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How Third Party Vendor Management Can Affect Agency Scalability

Sept 1, 2023

Let’s be real for a second: Agency life can go from calm and peaceful one week to absolute chaos the next. When the time comes to scale up, one of the first solutions that agencies look toward is vendors.

If you’re running an agency that outsources aspects of your operations to one or more freelancers or subcontractors, you’re working with multiple vendors. The intended goal is to leverage their expertise and fill skill gaps that might exist in-house.

This raises a question though: Is managing a network of siloed vendors the most effective way to drive results for your clients and scale your agency? While this may initially seem like a proactive strategy, it can inadvertently hinder your agency's ability to scale efficiently and achieve long-term success.

Today, we're going to talk about how managing multiple vendors can prevent you from achieving the goals you've set for your agency, and what you can do about it.

Vendor Management: A Double-Edged Sword

On the surface, having multiple vendors seems to offer several advantages, including specialization, competitive pricing, and reduced risk. You can tap into the best of each vendor’s capabilities, and rely on their deliverables to enhance your service offerings.

However, managing multiple vendors can quickly become a resource-draining endeavor and can actually pose a risk to the quality of work that you provide for your clients. Here are some reasons why:

Complexity in Coordination

As you bring more vendors on board, you introduce additional layers of complexity to your operation. Your team finds themselves managing various pricing models, process structures, contracts, and invoicing systems.

Each vendor may also demand their own set of meetings, status updates, and review sessions. This consumes valuable time and mental resources that could otherwise be devoted to strategic planning and core in-house priorities.

Eroding Profit Margins

While it may appear that you are receiving the most favorable terms from each vendor, this fragmented approach can gradually diminish your profit margins.

Why is this? When you're paying for multiple vendors, you're also paying varying rates that may change at any given time, preventing your financial situation from becoming predictable. A vendor could increase their prices over time, which then means you also either have to raise your own rates to compensate or take less revenue for your agency.

While vendors do not require the overhead of in-house hires like benefits and PTO, they may not always prove the best use of resources, especially if they start to nickel-and-dime each aspect of their relationship with your agency. Again, this further removes financial predictability from the picture.

Administrative Burden

When you have multiple vendors, the administrative overhead can become overwhelming. Contract negotiation, payment processing, and quality assurance are all necessary parts of vendor management.

These tasks multiply with each additional vendor, becoming a significant drain on resources. Don't underestimate the time and labor costs associated with vendor-related administration; they can add up, affecting your bottom line. Your team should be using vendors to save time (and ultimately money) for your agency, but if they are bogged down with quality assurance from their vended deliverables, efficiency diminishes.

Inconsistent Branding and Quality

One of the hallmarks of a successful digital marketing campaign is a coherent and impactful brand message. Managing multiple vendors makes it challenging to ensure consistency across all deliverables.

Different vendors have different styles, interpretations, and quality standards. The resulting mismatch can dilute the brand message, ultimately impacting campaign effectiveness and client satisfaction.

Because most vendors will operate on a fee-for-service model, they are not beholden to fulfilling any aspect of their role with your agency that is not explicitly detailed in their contracts. If they decide to start phoning in their work, but their i's are dotted and their t's are crossed, there's very little your agency can do to resolve dissatisfaction with quality.

Lack of Unified Strategy

Clients hire advertising agencies for their expertise in providing a unified and strategic approach to marketing. When an agency relies on multiple vendors, it risks diluting this unified strategy.

The more vendors involved, the harder it is to control and implement a cohesive plan. Clients may begin to question your agency's ability to manage their brand effectively, which could lead to lost contracts and a tarnished reputation.

Slower Turnaround Times

Let's face it, time is money. Clients often work on tight deadlines, expecting their agencies to deliver high-quality work quickly.

Juggling multiple vendors can result in slower project turnaround times, as it's not just your internal team that you have to coordinate but an entire ecosystem of external suppliers. Delays can erode client trust and make your agency less competitive in a fast-paced market.

Is There a Better Alternative to Working with Multiple Vendors?

Instead of building and managing networks of siloed vendors, there are other alternatives you can consider. Chief among them is joining forces with a white label digital marketing partner.

What does a white label partner provide for your agency that a vendor can't? Here are a few advantages that you can gain through partnership that are not available in most vendor arrangements.

  • Unified Strategy: A white label partner provides a holistic approach to marketing strategies, ensuring brand consistency across all channels. This is often harder to achieve when dealing with multiple vendors.

  • Faster Turnaround: White label partners have comprehensive in-house teams that can efficiently execute campaigns across various digital platforms, reducing the time spent coordinating with multiple vendors.

  • Quality Control: With a white label partner, quality control becomes much more manageable, as they are responsible for delivering on all fronts, minimizing the risk of dilution in quality.

  • Cost-Effective: Partnering with a white label service can be more cost-effective than hiring multiple vendors, as it eliminates the need to negotiate and manage numerous contracts.

  • Scalability: White label partners can easily scale their services according to business needs, providing the flexibility that might not be feasible with multiple vendors.

  • Expertise: White label partners specialize in providing comprehensive marketing solutions, offering expertise and insights across all aspects of digital marketing that multiple vendors may lack.

  • Holistic Service Offering: A white label partner offers a full suite of digital marketing services, ranging from SEO, content marketing, and social media management, to more specialized services like PPC advertising and programmatic advertising. This prevents the fragmentation that may occur when working with different vendors for each service, ensuring a streamlined, cohesive digital strategy.

  • Single Point of Contact Communication: Working with a white label partner simplifies communication as it provides a single point of contact for all your digital marketing requirements. This eliminates the confusion and time spent juggling between multiple vendors, ensuring more effective and efficient communication.

Is your agency ready for a partnership with a white label ad operations team? Check out our post on 5 Signs Your Agency is Ready for Partnership.

Work with North America's Elite White Label Partner

At Conduit Digital, we strive to redefine what it means to be a white label solution for North American advertising, creative, digital, and public relations agencies. Offering 17 channels through a single partnership, fully fulfilled in the U.S., we give your agency the communication and performance infrastructure that you need to say "yes" to the opportunities you actually want to pursue.

If you're ready to learn more about what it's like to partner with Conduit, let's talk!









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