Expert of the Month - Simon Jacobson - Microsoft
VIDEO: 57:30 mins
AUTHOR: Robert Craven and Simon Jacobson
In this hour long interview, Robert talks to Simon Jacobson of Microsoft. Simon is the UK Business lead at Microsoft and has had a diverse career working in agencies, consultancies and platforms which has given him an amazing insight into the world of search.
In the interview Robert and Simon discuss the state of play with agencies right now, during the COVID crisis, plus much more!
Robert and Simon discuss:
The early agency response to Covid-19
What are the good agencies doing?
Furloughing
The future of the economy and the advertising market
What’s holding agencies back?
How to get close to Microsoft Advertising
Smaller is better
Agencies becoming more commercial in their contracting with advertisers
There are opportunities in the right places
Simon’s advice for agency leaders
This interview was recorded on 19/5/20. Opinions and views are personal and that of the interviewee and not of any company that they are associated with.
Transcription:
Robert Craven 00:46
Hello, and welcome to the GYDA Talks podcast. And today, I am absolutely delighted to have with us Simon Jacobson from Microsoft advertising. He is the UK business lead. Hello, Simon.
Simon Jacobson 01:02
Hi, Robert. Thanks for having me.
Robert Craven 01:03
It's an absolute pleasure. So without further ado, can you just give us a couple of sentences to describe what UK business lead at Microsoft advertising actually means?
Simon Jacobson 01:13
Yeah, absolutely. So we have a number of different business leads across our business. And for me, I look after the SMB business, which is essentially everything that is not in the enterprise or account managed side of our business. So that's a lot of the agencies that you'll be kind of sending this out to. And also within our kind of wider small businesses, startup community, a lot of direct advertisers and a lot of fast growing direct advertisers as well. So I represent the small guy, and hopefully that will come across today as well.
Robert Craven 01:56
So what does that mean looking after?
Simon Jacobson 01:58
Looking after I'm essentially responsible for ensuring that we make the right investments across sales, across service. And across our solutions areas are so all our agency customers getting the right exposure from our engineering teams, our products set up to incorporate the feedback of our agencies in the UK, our startup businesses able to onboard as quickly and as effectively as possible. So end to end. That's obviously the revenue growth. But it's with this mindset that where our customers win, we will win. And that's kind of how I like to kind of approach my job.
Robert Craven 02:46
And what's the point of potted history? What's the background to, for you to end up where you are today?
Simon Jacobson 02:53
Yeah, it's an interesting one, because it's an interesting role within Microsoft advertising. And certainly within the publisher side, I've had a diverse background, but it's kind of always been centred around digital media and predominantly search. So I spent a bit of time on the agency side looking after managing large accounts before moving into managing teams. I've done that across the network agency side, as well as the small independent agency. And I spent a bit of time on the consultancy side. And then prior to joining Microsoft, about five years ago, I was working on the customer success side at a search management platform. So I feel that I have a kind of diverse background with regard to search. And that gives me an opinion, I should say, but hopefully a perspective on you know, the customer at the heart of those areas and how we can support customers to grow their businesses considering their end users.
Robert Craven 04:06
So we're recording this at the end of May, the end of May 20. Let's be absolutely clear, and it has been two or three months like no one's ever seen before. And I'd be fascinated to know what you've seen and how you've seen agencies respond to what's been going on.
Simon Jacobson 04:34
Yeah, look, make no mistake, this has been the most challenging time that any of us in our wider industry have seen and experienced and, you know, approaching it from a day one versus day whatever we are now. I think that the constant has been through Outback is that this will not last forever. But the mindset of going through, you know, the day one course correction, understanding the shock to our customers and our customers businesses, and our agents, you know, just seeing how our agencies have reacted certainly in the UK, like the way through to now where we're reading the signs of recovery and seeing some really excellent uncovering of opportunity that journey has, it's difficult to believe that's been, you know, two, two and a half months already. So I would say, what we've seen is the shock, I think, now we're starting to look at from a macro point of view, and from a one to one customer and agency point of view, signs of that recovery, and where some of that recovery will come from. And I mean, recovery in terms of, you know, activity, dialling up activities, searching for demand, moving away from that hibernation into that kind of pivoting and emerging stage. Businesses sort of rethinking some of the ways that they were doing things and what that looks like, in terms of their account structures and account setups. And really, for us as an organisation, and for me, as an individual, I've taken it as, let's serve these customers, and these partners and these agencies, let's give them what they need to uncover the right opportunities for future growth in their own businesses. Rather than saying, Okay, we've really got to, you know, flip the switch on this and treat this as a immediate course correction, because there just isn't a remedy out there a welfare might be a vaccine might force a better shape. But there isn't a remedy out there that's going to turn this industry, from where it is now into what it was three months ago.
Robert Craven 07:05
There's sort of, there's two questions I want to ask. The first one is what are you seeing the really good agency? What are the really good practices that you've seen? And the second thing is about your optimism for recovery? So let's just do the what is it that you're seeing that the really good agencies have done in order to deal with what's going on?
Simon Jacobson 07:34
I think the really good agencies, many of them have had the same attitude, as they had prior to this scenario, should we call it so whether that be, you know, generating awareness of a piece of market insight, uncovering how trends may have changed how COVID may have changed certain verticals and certain industries or certain customer types? And feeding that back into the industry? No, you know, no affiliation? Yes. You know, you could say that to, that's a lead gen tactic and a smart one as well. But I think at the back of that, it is, you know, really kind of giving value back to others. And we get a bit of this, you know, there's no shortage of insights going around the industry right now. There's no shortage of, you know, how smart marketers can recover from a pandemic or what you shouldn't be doing now. But I think the good agencies to answer your question, are the ones that continue to serve, they continue to act as a partner on behalf of their customers, and share what they learn as an agency. I mean, let's be honest, agencies have a really unique position to play in this market, because they're going to be the ones that help the market recover. And so to create that advantage by being a trusted partner, being someone who is, you know, someone or an organisation that's, you know, all things always thinking, always learning, always looking to better. Their customers business, I think that will put them in an advantageous spot.
Robert Craven 09:17
But I'm not sure that's right. I mean, not let me just explain what I mean. I think that agencies, pre the crisis, there were lots of very generous agencies, but the generosity was a to some degree tactic, part of the toolkit of generosity, reciprocity, opening up conversations, engaging stuff. So I totally get that. But I think what's happened is that agencies have been shocked by just every time I mean you've had it, I've had it, you know, It agencies owners being really nervous picking up the phone because they know the next topic is like, Oh, hi, a client, I haven't heard from you for a month ago. Oh, surprise, surprise, you want to put everything on pause? Yeah. And that first two or three weeks was carnage for most agencies as needed because they didn't know when it was going to start. They didn't know at what point it would stop. And also that surprise about people you thought were really good clients who were really on your side working with you just cutting you dead. And there's one agency owner who talks about a bastard tax that she employs that there are people who are so cruel to her that if they wanted to work with her again, they would have to pay a bastard tax to come back in. In other words, if you come back, there's going to be 20% on the fee. Because when we were struggling, you didn't even have the courtesy to phone us up and talk us through it. You just send an email saying the budget stuff. And I think that's brought into question a whole load of value that people thought they had. So literally, it's almost like Maslow's hierarchy of needs. You know, like, when you're at the top and things are going well, you can be generous, and you can think about other people. And then as in a moment of crisis, it's suddenly about Oh, my God. So I'll give you one example, one agency owner said to me, I'm going to cut everything, but I'm not cutting my dividends. You know, and this was an agency that talks generosity and family and openness and transparency. And he says that to me, privately. And then there are other agencies where the owner, Ross Carbondale I interviewed and he said, he's cashed in his pension. He's not taking any dividend because the one thing he's going to protect is his staff and the community and the family. So I guess, what I'm saying is that it's we didn't realise how good we had it. And now on the backfoot, I think we're revealing how people you're actually seeing how your boss really behaves now, how does your boss furloughing people? So, a very long way of saying, I think that has been great practice, but I think also some holes have been revealed.
Simon Jacobson 12:29
Yeah, I would say. So there's a few things that you touch on there. And this is the one thing to recognise is, when I talk about agency, I'm not just talking about kind of that smaller agency, I'm talking about midsize agency as well. So to my mind of focus is, I guess, somewhat blurred between the two. But when we think about the profile of agency, there's, we all had that shock to the system. So we all have that on a personal level. We all had that. You say first two weeks, my French colleagues might have had it two weeks before my German colleagues and the communities that we work with, we can learn from others. But yes, you know, we all have that, you know, where does this where does this bottom out? What's the you know, where do I create the optimism from because as a server, I kind of need to make sure that I'm delivering that value back and creating that optimism or that windfall optimism in the market. And the Furlong piece thing is super interesting. So I was hoping that we'd get onto there. So really, you know, we've spoken about this before. I look at the UK market as the response to furloughing impacted all of our service industries across the country, not just in the professional services or our agency space. And, you know, for some, there's the moral dilemma to go back to your point about, you know, good or bad. There's the moral dilemma of two I do X and have a business to come back to whatever that looks like. Or do I do why? And, you know, and then do I'm doing the right thing, but am I, you know, am I able to do Y effectively. And then some had a blend of the two furlough some stuff that was associated with certain customers or clients, and then they'll kind of retain the rest. I think as I my perspective takes into account the other markets across Europe and the other countries and how their governments approach their own job retention schemes, which is effectively what the following scheme is, and before the chancellor announced the August to October flexible working as in the part time piece, we effectively had 20% of our country, or our working population in our country, not at work or able to work, or have by their employers declared that they didn't have any work for them. So we've kind of created, the government sort of created that scenario or dilemma for agency owners, which was, you know, am I X? Or am I Y, you know, and I, there's no in between there. So, I think the seeing the best in people, and seeing the worst in people ultimately came down to do I take the option that gives me something to come back to, and I can try and recover from, yes, there might be a bus or taxi pail, or whatever else that it's there. But that's the mode dilemma for agencies. And it's not even going into the advertiser spectrum, or an advertiser pulling or cutting back on a budget. That's just the agency's mere existence is, you know, do I do this? Or do I do this, there's no in between. So we saw that a lot with agencies, and we tried to consult where we could on, you know, where our resources could help support their resources. And in many cases, it did lead and support a decision. But, you know, fundamentally, nobody knew at the time that the option was given, where does this stop? So, timing, and also, you know, decision, the choice of ARB led the agency to make the agency well, to make some sharp, sharp choices at the time.
Robert Craven 16:48
So How do you see it panning out because you use the phrase, economic recovery. And if you look at the economist, or the ft. Conservatively they're saying it is two or three years before, that, if we're lucky, before there's any sense of things being back to normal. We've got a government in the UK, that has somehow got to get back the money that it's spending. So there's a potential of some kind of austerity, although we're promised that's not going to happen. Fantastic. If you've got a whole load of clients, who are bike shops, you know, fantastic if you've got all loaded clients who are in online gambling, not so great, if your niche is hospitality. Is your view that in 6 months or 12 months, that will be back to 2019 levels? Is your view that it's just going to be a different blend? So if you did have lots of hospitality clients, now might be the time to head towards professional service firms or to not know what's your take on the future?
Simon Jacobson 18:11
Yeah, this is a personal view, with some, you know, with some insight from looking at things from a kind of agency and partner lens, but I'm not an economist, so I'm not going to comment on the first one, I think it would be, I'd love to see a recovery on a personal and professional basis. But I think the second piece is probably irrelevant, I think there'll be a different blend or a different shape to how to what demand and supply looks like of course, in the retail sector today, in the UK, we're seeing nonessential is open for business online, essential is open for business, the definition of essential is, you know, slightly differs across different countries, but you know, we see that kind of essential non essential divide and then you know, in the short term that essential does recover and do you start to see, you know, do you start to see some of that come back into the systems or within into the agencies, and I would say demand and supply looks a lot different and spending, household spending, consumer spending on you know, on things changes, inflation plays a part, the, you know, the the economic impact of this will play a part. I think the blend the answer is my view is the second part, which is the blend looks a lot different. But what I do want to come back to is, in these situations, there's always an opportunity. There's always an opportunity, there was in 2008, there would have been 10 years prior. Throughout the ages, there's always an opportunity. I mean, you can take in every high street across the country, there's a, you know, there's a food establishment a dining establishment doing far greater now in takeaway sales than they ever were in dining in cupboards. That is just an example of one opportunity. Once you democratise that opportunity, and you take someone from home, cooking meals and selling them, you know, somewhere or getting a licence and distributing them via a dark kitchen, all of a sudden, you know, you dilute that and there becomes more competition in that sort of micro marketplace. And it looks a lot different than it does right now. So, the long answer is that? Well, the short answer, I should say is, it's just the blend changes society in the shorter term will change. And economically, it's up to us as a, you know, I guess, as a responsible publisher, to provide those insights of where those consumers are changing their behaviours. And then from a b2b, you know, position, helping our partners and our advertisers capture that insight and leverage that increase of demand. And there'll be many organisations that, you know, have had their existing business cut. And they'll be looking to kind of move out of like I say, out of that sort of hibernation stage into that, okay, now, how do I pivot and emerge from this and grow from this and find an opportunity?
Robert Craven 21:50
I mean, certainly the all the research, I've done quite a lot of looking at the Harvard Business Review and McKinsey and Accenture and people talking about the last recession. And an interesting enough, most of them were writing literally in February of 2020. Because they could they knew something was going to happen, but they didn't know quite what it was. And they're all consistent, that the people who grow long term are the ones who seize the opportunity. They're the ones who go, Okay, we've got a couple of months, downtime in effect. We need to update, remodel, revamp, reconsider what's going on, we need to get our Mergers Acquisitions strategy in place, we need to know what the phrase is never waste a crisis to make some tough decisions. And the nervous thing, I guess, or the nervous thing that I worry about for agents is those a lot of agents have been told by their accountant, the best thing you can do is do nothing for four months, and just hang on in there for four months, and then lift your head above the parapet and have a look. It's almost like there's one agency I've worked with and considering closing the agency, because it's so tough out there. They're working with premium brands. They're not getting any traction. So I think, well, we're just twiddling our thumbs playing on LinkedIn. So why not just be honest, and just shut shop for two or three months? Come back? Yeah, on the lead into Christmas, and then there might be some business to be had. But, so the evidence, the research evidence supports exactly what you're saying, which is now the time to reposition to really think about what doesn't work, but I suspect or not, and I suspect we're going to end up with very different agencies. So agencies that you and I worked with that I've been talking to over the last few days are saying, you know, thank the Lord, we didn't sign that tenancy agreement on that big office block in the town centre, because actually, we're gonna go in entirely the opposite direction. So rather than needing a space for 130 people, actually, we need a space for 30 Because we can meet on a Monday. We can hire a hotel, conference room for a day on a Monday and all 100 people can come in just for the day. And the rest of the time most people can work from home, saving us, you know, 150,000 - 200,000 pounds a year on rental, we would have paid or they're discovering that actually people are 50% more efficient working from home because they didn't spend the whole time playing ping pong sitting on beanbags and pretending to work.
Simon Jacobson 24:48
Actually use those ping pong tables. Versus decoration.
Robert Craven 24:57
No, no they do. I go to one agency out I see that the ping pong table is by the board meeting room. Okay. You can hear all day ping pong noise . And in fact, they've got so bad that the next door neighbour that was ironically, a sound hire pa higher company complained about the cost of ping pong noise coming through the wall. Anyhow, backup back on plot. It's going to be different for agencies, I guess. If you were talking direct to agency owners, I mean, I guess the first obvious thing is what do you think is holding back agencies from stepping up to the plate? As Americans would say?
Simon Jacobson 25:54
Yeah, I think, as I said, Before, I get a lens at agencies of all sizes. And I think if you're the sort of, I want to be respectful of the number of employees, so if you consider yourself at the small end up in an agency spectrum, employee wise, then you might consider the longer term kind of partnership aspects of working with a customer, client and advertiser. And commercially, does that mean, I need to kind of put in a two year plan, kind of think more like one of the larger kind of independence, which is, if I commercially set myself up with this client for on a two year journey with, you know, a performance related fee element baked in, you know, those, you're thinking more in terms of skin in the game, that creates a more kind of trusted in close partnership, I find very often. And it may be that agencies choose to work with less customers, but more defining the basis of the commercial arrangements that way, I don't think, you know, we've all done it, you think if I get X number of clients paying X amount, that's it? That's why, and I've had that discussion with many agencies. And then there's also that, you know, build or buy scenario, , there's all of those questions that were philosophical become, you know, the real questions to answer, you know, do I invest in a build here or the hiring of staff? Do I look at my contractor model, do I? What are these things that are going to become important or more important, I should say, I mean, they will top of mind for agency owners anyway, but they'll become more important as they think about navigating their way around this. The other thing I would say is to use the resources and partners to, you know, to your own advantage. And I say that as a, you know, present the small and midsize businesses and startup businesses at Microsoft advertising, but we have resources that can help agencies set up campaigns in a different way, you know, understand, you know, marketplace insights, all of the agencies that have account managers in our business, can tap into those, or contact points within our business can tap into those resources anyway. And I think that can really help generate a better profile for an agency or more muscle, I should say, when it comes to new business conversations. So I think there's a lot of things that are in play with the way that the game is likely to change. And I come back to opportunity, I really do think it's an opportunity. And it will be considered an opportunity by many advertisers who look at how their current agency reacted during this and benchmarks them against other agencies and how they react to doing this because clients and advertisers go through. So clients and agencies go through that journey of, you know, respectful, disagreeing, and, you know, respectful conflict the whole time. And you'll never fully agree, but that's what creates good campaigns. And that's what creates great work in our industry. But I do think that there's an opportunity right now, not just to rethink the way that you act, but the way that you want to have your relationships with your agencies going forward with your advertisers or clients.
Robert Craven 29:52
So that if you're an agency owner at the moment, you're being courted by the different plans forms and you're being courted by the different technologies, and so on and so forth. Which is fine. I personally think it's where we are now is fascinating. It's great to be talking to Microsoft, because as we know, there was only one gig in town five years ago in terms of platforms. Now, we're in a much more interesting space, not just for the agencies, but also for the advertisers. Because the advertisers are obviously thinking about, they're just thinking about how can I sell more stuff? They're not thinking about how can I go down one particular platform or another, the platform is just a tactic. But I guess my point is, how can agencies squeeze the maximum amount of value out of you guys at Microsoft is because I've sat in conferences or other platforms, and the platform owner, and the VP stands up and says, You must come and talk to us, we believe in partnership, yada, yada, yada, we can't do this without each other. And then you go into coffee break, and the agency owners just hang around each other and the, you know, the big rigs, and the sales, execs and so on and so forth from the platform or just talk to each other as well. So it's almost like the agencies don't, or most of the agents, agencies don't actually engage with the platform, which seems like to me seems totally upside down. I'd be all over you. So what I guess what's your advice to agencies that want to get closer to you? Is it just literally pick up the phone? Or are there specific routes and specific avenues? That you're encouraging?
Simon Jacobson 31:44
Yeah, I mean, first of all, I just kind of go back to your point around, you know, publishers or kind of platform businesses, you know, everyone has an exceptional amount of value to add at this time. And the primary reason for that and all of our competitors among that, as well, because everyone's essentially offering a perspective based on their audiences, and their unique audiences and unique mindsets across all of the costs all of the Facebook's and the Googles, and the Verizon and the Microsoft, we've all got a unique perspective based on our own the audiences that we see on our platforms. So that's kind of on that piece,I would say, in terms of support. There's support comes in different guises. So you might have an account manager, in an agency, search manager, Display Manager, whatever, it doesn't realise that, you know, we operate a, you know, phone support modality, where you can just speak to an expert, by, you know, arranging a call online, some people don't realise that we have that. And so that's, you know, that's a, we do have that, you know, many publishers have a chat functionality that they can get in touch with the people get in touch with support. I guess from a deeper partnership perspective, at scale, we have a partner programme framework where, you know, through accreditation, and through platform growth and platform behaviours, you are accredited with a partner status, and we have several different status is based on status stays high, based on level of engagement with teams, accreditation, advertisers, significant advertisers, stories different there are different programmes and accelerants in there, that kind of help move from one status to another. So that's on a status, partnership status and the things that you get from those different levels are typical of all platform kinds of status platforms, partner programmes, or partner frameworks, officials say, going deeper than that. From a supply point of view, we work with a number of different partners globally, to help expand our own marketplace reach volume, so we'll have partners like Verizon media. So on a global point of view, we'll capture 100% of Verizon searches on the big network, and a Microsoft advertising network. And then, you know, on the kind of more micro scale of that we'll have local supply partners so Italia online in Italy and come to in the UK and several other types of syndication or supply partners. And so that's the this is how we're sort of banding partners here but If there is an interesting product that you feel can be built on our platform, or you want to understand how we can better how you can better serve customers at scale, we have a channel partner, division or team in Europe, that can help you accelerate your business that way. We think of partners every to me, everyone is a partner, a partner is where you have an exchange of value. And where there is a kind of a given get through all partners. And that's for the mutual benefit of both. And we partner with many different organisations in many different ways, I would say the first step is speak to a Microsoft advertising expert. So at the support level, start your conversation that way, find me on LinkedIn, I'm always open to a conversation of what interesting things people think people are doing. And how that can help, you know how that can help a greater number of groups or teams or individuals. You know, there's a number of ways to partner with us, I would say, I can't, sadly, I can't say for the example of not mixing with agent with, you know, publisher individuals, or execs, I would say any opportunity that you get to feedback or to, you know, to share your point of view. With an engineering team on product, I mean, we have product advisory group road shows that are set up to do exactly that. As well as you know, executives going to conferences and speaking and having conversations there. And fundamentally, what is fed back into our teams, and our executives and our engineering teams, is what builds out the product for our customers. We don't win when our customers don't win. So we need to hear what our customers need in order to stay relevant to them. So we want to hear from everybody.
Robert Craven 37:19
Because the interesting thing is, you've got to the word on the street, I'll rephrase it, the word on the street is you've got a tighter, more engaged team, because you're more in you're coming up the curve, and you're growing and you've got tremendous investment. And you're up for growing. And that's kind of different from the larger number one player who has a bit of a reputation for being having got a bit too large a bit too quickly. So that kind of gives you a really interesting people are really interested in leaning in your direction for that very reason.
Simon Jacobson 38:04
Yeah, I mean, speaking for just speaking for our business, I know where you're going with this now, but speaking. For us, I think, you know, maintaining that growth mindset and having that kind of, you know, we will win if our customers win, so what is it that our customers need, and then having those listening posts, like I say, you know, we send our engineering teams out to listen directly to customers of all segments at all sizes. And that's not randomly selected. But we do like to see active use of the platform and understand from, you know, daily doers of our platform, what their feedback is, and then obviously delay in some of the kind of management feedback and in agencies. But creating those listening posts, and having that mindset of why out of this, what we want is what are the top things we need to do to change our system? What are the top asks of our customers that will help us generate longer term trust. Of course, many of our competitors are a lot bigger than us in terms of individuals. So we have to be agile in the way that we do listen, and the way that we incorporate in the way that we prioritise for our customers. Because then you may get in a room with one of our competitors, and have an entire laundry list of things. And, you know, you may get in a room with us and say actually, there's just one or two burning things that, you know, frustrate me about your platform or that I need to, you know, I need help with. And, you know, for us, I think it's you know, we've seen, you know, we've seen success from that. And I think you spoke to the five year time magazine, Ad Centre it's a business, it's a lot older than five years. But, you know, the Microsoft advertising business today is on that growth tangent, because we are an I like to think customer first. So when I'm talking to my agencies, very often I'm thinking about their advertisers, whilst I'm talking about them, and I'm looking at their advertisers as a growth mechanism for them growing and then growing as a proxy for us growing. So that kind of value chain and I guess being close to it, is super helpful for me.
Robert Craven 40:45
Let's go back to what you were talking about slightly earlier, which is about agencies adding more value to the advertisers about agencies trying to get up the food chain in their relationships with their clients. I mean, is that do you see that there's a kind of this is what the good agencies do, the good agencies tend to move up the food chain, because you talked about something fascinating, which not many people talk about, which is about how people create the commercial relationship. And that's a welcome conversation. Because normally, it's just about, you know, how do we grow this agency, we go and get customers, but you're saying, you don't just go and get customers, you think really quite carefully about strategically about your customers and how you can add value by having skin in the game, which is music to my ears, because whenever I say why don't we do this? Why don't we make this performance related? You know, if we're so cocky about how good we are, you know, what we can do? Why don't we have a promise to our customers that, you know, if we hit the targets, we should get paid a bonus or even better? Why? If we're so so cocky about what we can do? Why don't we make it pure performance base? And that's the kind of music that going down that direction is music to my ears, because I just think, you know, agencies can't just say, give this our fee, give us our percent. And the way that we add value is kind of in the boardroom, if that makes sense, rather than a roomful of 19 year olds banging away on on laptops, because a lot of that stuff is either gonna get, you know, strategically, it's either gonna get taken by AI, or machine in the corner doing all of that stuff. Or alternatively, it's gonna get shipped out to Bangalore $5 an hour. So all I'm positing is many agencies are going to have to go up the food chain, if they're going to be different. And if you don't do that, that might actually be dangerous.
Simon Jacobson 43:14
Yeah, I mean, the example that we give, we had this earlier on in the call and when we spoke previously, but you know, a lot of agencies are time constrained. And they're, you know, they're working on a set tasks, and they've got their kind of systems and processes, and the individuals have their own kind of sets of ownership around that as well. You then have the oldest commercial model in the book, which is the professional services, it's the time for hire model. So you get a clashing of, okay, well, I've got three days per month to work on this particular client, that what's the most amount of value I can give is not necessarily on a commoditized task, or a commoditized set of media that can be run by automated rules in a UI. Where's the maximum amount of value I can capture from those three days, whereas the conversation could shift in a different direction around like you say, commercial incentives or, you know, performance related fee or something else and I don't have a kind of a vanilla opinion on this. I just, I can speak to some of the challenges around, you know, small agency businesses, having, you know, volume of clients as a proxy for size. You know, the I am so big because I have 20 agencies, or 20 advertisers, for example, whereas the depth of relationship and the commercial fine tuning could actually create a greater value from, you know, concentration of what they would see as the top clients, and then having a different system altogether. So you're not neglecting the others. But like the some of the things earlier, you know, if you've got 20 advertisers that your search team looks after, and let's say 30, advertisers got 30 advertisers, that your three person search team looks after 10 per 10 per individual, do you create a model where each of them has their you know, each of those individuals have their apex, you know, they're kind of top of the tree customer that they spend the majority of their time on. And then a model where, you know, a smart automation partnership, you know, one layer partnership with a publisher, you know, a really fine tune process driven approach that takes care of, you know, the other 27 advertisers, I'm just kind of riffing here. But I think there's something to be said for the fine tuning of operations, that doesn't actually give the advertiser themselves any less value for agency getting. And it's not about, you know, you mentioned a point earlier, and it's around squeezing value out of agency or squeezing or more revenue, I think it's, you will always win and lose clients and the general scheme of an agency, I spend a lot of time on the agency side, myself, and there's a cycle of responsibility towards a new generating new business, and then there's the same thing with, we're going to lose some, you win some, you lose some. So what we do throughout both is a kind of an ongoing dilemma, but commercially having an understanding that, you know, you can give value to a client, you don't need to spend too much time on. And you could also give value in a different way to a different client, a different might, they might be spending more or less. And that could also be valuable to both parties.
Robert Craven 47:28
So what you're talking about is just pushing the 80/20 curve, turning it into the, rather than looking at a bell curve, as you look at the power curve. And the fascinating thing about the power curve is if I'm just gonna reach across to my wall, rip down the piece of paper, I've always got a very low. If you've got to get the numbers really simple, if you've got 100 clients, and the fees from the 100 plants or 1000 pounds per month, yeah, 20% of your customers will pay four times the money, you know, so 20 of those 100 customers will pay 4000 pounds a month for a service, not the same service, I need the value added just pure at 80/20. And therefore the trick is to get when you go on your fishing trip, you know is to not undersell yourself to the people who are willing to pay. So your concept of being commercial, I think it's absolutely spot on because there are people who want you to have skin in the game. And then also spend more money if you actually if you take the age of 21 stage further, which is why I would pull it out consistently and whether this is deaths from COVID or whether it's from people pulling themselves out of a ghetto, or whether it's looking at the 100 richest people in the world. Yeah, it's always the same thing that the top 100% through the top 1%. So one of those clients would be willing to pay 50 times more than the rest. Now the trick is, obviously, to find that one and catch them at the right time. But it's about, you know, understanding that there's loads and loads of people who want to spend 1000 quid a month, but there's a handful who are willing to pay way, way more and therefore, in some senses, that's where the opportunity is. And as I often say, even now the Ferrari salesman is still incredibly busy. You know, there's always that minority of people who want to do well. And you know, right now, you know, bike shops have got I think there's a bike shop in Bristol that's eight times busier than it normally is. It's like Christmas every week and there's a factor I heard about down and divided that does snacks, chocolates chopped at type snacks and Pot Noodle type food, they normally run one shift a day, they're currently running three shifts a day, again, it's like Christmas every week, so that there's always these spaces.
Simon Jacobson 50:18
Come back to the opportunity, there's always opportunity, just like there's always there. There's always that 1% I think the other thing to know, on the kind of, shall we say time for hire or professional services, you know, agency, commercial model is your 10 accountable for time. So, your interest, I am sure that, you know, there's an MO P server, if I am an agency, and I have taken your money, and I've dedicated to work in three days a month on that particular, you know, on your particular account, that I will work three days. And fundamentally, I will be interested in the success of those three days. This turns it kind of on its head that says if I go down the time for hire too much, am I proving that security is more important than success? Now, and I'm not saying that you wouldn't. But your point earlier is, you know, by setting up the right commercial model, I think this is what you were getting that by setting up the right commercial model, you're more interested in that success. And you're kind of backing yourself more. That creates a more interesting, you know, agency type of Outlook. And it also creates one of confidence.
Robert Craven 51:46
I think it as I stood up in front of 100 agency owners last year, because we're about to do this site we've just done and said okay, guys, you know, it currently costs me I don't remember what the number was I quoted but just let's just say it's 250 pounds, it currently costs me children 50 pound to acquire a new client. So anyone who can give me a client for 249 pounds or less, I will give you as much money as you want. So come up afterwards, to me 50 pounds. I'll take John in fortnight, and I'll have new clients till the cows come home, you know, and everyone coming? Very, very interesting theory. Would you also pay a retainer? No, no, no, is that the deal is if you're so confident, come on, you know, bring it on. And it's from the customer's point of view. It's like, if you're so confident about what you're doing, I've just been to your website and a website cleanser, you can do this, if you're so confident that you have skin in the game. I totally get that it's it's it. There's a lot of risk attached to that don't get me wrong. But I think that those sorts of models are going to become more attractive to customers, and then they're going to be around. Listen, I talk pretty much up. What are your top tips for agency owners? What is it that you implore them to do? What are the gems? Whether they're blindingly obvious, and people aren't doing them? Or whether they're at today? What are the kind of few sort of pearls of wisdom you'd like to leave us with?
Simon Jacobson 53:32
Yeah, I don't think I give many people. Gems are certainly not in my household. But no, I would say that the stepback moment is, and this may be a good thing or a bad thing, but you won't get this COVID-19 shock. Tomorrow. So you're going through this now, you know how is it you want to be known to your clients and to the industry that will help you generate business set up all of the you know, these kind of micro changes in your business that help you over the longer term. But this is an opportunity to assess whether what you're doing in the way you're doing is the way you want to do it. If you have an opportunity to take a customer that you have an advertiser that you have in your book a client and you want to take them to the next stage of their own growth. That's a great story. And I think this is a time to kind of create those stories. You can't do that. Of course if we haven't got any staff I get that but I would implore us a good word. I would implore agency owners to Think about whether what they're doing today will impact their chance of what they can do tomorrow. And I think, you know, there may be an advertiser with three airlines that might tell you there might be an agency that might have three airlines that make up their revenue. And there's a very different level of opportunity there. You know, that's understood, that's what happens in scenarios like this. But then there may be an agency, that's got three garden centres in their portfolio or 30 garden centres, and that there's an opportunity right now, to capture that, I'd say everyone kind of needs to look at the consumer trends, and they need to kind of take a view on cause and effect of what the government is saying, on an immediate basis and be super flexible around that. You know, three days before real estate agents were able to operate. There was an announcement that estate agents could operate. So what do you see, you see a micro shift in consumer behaviour, the end of the house buying supply chain increases, people start completing all of a sudden, slowly, there's a you know that starts to move on. The second thing during the first I think we're talking to a business that looks after car dealerships. In terms of car handovers, I think it's the first of June, car handovers are able to be done socially distanced, all of a sudden, government gets tax the person that the person that sells the car has to go out and buy a new car. I think that you know, slowly but surely that the signals will create the behaviours. So I would say definitely be keeping an eye on consumer signals and where that opportunity is. And then, you know, just stay close to advertisers and find out what they need. Because now's the time to earn that trust, and create a better backdrop for whatever the recovery or normalcy looks like after this.
Robert Craven 57:29
Brilliant, absolutely brilliant. Thank you so much for being I guess I'm thank you so much for the time. It's been really lovely to hear from someone who's got an overview because they're dealing with lots of different agencies of different size and scale. And it's really good to hear some of the Microsoft story. So there's a thank you on behalf of everyone for being a really great guest. Thank you very much indeed.
Simon Jacobson 57:54
Thanks for having me. Cheers.
Robert Craven 57:56
Thank you very much.
Simon Jacobson 57:57
Thanks.