CWD commentary on strategic partnerships

This post discusses a strategic alliance between an advertising agency and a software/web development company. The web development company is very technology focused. Their strategy is based on a high level of service, customization and quality development. The advertising agency’s focus is on brand strategy and design. Their strategy is based on high design differentiation and specialized service within an ‘agency’ of service providers. The following value chain diagram represents the responsibility of each partner in the industry. Gray = advertising agency; Blue = Web Development company.

Pluses

Minuses

- Both companies use each other as referral sources. Resulting in more predictable sales projections. - Access to capability that either company could not maintain on their own without larger volume. - Co marketing programs - Augmented product/service offering- Additional value in service delivery if partnership is evolved. Results in increased profit margin. - One company might extend special terms to help the other, for example extend A/R days. It gives you another partnership to allow you to stay afloat, but only works when the two have opposite needs.

- Risk of losing the customer to the other company. - Constraints that you would not have if you operated on your own. - The cost of servicing a customer goes up in some cases. - Unpredictable when the lines are blurry between the value delivery stages - Value Chain: In some cases the client values steps of the process different. Therefore, establishing $ value when you are breaking up each part of the delivery process can be tricky. -  Life Cycle: The development company is at the end of the project process so if the project is late, they are forced into tight production time lines with little control.

The challenges here are easily overcome with clear communication and quality relationships. The necessity of these relationships is undeniable in a dynamic world such as the web. A "website" can mean a million things from a brochure ware site to a complex application. 

Read our account of a recent project launch with an agency partner.