shift away from what has traditionally been a way of describing an agency as capability based? We are in a creative agency, or we're an ABM agency, or we're a performance agency, and some of those will continue and that's fine.  

33:23 | David Van Schaick 

But I think if your ambition is to talk about value creation and be part of that bigger conversation and think about different commercial models, then you need to start thinking about framing yourself as a specialist in delivering certain outcomes. Perhaps instead of ABM, which is quite downstream from the conversation, how are we helping to improve the deal quality in a business? Win bigger deals, entry into new markets drive market penetration. If you're a performance agent, which is.  

33:53 | Dom Hawes 

Kind of bringing us back to productization, I suppose because you're identifying particular areas of compelling need in a client or a compelling reason for, certainly for them to buy and then wrapping a very specific use case around that. That's kind of productization, right?  

34:09 | David Van Schaick 

Yeah, it may be if you're going to scale to any level that you kind of need to have that. The other answer is just we have a particular culture, and so therefore we are exceptional at creativity, for example, and we can apply that to any business problem, which is perhaps a lot of what you might get from certain big b to c creative agencies.  

34:30 | Dom Hawes 

Okay, times are marching on. It's that time of the show where we ask our guests to do a quick and dirty pest thinking about the future. And I'm going to start with the p word. Sometimes people refuse to answer this, but as a consultant now thinking about the next twelve to 18 months, what worries you politically, like for your clients or from a marketing point of view?  

34:49 | David Van Schaick 

I mean, I'm no political expert, but I think in general terms, there's obviously a lot of uncertainty and the big forces driving those uncertainty, climate change, globalization, late stage capitalism, hunger for profit, et cetera, they're not going away or changing. And we've got some big milestone events coming up with the US election later in 2024, obviously the uncertainty in the Middle east. So it's going to be very uncertain. All the more reason, therefore, for marketers to be thinking about how to plan for and deal with long term value creation in a way that is emergent, so that we have an understanding of what value looks like. We have a way of measuring how we're getting there, and we can be adaptive to that.  

35:39 | Dom Hawes 

That is great advice. If you don't listen to anything else on the podcast, you need to listen to that. Economically, we're in a tempestuous sea at the moment. The volatility is off the charts as a marketer particularly, I think if you're focusing on too short term, that can be enormously destabilizing. I think we're in slight stagnation for the next twelve months economically in this country, certainly. What do you think marketers can do to help create value for their businesses when you've got a market that's growing like under 0.3%?  

36:11 | David Van Schaick 

Well, now is the time, I think, to focus on value, as we said, and I think revenue quality, which as you said, is a concept that's very strong in the PE world, but I think is very interesting to apply broadly and is a very good lens for marketers to be looking at right now, because if we're going to only grow the top line at a few percent, or if the top line is going to stay steady, we can still improve the value in the business by improving the quality of revenue. So that's looking at the quality of the contracts, the recurring level of the revenue onward, potential value of the revenue, and sort of, I guess, lighting the pathway or building the pathway to future revenue and thinking about how we can be doing that. Now is.  

36:53 | David Van Schaick 

Now is the best time to be doing it.  

36:55 | Dom Hawes 

Boom.  

36:56 | Dom Hawes 

There's another one. You see, I just said before, if you don't listen to anything else into that, you now need to listen to that bit too, and take notes on it. So rewind a minute and write that down, because that is amazingly good advice. Culture and society, we're in this kind of. I mean, at least if there's one upside to hard economic times, is it takes some of the focus away from the kind of culture war stuff that were seeing a couple of years ago, because we're in sort of existential crisis now. Over the next twelve to 18, we've got enormous uncertainty coming, as you say, because of elections, probably on this side of the Atlantic as well. What external influences, from a kind of societal point of view, do you think will be taking marketers'attention?  

37:39 | David Van Schaick 

It's hard to underestimate, probably, I guess, the fear and anxiety that be around, I guess, in the general public, in people's minds. There's a guy called Faris Jakob. He's a strategist, a creative, very interesting guy. And he did a piece recently which I saw, which was interesting. He talks about the Yolo economy. You only live once. Why is consumer spending not going down more in the west as interest rates have gone up? Partly because they've got a buffer from COVID but that doesn't necessarily explain it all. And he was talking, why are we still spending 300 quid or 500 quid to go and see Taylor Swift when budgets are so tight, for example? And his answer was, we're seeing more of this you only live once economy. And that sort of carefree mindset certainly hasn't translated to business.  

38:28 | David Van Schaick 

But there's an interesting tension there for marketers to play with. And then we bring ourselves back to the old cliche that I don't like that business people are humans, too. Yes, but if we are now talking about comms and advertising, there's a really interesting tension there.  

38:44 | Dom Hawes 

It is interesting. So I was at conference this week, and I think he's the economics editor for the Sunday Times, was talking to us and one of his charts looked at consumer confidence, and consumer confidence is at an all time low, but the spending isn't. So it's really interesting. I hadn't come across the yellow concept before, but I've been scratching my head about it slightly because consumer spending is so important as a driver for our economy. It's something like two thirds of our GDP, and I'm slightly worried that money's running out. This is slightly reminiscent of the early know, consumer credit then there wasn't a buffer, but consumer credit got insanely high, and you knew that at some stage there was going to be a crash.  

39:25 | Dom Hawes 

So it's interesting to see how that Yolo concept might translate into a business environment, people being maybe a little bit more carefree, maybe.  

39:33 | David Van Schaick 

I think certainly the value of experience is an interesting area for businesses to.  

39:37 | Dom Hawes 

Be thinking about another boom moment. Value of experience, yeah.  

39:41 | David Van Schaick 

And how do you create that? The sort of value that people are going to want personally is in the quality of the experience. There's a sort of general shift, I think, from quantity to quality in a lot of what were talking about. How do you measure and think about quality? And experience is a great way to do that. And experience design and those sorts of principles are certainly going to be one of the key tools that you can use to adapt to the disruption from Gen AI and the technology change.  

40:09 | Dom Hawes 

Well, we're just coming on to that technology next twelve to 18 months. Go back 18 months and have this conversation and I bet you, well, chatty GPT wouldn't have been on any of our agendas, and I guess it might not be in 18 months, depending on where Sam Altman goes next.  

40:26 | David Van Schaick 

Yes.  

40:27 | Dom Hawes 

What do you see ahead thinking about technology?  

40:30 | David Van Schaick 

Well, it's happening so fast, isn't it hard to look very far ahead? I think talking to a couple of businesses about now is what happens with Gen AI now in business. And how do you turn from experimentation into kind of production mode with that, and particularly around productivity, I think is going to be a big focus because when you've got a low growth economy and high interest rates, the kind of only way out of that for companies often is to improve productivity. There's not a lot of cash sloshing about. So I think how we actually harness those tools to drive productivity, that's going to be what it's all about for the next twelve months.  

41:12 | Dom Hawes 

And lord knows, in this country we need it because we're crap at productivity.  

41:16 | Dom Hawes 

We're off the chart.  

41:17 | Dom Hawes 

Our productivity I think has gone backwards over the last 15 years. Yeah, okay, brilliant. Look, we like to finish on an upload. So what is the big one? Hairy opportunity. You've got a room full of marketers now, they're looking at you at the end of this podcast thinking, this is David van Sheik, he's got the answers. I'm going to look for one big opportunity for the year ahead.  

41:38 | David Van Schaick 

There's a great little motif that a good friend and colleague of mine taught me a while ago, that every great marketing plan should deliver on the scorecard and the story, and I use it all the time. I find it so useful. The scorecard is the KPIs, it's the funnel, it's the things that you're going to do in the next twelve months. But you also need to think about how you're moving the story forward for the business. And I think just using that motif and spending some time writing down how are you moving the story forward for the business, connected to the business strategy, and how are you measuring that and talking about that to your peers? It's always a useful exercise to do.  

42:21 | Dom Hawes 

OMG, what a big brain David van Shake is. Oh my God. Thank you David, for sharing so much time with us. We really appreciate it. Well, what are we going to take away from today? At halftime I looked at a couple.  

42:35 | Dom Hawes 

Of those things that I thought were.  

42:37 | Dom Hawes 

Important in the first half and I said I was going to come back to a couple of other points, which I'm pleased to do now. Actually, one of the big things I wanted to comment on from the first half of the show has also reappeared a couple of times in the second half, and that is that in times of uncertainty, marketers need to be thinking about how they plan for and deal with long term value creation in a way that sets their businesses up for long term success. And one of the ways of doing this is focusing on quality of revenues, not just revenues. So what do we mean by quality of revenue? Well, we talked about it in some.  

43:13 | Dom Hawes 

Detail in an earlier episode with Peter.  

43:14 | Dom Hawes 

Russell Smith, and I will link that on the show notes at Unicorny Co. UK. On that show we talked about value drivers from private equity. So it's appropriate that's what were talking about today too, particularly given David's recent experience in a private equity backed business, quality revenue is revenue that is well contracted, by which I mean regular, predictable and repeatable. And private equity likes that kind of revenue because it allows them to raise debt to finance their deals. As a marketer, quality of revenue probably means something slightly different. For example, if you subscribe to the view that marketing is a territory capture game, not just a communication exercise, then it should matter to you that the majority of your revenues are coming from a definable market. After all, how can you dominate a market if you're not building market share?  

44:07 | Dom Hawes 

This might seem to contradict the point that David made about adjacency, but I don't think it does. Adjacent markets don't become attractive as a strategic imperative until you have a dominant position in your core market. But in tough times, that doesn't mean you can't find fuel there. As long as you have a clear focus on quality and understand that focus is a value driver itself, you can dabble in adjacency. Quality of revenue is also defined by the profitability of that revenue, and that means really looking into two aspects of pricing. Firstly, I'm talking about how you price your work in the first place. In services, the race to the bottom starts with time and materials or rate card pricing, and they're the favored things. You've heard me talk about this before.  

44:54 | Dom Hawes 

They're the favored tools of procurement departments because they allow them to put the screw on suppliers. But unprofitable work is not work that will be done well. It serves both parties in an agreement to ensure that the work commissioned is profitable and connected to outcomes, not outputs, so that both parties have skin in the game and both parties are aligned. I'm talking value based pricing, obviously, which normally invokes an image of a percentage based remuneration, a share of upside or a percentage gain, that kind of thing. But actually that's not what I'm talking about at all. I think I'm going to do a whole show on pricing in the future.  

45:32 | Dom Hawes 

But for now, what I'm talking about, well, is probably enough to say that work should be priced according to the value it creates, not the time it takes or the ability of the buyer to pay more. The price from the client, not the job. That's a little too 80s for my liking.  

45:47 | Dom Hawes 

And pricing according to rate card, it's.  

45:50 | Dom Hawes 

Just not a business that anyone wants to be in. Suppliers need to charge the right amount for the right bits of work and buyers need to pay for what they value. Secondly, your contractual terms and how well you've reserved your rights to raise prices are a critical part of revenue quality. Like why would you want to fix prices contractually in a world that is VUCA? I've seen service businesses in year three of a five year contract where this year's inflation or last year's inflation has eroded almost all of their profitability, yet they're bound to continue supplying, and that just doesn't make sense for either party. So sort your contracts out and make sure you have the ability to raise price, particularly if you're signing long term contracts. And if you can't do it, don't sign long term contracts.  

46:39 | Dom Hawes 

It's better to have a short term contract that has a better quality of revenue than a long term contract that doesn't. Well, there's so much more from today, not least the importance of experience in business to business, and I think we're going to look at that in this week's blog. You will find some detail on that.  

46:57 | Dom Hawes 

At Unicorny Co. UK, and it will.  

46:59 | Dom Hawes 

Be linked on the show notes. That, however, is enough for today. I know your time is precious, so thank you for listening, and be sure to tune in next week. Right, I'm now off to the whiteboard to map out my own plan for increasing quality of revenue. See ya. You've been listening to Unicorny, the antidote to post rationalized business books. If you've enjoyed the show, why not hit follow? We'd love you to rate or review us on Apple Podcasts or Spotify, and it only takes a few seconds, but it means a lot to us. Or if it's easier for you, please recommend us to a friend or post on LinkedIn. Tagging at Unicorny, I'm your host, Dom Hawes. Nicola Fairley is the series producer, Laura Taylor McAllister is the production assistant, Pete. Allen is the editor, and Ornella Weston and me, Dom Hawes, are your writers.  

Unicorny is a Selby production. Now go win the future.