There is an ad industry adage: Two clients in the same industry is a conflict. Three is a speciality.
Industry (or vertical) specialization is a common tactic employed by marketing and branding agencies to gain credibility and expertise. When we were developing Six-Point Creative, one of our big questions was “do we specialize in a single industry?” We opted instead for “horizontal specialization.” In our case, this meant focusing not on industry but on company lifestage that we felt was underserved in the agency world (second stage companies preparing for additional growth), and on brand development and brand strategy instead of general “marketing and advertising.”
Prospective clients often ask me if they should choose an agency that is more specialized in their industry. Unfortunately, I don’t have a yes or no answer to that, but I do have some food for thought.
You want a horizontal agency if:
You have a significant amount of internal industry expertise. Leadership teams that already have a lengthy history and experience in their own industry may greatly benefit from a relationship with an agency with a broader experience. I have seen many companies get so mired in looking left or right to their competition that they miss opportunities by not seeing broader social, technological, or business trends. Our clients are already experts in their industry and their existing customers and markets. They are relying on our expertise to bring them best practices for reaching new customers and markets, and employing positioning techniques that are not already part of their competitors playbooks.
You are trying to do something new or disruptive to your industry. For these companies, experience outside of their industry is a necessity, because they are developing opportunities that their competition isn’t. A distributor launching private labeled products for the first time needs an agency skilled in product launch, not industrial distribution. A business-to-business company who need to extend its brand to the end user consumer needs a consumer product specialist, not an industry specialist.
You might want a vertical agency if:
Your industry is highly technical (and you don’t have the time or the resources to get an agency up to speed). When speed and self-direction is of the essence, and you have a technical product or industry, you might gain a lot of value from a company who has worked in your industry for years. You will spend a lot less time with them upfront, and will likely have to do less collaboration with them during the engagement. You may even save money if they can use pre-developed templates, technology, or content and repurpose it for your business. For many small businesses in which resources are scarce, this is a significant benefit.
Your internal team is new to the industry. If you have hired talent without industry experience, especially in marketing and sales, it can be very helpful to bring in outside industry marketing specialists to give your team insights on the competitive landscape and what techniques are traditionally successful. Particularly if you are in an area of the company where the labor market is tight and limited, bringing in an outside partner from elsewhere in the country can allow you to access industry expertise that isn’t available locally, as well as industry connections to media or other partners that may be particularly valuable to you.
The bottom line: Vertical or horizontal specialization is your call based on your goals, structure, and comfort level. But you never want an unspecialized agency. If your agency is totally unspecialized (“we will do anything, for any company”), they are not experts. It is simply impossible.