What Are the Risks and Rewards of Agency Partnerships? A Balanced View

Partnerships in the agency world come with their own set of risks and rewards that need to be carefully considered. By understanding these risks and rewards, individuals and organisations can make more informed decisions when it comes to engaging in agency partnerships.

What are the Risks of an agency partnership?

One of the risks associated with agency partnerships is the potential misalignment of goals between the partners involved. It is essential for both parties to have a clear understanding of their objectives and ensure that they are aligned. If the goals of the partners are not in sync, it can lead to misunderstandings and ultimately the downfall of the partnership. This misalignment can occur due to differences in strategic priorities, target markets, or even cultural values. Therefore, it is crucial to have open and honest communication to ensure that all parties are on the same page and working towards a common goal.

Based on my personal experiences, I had conversations with some early referral partners. One of them was initially very aligned with my goals. We were both niche agencies that complemented each other, and we spent several enjoyable evenings discussing the challenges and successes of our respective agencies over beers. However, within 12 months, he started talking about transitioning into a full-service agency and claiming that niche agencies cannot survive. While this alone may not have been enough to end our relationship, his approach was a major factor. Our discussions became very one-sided and he dominated the conversation, which ultimately made me uncomfortable. Gradually, I decided to distance myself from him, fortunately without having engaged in any content sharing or publicly promoting ourselves as “partner” agencies. This is why I emphasise the importance of prioritising referrals first, which I discuss further in my white-paper below.

Another risk to be aware of when entering into an agency partnership is the possibility of becoming too reliant on the partner. While partnerships are meant to leverage each other’s strengths and resources, relying too heavily on a partner for resources or expertise can put your own business at risk if the partner is unable to deliver or if the partnership ends unexpectedly. It is important to maintain a level of independence and have contingency plans in place to mitigate the potential negative impacts of dependency risks.This situation occurred in my agency during its early stages. We were fortunate to have an amazing partner who provided us with significant support. However, relying solely on this partner for leads posed a significant risk from a purely business standpoint. Therefore, it was necessary to diversify our partners and, more importantly, expand our marketing and sales efforts. As a result, this partner now contributes to only 10% of our leads, compared to the previous 40-50% during a short period of time. I outline in the guide below how to approach this so you don’t burn bridges and allow yourself to build up multiple non-competing partners.

What are the Rewards of an agency partnership?

One of the key rewards of agency partnerships is the opportunity to share resources. By partnering with another agency, you gain access to their pool of resources, which can include anything from equipment and facilities to talent and expertise. This collaboration can help both parties to achieve their goals more effectively and efficiently. For example, a digital marketing agency partnering with a web development agency can combine their resources to offer comprehensive digital solutions to their clients. By sharing resources, they can deliver high-quality services that neither agency could provide individually.

From my experience, this benefit always seems like a dream on paper. However, in practice, it never turns out to be as good as it initially appeared. That being said, I have heard that it works well for output-led agencies such as writers, designers, or developers, in comparison to strategy, performance, and ROI-driven agencies like marketing. In these types of agencies, where every dollar is up for grabs and proving the value of your channel can clash with your partner, this benefit may not be as effective.

Another significant reward of agency partnerships is the ability to broaden your service portfolio. By partnering with another agency, you can leverage their expertise and capabilities to offer a wider range of services to your clients. This not only enhances your value proposition but also allows you to better meet the diverse needs and demands of your clients. For example, a public relations agency partnering with a social media management agency can offer integrated PR and social media campaigns, providing clients with a comprehensive and cohesive marketing strategy.

I have found this to be particularly valuable in the pitching process. On numerous occasions, our referral partners have received requests for proposals (RFPs) that require an agency to provide four different services. While our partner can offer three of these services, they do not specialize in SEO. Rather than pretending to offer SEO services, our partner chooses to be honest and suggests working with NOVOS for this aspect. The client is usually satisfied with this arrangement as they appreciate having a specialist dedicated to their account. This approach also helps to establish trust right from the beginning.

In conclusion, when considering agency partnerships, it is crucial to carefully weigh the risks against the rewards. It is essential to find a balance between the potential benefits and the potential pitfalls. By doing so, you can increase the likelihood of a successful and mutually beneficial partnership that aligns with your strategic objectives.

Partnerships in the agency business can offer numerous advantages, such as resource sharing and enhanced service offerings. However, it is important to be aware of the potential risks, including misaligned goals and dependency risks. By conducting thorough due diligence, establishing clear communication channels, and setting realistic expectations, agencies can navigate these risks and maximize the rewards of partnership. Ultimately, a successful partnership is built on trust, mutual respect, and a shared vision for growth and success.

As the agency landscape continues to evolve, strategic partnerships will play an increasingly vital role in shaping the industry. By leveraging the strengths and expertise of partners, agencies can expand their reach, drive innovation, and strengthen their market position. However, it is important to approach partnerships with caution and carefully evaluate the potential risks and rewards. A balanced view is essential to ensure that the partnership is mutually beneficial and aligned with the long-term goals of all parties involved.

In summary, agency partnerships can be a powerful tool for growth and success, but they require careful consideration and strategic planning. By understanding the risks and rewards, agencies can make informed decisions and forge partnerships that propel them towards their goals. It’s about finding the right balance and ensuring that the partnership is built on a solid foundation of trust, shared values, and a shared vision for the future.

With proper planning, communication, and a commitment to collaboration, agency partnerships can be a game-changer, providing agencies with the resources, expertise, and opportunities they need to thrive in today’s competitive business landscape. So, take the time to evaluate your goals, assess potential partners, and embark on a partnership journey that can transform your agency’s trajectory and position it for long-term success.

Remember, a successful partnership is not just about the rewards; it’s about finding the right balance and strategic alignment to mitigate the risks and maximize the benefits. So, embrace the power of agency partnerships, but proceed with caution and make informed decisions that align with your agency’s unique needs and objectives.

If you want to understand more about partnerships and how to build a successful referral network you should check out my partnership guide available here: https://learn.theagnc.co.uk/partnerships