Only Uncommon Solutions Command Uncommon Pricing
By Tim Williams
Click on the “Services” section of an agency website and you’ll be served with a bullet-point list of widely-available capabilities and competencies. The introductory copy explains that the agency will carefully assemble the right combination of services to meet the specific needs of prospective clients.
This unimaginative approach to describing your firm makes it almost impossible for marketers to differentiate your firm from the “sea of sameness” that pervades the industry. Simply saying that you do everything every other firm does, only “better,” is a pathetically weak new business strategy. But worst of all, this me-too recitation of services makes it impossible for your firm to command any kind of premium pricing.
If what you do can be done by everyone else, that’s the very definition of a commoditized product. It’s the equivalent of a commoditized food item on a restaurant menu. As behavioral scientist Dan Ariely points out, a “cheeseburger” is worth $5.99. Or for $35 you can get a sandwich made of “grilled grass-fed beef topped with artisanal goat fromage, tranches of heirloom vine-ripened tomatoes, simmered in a hand-crafted blend of imported spices.”
It should be obvious to organizations that employ copywriters that the language you use to describe your offerings is immensely important. Not only your selection of words, but phrasing your offerings in a benefit-centric way. In place of a “what we do” statement, we should describe what the client will get. Not “we” language, but “you” language.
Not just the style, but the substance
But beyond the style, it’s the substance of your offerings that makes the critical difference. Your goal is not to just be different, but to be exclusive; to be in a category of one.
An economist reviewing a typical agency website would conclude the firm is jostling for position in the land of “perfect competition.” Perfect competition is a market structure in which there are many sellers offering nearly identical products, earning just enough profit to stay in business. If you run an advertising agency, see if this type of market sounds familiar:
The products and services offered are widely available from a large number of providers.
Products and services are produced to a repeatable industry standard.
Products and services offered are seen as interchangeable; buyers believe they can simply substitute one provider for another.
New, lower-priced providers can easily enter the market.
Buyers have access to information about the costs of production, making it difficult for sellers to justify higher prices.
Sellers are therefore price takers, not price makers.
Producers of cereal grains largely operate in this type of market. So do the various brands of sugar. It seems ironic that advertising agencies, which exist to help clients differentiate their brands and charge premium prices, routinely fail to do the same for themselves.
The opposite of “perfect competition” is a “perfect monopoly” — a market in which only a single firm supplies a product for which the firm can set its own pricing structure since buyers have no alternatives. The most basic concept of economics is “What’s scarce is valuable.”
Black box, white box
Firms with truly unique products and services are what we call “black box” providers, meaning their offerings can’t be deconstructed into their component parts. It’s nearly impossible for competitors to create direct copies of “black box” offerings. But most importantly, these distinctive solutions are almost always premium offerings sold at premium prices.
A good example is ALLI, developed by the marketing firm PMG — a technology platform that provides powerful AI-driven creative insights for brand marketers. The same is true for the AI-powered platform “Marilyn” created by the commerce agency Mars United. These firms are marketing solutions that are literally inimitable.
Meanwhile, the vast majority of agency offerings are “white box” and are therefore subject to all the pricing pressures that accompany widely available products and services.
To say that your firm will assemble a custom combination of these “white box” services is not enough. Many clients have the ability in-house to simply copy the formula — the equivalent of assembling together a list of food ingredients based on a published recipe. Great meals have bespoke ingredients and unpublished preparation methods. No doubt you’ve had the experience of trying unsuccessfully to reproduce a memorable culinary experience.
Common sense is not common practice
Unless you intend to compete solely on price (not a great business strategy), your goal must be to create a suite of programs and products that exist nowhere else — solution sets that are literally a breed apart. If this sounds like common sense, it is. But common sense is rarely common practice, even among seasoned marketing professionals who understand the benefits of differentiation.
So most agency professionals continue to fall back on the lazy promise of “same, but better.” They want prospective clients to believe that their firm is distinguished by an uncommon creative energy and a passion for excellence (which presumably can’t be found at competing firms). Agency websites are littered with such vapid hyperbole. If you doubt this, take 10 minutes and visit the websites of 10 agencies at random. The meaningless marketing promises made by agencies large and small represent a “non-positioning.”
In a memorable scene from the movie “The Prestige,” a magician played by Christian Bale mesmerizes a boy with a magic trick. Referring to the magic behind the sleight of hand, Bale’s character provides this invaluable advice to the awestruck child:
“Never show anyone. They’ll beg you and flatter you for the secret, but as soon as you give it up, you’ll be nothing to them.”
Agencies need much more “magic” in their portfolios. They need to captivate their clients and prospects with solutions for which there are no direct substitutes. In order to earn above-average profit margins, they must push themselves beyond the land of perfect competition to cultivate a monopolistic business model.
Entrepreneur Peter Thiel, co-founder of PayPay, believes companies have a choice between stagnation or singularity. The most successful enterprises, says Theil, find singular ways to create new things of unique value. As he observes in his compelling book, Zero to One, ”All happy companies are different; each one earns a monopoly by solving a unique problem. All failed companies are the same; they failed to escape competition.”
