Kath Blackham is the CEO of VERSA, a digital agency specialising in voice, AR and AI and she shares the challenges facing independent digital agencies like VERSA and how she has worked to overcome these challenges to attract and retain high quality talent through interagency job swaps, international conferences and innovative working hours and conditions such as the four day week for which the agency has become well known.
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Transcription:
Darren:
Welcome to Managing Marketing and today I have an opportunity to sit down with Kath Blackham, CEO of Versa Digital Agency. Welcome, Kath.
Kath:
Thanks for having me.
Darren:
I feel like I know you because I’ve read so much recently in the media about Versa for your work hours, I guess that is the best way of putting it. But we’ll get to that in a minute. First of all, tell us a little about Versa.
When you say digital agency, I have quite diverse views on what a digital agency could be. What does it mean for you at Versa?
Kath:
It’s an interesting question. Versa for us, and a digital agency for us, is about making people’s lives better by using technology. That might be building out a platform, and when I talk about a platform I mean websites or apps.
But it might also mean using emerging technology such as voice or augmented reality to help a brand engage with their users or consumers in a different way. So, that’s what a digital agency means to us.
We do do campaigns but we are really all about (and dare I use these two very overused words) digital transformation. It’s a very big thing for clients at the moment and we’re really just enabling that and making sure that the platforms clients are building are built for the future.
Darren:
If we were sitting here a decade ago, digital was quite a different offering wasn’t it? It really was about things like websites and very early days of apps but definitely display ads.
Kath:
Yep, it was completely different then and I think that the digital agencies of today are changing dramatically as technology speeds up. It used to be that you could get yourself across, how to build a banner ad or a website in a couple of different CMSs and that was enough.
Now as a digital agency, clients are expecting us to be the ones that understand all the technology. And that’s AI, augmented reality, virtual reality, websites, CRM, CMS; the acronyms go on and on. And we’re expected to understand all of that and help the clients make sense.
So, that’s a lot of pressure on a digital agency. We’re 55 people and once upon a time I was 5 people. And that is tough for a 5 person agency to do.
Darren:
It costs so much. That’s one of the things about technology, isn’t it, that there’s constant evolution and new channels and platforms and protocols and all sorts of things that are coming up all the time.
How do you keep across all that (maybe not you personally but the agency)?
Kath:
It’s actually one and the same. We have two major things that we do. I send my team across to the US quite a lot and that’s where our voice agency came from. We go to South by Southwest every year. We make sure we’re there when Microsoft and Amazon etc. are doing their conferences.
We get a lot of it from just speaking to people at those different conferences and understanding where it’s at.
Darren:
Someone described South by Southwest as the Cannes of America. That’s where the industry hangs out to be seen and self-congratulated.
Kath:
Yes, it has a very bad rap. And if I was saying anything to anyone on South by Southwest it would be, it’s what you get out of it. I built an entire successful agency called Versa, the voice agency part of our business just out of the fact I went to South by Southwest.
But when I’m at South by Southwest, I’m not only going to the talks but I’m talking to people, I’m reading between the lines, I’m looking at what everybody’s doing and I’m trying to find what’s happening in the US and applying it back to Australia.
Some people just go there and literally drink themselves stupid like they do at Cannes, on Rosé for 4 days straight. You’re not going to find it there.
Darren:
So you’re not hanging out at the Texas Barbeque or riding the latest electric scooter around with the designer backpack.
Kath:
I have moments of doing that; I think it’s important to have a little bit of fun. I have a fairly large capacity to not sleep at South by so I can do both. But it’s really important to look beyond just the talks and really talk to people who are working in New York, LA, that are at the cutting edge of whatever their specialism is.
And this year it was all about augmented reality. In the US that is absolutely huge and my pick for the next couple of years is we’ll see a resurgence of that.
Darren:
People were pushing VR (virtual reality) really hard but I think the bit that stops people really amplifying or magnifying that is the huge headgear that you have to wear and the technology. But all of the augmented reality stuff all works off your Smartphone and it’s incredibly useful if it’s applied properly.
For instance, as tourists, you get the history just by scanning the surroundings to know what’s worth looking at.
Kath:
It’s highly engaging as well. What was interesting at South by was the range of products that had augmented reality baked in and not just from a sight perspective but also from a hearing perspective.
So, Bose sunglasses, which retail for about $200 USD have augmented reality baked into them so if you want a piece of kit that no one else has got just order them from the US, because they actually work.
They’re sunglasses. The sound quality is amazing; you don’t have to put anything in your ear but it also knows which way you’re turning and it can take you on an entire experience as a tourist without having to take your sunglasses off or put something around your neck.
It knows if you’re facing forward or if you have to turn. My pick is that those kinds of platforms are really going to take off with some brands. That is the whole thing of why you would go with a digital agency in the first place but really we make sure the technology is fit for purpose.
There is so much available now. We are the ones who can help a brand make sense of ‘you can use that because that makes sense for your brand and that’s going to help you in your relationship with your consumers’.
Darren:
The evolution of the digital agency has been interesting because I remember about a decade ago you had the RGA, which at the time was a production company. They largely did trailers for movies, who then got into digital. You had Avenue a Razorfish, who were largely a design company that were getting into digital and Sapient, which was basically a development company that was getting into marketing.
There have been multiple streams that people have come into this. What’s your stream? Where did you come from that got you into digital?
Kath:
I had never worked in let alone run a digital agency before I started the agency 10 years ago. I was the head of product at realestate.com.au ad head of product at seek.com.au so I was very much about building out big digital products.
I’ll be honest with you; it did not look that hard when I was sitting across the table. It’s a little bit harder than I thought –I’ll admit that. At the time I had come out of working on one brand and I really wanted to take all my knowledge and push it across lots of brands.
Darren:
So you had been involved in building quite significant platforms–some would even say ecosystems or marketplaces for both of those, that you then wanted to apply to a whole lot of client issues?
Kath:
Yes, absolutely. And I wanted to work on a broader range. I think that’s why agencies are able to attract really good talent that sometimes client-side, despite their budgets, are not able to attract. Because when you’re working on one product for a long time it can be pretty hard going sometimes. It’s hard getting budgets. You get knock backs quite often.
Having been on agency side now I think the agency side think that it’s really easy on the other side of the fence as well and they don’t see all the blood, sweat, and tears that goes into getting budgets to be able to do the work.
It is an absolute privilege, as someone working in an agency to be able to come in with this budget that this person who has worked for a brand possibly a year to get and to be able to realise that dream with them. And that’s why I started the agency.
Darren:
It’s what gets you up in the morning every day.
Kath:
It is. I love it. I don’t think I could ever go back but never say never. I don’t think I could ever imagine going back into client side after working in an agency.
Darren:
Well there is this trend, especially in the US, with clients taking agency in-house and it’s a real issue. When you work for a particular company, one of the things that’s lacking is that diversity of input and challenge and also diversity of cultures that you work with that stimulate both the creative process and innovation.
Kath:
Yeah. I think one of the reasons you go with an agency is you’re buying experience. So if you bring an agency inside your business, by definition they stop learning from all the other clients that they’re working with and all the other agencies that they have exposure to.
Every single time we bring someone new into our agency, I’m excited because I’ve got all these other learnings from different projects that we can apply to the existing clients that we have. As soon as you bring an agency in-house, to a large extent, that goes away.
You can still bring in those people but just not on a daily basis getting access to all of that experience, which I think is a shame. I can understand from a fiscal perspective why you would do it but I think you’re missing a trick and I can see from a competitive perspective why it would make sense but allowing your agency to work with other brands and other industries is actually quite a healthy thing.
Darren:
Because they’re getting exposure to whole lot of different problems and that cross-pollination works really well. Solving one problem over here could give you an insight into an opportunity for another client couldn’t it?
Kath:
Exactly. And we do that every day. Every day there’s ‘this worked here; maybe we could apply it to this project buy maybe in a slightly different way’. And it also means, from a coding perspective, you end up with better and better code because the people you’re dealing with have got more and more experience.
For example the ecommerce space. It doesn’t matter, you might be in a completely different industry but ecommerce is ecommerce so you get better and better at that shopping cart experience. And that’s what you want from an agency, a specialist.
Again, it comes back to that idea of being a specialist and augmenting your team and allowing you to have access to that kind of specialism.
Darren:
But also because you’re updating your team’s knowledge and skills by, as you mentioned earlier, giving them exposure to thought leadership in the US as well.
Kath:
And one of the other things that we do that I haven’t come across another Australian agency doing, is that we do this exchange programme with other agencies, particularly in the US but we’ve also done it in the Netherlands and the UK as well.
We send people over to spend time in other leading digital agencies around the world and then they come back to us. I’ve got a lot of friends all around the world who run agencies and so we do this swap and that’s great for retention, as you can imagine.
But it’s also good for bringing ideas back. And we’re not competitive with them. I always say to my friends who run agencies even here, ‘I could go and sit in an agency for 6 weeks and see exactly what they do and still not be able to compete with them because our business is all about the people we have and the case studies and experience we’ve got.
And so you don’t need to be protective of what you do. If you let people in to see what you’re doing, they’ll do the same for you and you’ll both be better and that’s good for our industry.
Darren:
That’s amazing. I haven’t heard of that happening between agencies. I know within agency networks it sometimes happens. But I imagine having people come in even for 6 weeks, you would get quite a different perspective from them as well. So your own team would be learning from them as well, apart from the one you’ve sent to them.
Kath:
Absolutely. So, there’s all this knowledge sharing of ‘how do you do that’ and it’s not at a senior level; it’s at an operational level, which I think is important as well. You’ve got to look at how you get information differently.
Conferences have their place and you pointed it out with the South by Southwest, it’s a really difficult thing, particularly with more junior staff, when they go away to a conference sometimes it can feel a bit more like a jolly than the content in itself. So sometimes swapping between agencies is more effective.
And you touched on it actually; being an independent agency, particularly, we’re one of the biggest independent digital agencies now in the market in Australia, it’s tough. We’re competing against big groups that have got lots of support. They’ve got cross-selling happening and so being able to lean on other independent agencies that are doing great work in other countries has been important for me.
Darren:
You’re right, one of the things that the agency networks, but even the big consulting firms, will argue with their client is that there is one door. So they just come to one agency or consulting and all of their needs and requirements will be met and that there are not all of those issues.
Whereas being a specialist and from what you’ve described you’ve created a position that’s very focused on utilising these emerging technologies. And there are always going to be emerging technologies.
Kath:
Yeah. And we do have a specialism but we also widen it out to building websites, apps, we do digital campaigns but we have it with a future forward so I don’t think as a 55 person agency we can afford to be too specialist but we have that emerging tech story coming through all the other work we do.
It’s difficult. And we don’t need to get into the woes of being an independent agency at all except to say it is tough being in a market where you’ve got pressure from Accenture and Deloitte on one side and then you have pressure often from really awesome 5 or 6 person agencies. And the client’s trying to make sense and you’re sitting in the middle.
Now, sometimes, clients just want independents and that works for us but there is a lot of pressure these days but we’ve just got to make sure we keep reinventing ourselves because everyone around us is reinventing themselves. And the whole market is reinventing itself all the time.
Darren:
In that competitive environment I imagine one of the things you’re competing for is talent?
Kath:
Always.
Darren:
I mentioned it earlier but you’ve been quite prominent in the media around the 4-day working week at Versa. How did that come about and was that part of talent attraction retention as the strategy or was there something else that motivated that?
Kath:
If you go back to when I started the agency 10 years ago, I had 2 young children, so I started it with this utopian idea of everybody working flexibly. And that worked for a while to be honest.
One of our guys works 2 days a week from the office, 2 days a week from home, and 1 day a week he has off, alternating between a Wednesday and a Friday. So, it gets quite complicated. As we grew we found at about the 7 year mark the itch. We found that flexibility across the board just wasn’t working.
And we were getting a graduate who had literally just come off the back of our internship programme saying, ‘I just think I’ll work 4 days a week’ so it was through the whole agency. So my reason for doing this was to come up with a sustainable model for my industry, which is agencies.
I feel very strongly that if we are going to attract and keep talent, particularly females as they hit that 28 to 32 age and they’re starting to think about families etc; if we’re going to keep them we need to evolve as an industry. We can’t have that feeling of the ECD or managing director as sitting in the house therefore everybody else just sits there and plays Tetris until they go home.
That’s not a sustainable model and people burn out. They go to client side and that is the point we as an industry lose amazing talent. They go client side because they can get better hours and pay. But they’re not getting access to the work and they want to stay.
Darren:
Or they’re going to the big tech companies or consulting firms.
Kath:
Yeah, plenty of options unfortunately.
Darren:
That’s what I mean, it’s highly competitive.
Kath:
It is.
Darren:
There’s a limited resource of talent and there are increasing numbers of options. There used to be a time when going into advertising or agency land was seen as a really positive thing. And yet a lot of the shine has gone off because of long hours, lower pay than you can earn elsewhere and a decreasing perspective on the value of it.
Kath:
Absolutely. The advertising agency versus the digital agency; the digital agencies are winning. We’ve got a really strong intern programme and we go toe to toe with advertising agencies for great talent all the time.
And one of the things I find is that talent these days is opting for digital which would never have been the case 10 years ago. They were all wanting to go to the big 5 or 6 advertising agencies to start their careers.
Now they’re saying I want to start in a digital agency because I want to learn all of this stuff. I might want to go and work and earn bigger dollars going to the Accenture’s or one of the big advertising agencies but I’m going to start in digital to get a really good basis.
Darren:
Do you think that’s because the early days of digital were seen as being part of what was called ‘below the line’? There was direct marketing, customer relationship rather than the brand focus.
Kath:
Yes, I think it’s all that and it all comes down with recent graduates to what’s sexy in the marketplace; what can they tell their friends at the pub they’re doing. And I think there has been a move to people seeing technology as something that’s quite cool to do and interesting.
And people just aren’t watching TV as much as they were so doing a TVC isn’t seen as necessarily having quite the cachet it used to even 5 or 6 years ago. I’m talking generally here. I am a big proponent of using everything. I think there is a need for above the line, below the line, for everything.
Experiential is really important as we can’t find people in their homes as easily as their media has gone out to platforms that don’t even allow advertising. Where do you go and get them? When they’re walking through the supermarket; that’s where you find them.
Darren:
Going back to the 4 day working week.
Kath:
My favourite topic.
Darren:
For those people who are living in a cave somewhere and haven’t seen the media coverage so what you have is people who work the average working week.
Kath:
37.5 hours.
Darren:
But they work it over 4 days and you’ve set Wednesday.
Kath:
Yes, Wednesday we close the office so no hump day. And don’t the journalists love that.
Darren:
Was that trial and error or was it something you just decided?
Kath:
That was just something I decided. I knew there was a problem with complete flexibility once we got to a certain size.
Darren:
It would make it difficult scheduling things like team meetings.
Kath:
Client meetings were a nightmare. We try and get everyone in a room at the start of a client relationship. Finding a period of 2 days where everyone was in the office was almost impossible.
So, I took all of the things that were difficult and came up with this idea –I took some time off in May/ June last year—that’s when I do my thinking, on holiday. So, I came back and presented this 4-day week concept to our leadership team who thought I was completely mental and that we would be dropping our revenues and therefore profit by 20%, possibly more.
But I was determined to give something a go so the deal I struck with them is that we would try it for a month and so we went out. I didn’t present to the team. I purposefully let the leadership team present it because they had to own it because they didn’t believe it quite as much as I did.
And the results were staggering. We were more efficient, productive, happier, fewer sick days; there was just all of this positivity around what we were doing. So we then put it to 3 months so we could actually look at some decent figures because a month in agency land – the numbers are a little patchy sometimes, so you need to look at the longer trends.
Darren:
Was this an anomaly?
Kath:
Yeah. And when we saw really positive results over 3 months we pushed it out. I started it purposefully on the 1st of July so a year will be the 1st of July. We had planned on waiting until the 1st of July to tell anybody about it but someone came to work for us and their wife worked at the ABC and they picked it up as a story and the rest is history.
We didn’t go out looking for this PR. One of the things I would say about that and the amount of coverage we’ve had is it shows me the thirst for innovation in this space. People want to talk about something and they want to be thinking about it.
They just need a couple of different types of companies, not just Perpetual in New Zealand but agencies and other industries to be doing something about it.
Darren:
Absolutely. People talk and talk and talk. I love the fact that as an independent and a business owner you were able to make this decision and then you got your leadership team, who weren’t that onboard, to give it a try and you’ve actually done it. Absolute kudos to you.
Secondly, I’ve had conversations with lots of people that have raised this and said to me, ‘oh yes but what happens with public holidays because public holidays are always Monday and Friday?’ People still get their holidays I imagine?
Kath:
So today everybody at Versa is in the office. So if the week is a week with a public holiday then you don’t have Wednesday off unless there is a specific reason. So if you’ve got a regular thing set up on a Wednesday then obviously you can work from home that day.
But we won’t have enough hours in the week. And people are more than happy to come in on those odd weeks.
Darren:
So, you’ve even built flexibility into what appears to be a regimented 4 day week?
Kath:
Yeah. Well we have to because really at the end of the day we’re a business and I own 100% of it so I am very motivated to make sure that fiscally it’s good for all of us.
Darren:
Well if the business isn’t successful then there is no future for all 55 employees.
Kath:
And we’re not investing in future growth neither so I need to make sure that this is highly profitable as well. I want to be a highly profitable agency that is able to invest in its people and other future tech.
Darren:
What I particularly like about that and that’s something we do as well, is you’re treating your employees as adults not children. Because when we go to school you have to turn up at 9 and here’s the break and here’s lunch and then you can leave school at this time. That’s the way we’re taught and treated as children.
But you’re actually treating your team, your employees as adults and letting them take responsibility for getting the work done and managing their hours within a framework that makes it workable.
Kath:
It makes it workable for clients as well. And we made it very clear that if it didn’t work we would have to take the ability to do the 4 day week away from the agency again. Everybody is very motivated. It just comes down to trust.
But we also know that if a client absolutely has to have a meeting on a Wednesday; it’s the only day they can get everybody together (and it does happen), our team are more than happy to do it on a Wednesday.
They don’t even hesitate; there are no grumbles because they know that with something they get that is so valuable there has to be compromise sometimes.
Darren:
There was a book I read when I started this business, called Maverick. And it’s about a guy who inherited his father’s business in South America and it was going badly. He had an epiphany and started treating his employees as adults and allowing them to make more and more decisions and take more and more responsibility.
And the business started to thrive and that’s what I like about this. If they have to come on a Wednesday the people just turn up because they have to do it. There’s not this attitude of you’re the employer and we’re the employees and grumble grumble.
They have actually bought into the business being part of their responsibility and almost having an emotional ownership of it.
Kath:
And interestingly, not just employees but clients as well. We have to spend quite a lot of time and all of the PR we got was an interesting test for us because obviously our clients also saw us everywhere. But clients need to buy into the fact that the reason we do it on a Wednesday and not a Monday and Friday is because Wednesday is a rest day.
It’s not supposed to be go ahead and write yourself off Saturday, Sunday, Monday, come in even worse on a Tuesday. That’s not the idea. The idea is that Wednesday is there so that you can rest, reset and you can be more efficient Thursday, Friday.
Once the client gets their head around that and that a Thursday feels like a Monday –we have two short weeks that are highly productive, they buy into it too. I just sat down with a client last week and he wanted to get a whole team in-house but let’s talk about how does that work because I don’t want to muck around with your 4 day week so how do I make a 4 day week work for me in my company to include you.
And I was wow, that’s awesome that he doesn’t just say ‘well if they’re going to come to us they’re going to have to work a 5 day week’. He believes in it so much that he’s willing to make sacrifices to make it work even when they’re client side.
Darren:
So I imagine whenever you get publicity, whether it’s mainstream media or social media you’re not going to have 100% support. Has there been negativity (I assume there would be)?
Kath:
Oh yeah, there are hate letters.
Darren:
You’ve got some haters.
Kath:
Some of the things that have been written I can’t repeat.
Darren:
So we’ll just put a big beep. Bizarre isn’t it? Do you think it’s because they don’t really understand and it’s just a superficial gut reaction they’re having to this?
Kath:
No. I think there is a little bit of fear in our industry. I’ll just talk about our industry because actually what we’ve been doing has been far more reaching than that. But I’ve got some very good friends who run agencies of a similar size or larger and they don’t like what I’m doing because once you stick your neck out and start talking about something like this.
Obviously there are some big agencies in Melbourne now where it is right through all their staff. They know what we’re doing; they’re talking about it. They’re trying to find out is this something we might be doing. So, it’s starting to bring up things that the agencies don’t necessarily want to implement.
You could argue that I could be 20% more profitable if I just made everybody work 70 hour weeks, I would be more profitable. I wouldn’t have my staff for as long as I do, and retention is huge for us; it’s a big selling point.
But I think there is this fear and dislike of the amount of chatter that’s happening, not just at a senior level but actually within the troops about what we’re doing. And it’s good.
Darren:
Burnout is one of the issues the industry faces. When agencies are charging clients on an hourly basis, if you can get someone to work twice as long, 80 hours a week, then basically you just pay them for the first 40 and then you pocket the next 40.
We see this all the time, particularly with high profile people in a particular agency, they might be 50% on 4 different clients and you wonder how they clone themselves to do it.
Kath:
Well we know how they’re doing it; they’re doing 60, 70 hour weeks regularly and that’s not healthy. And my selling point, and we’re doing incredibly well as an agency and we’re very well respected for what we do, is we go to clients and say, ‘what’s the experience you’ve had because I’m guessing that you have maybe had 4 or 5 different sets of people, whether it be suits, producers.’
Producers and project managers are a really big issue across our agency. The people that are actually building the stuff, the designers, coders etc, they all go because they’re working such long hours.
At Versa, we keep people so our retention is super high because you can’t get what we provide anywhere else and it’s not just about the 4 day week. So that creates this experience for clients. I had a client the other day who rang me up. I haven’t spoken to her for 8 years.
The team that worked on her project 8 years ago are still with me so I was able to say ‘awesome, you’re ready to rebuild; Jase and Andy and the producer, everybody you worked with are still there.’
You can imagine the delight for her. It’s possible she’d been around the traps a bit and then has come back to us and we’re still here with the same team.
Darren:
And it’s a team she knows and is comfortable with.
Kath:
There’s a lot of value in that for clients.
Darren:
You’d pick up speed very quickly because you know each other and know your businesses.
Kath:
Yes. There’s a flip side to that, which I’m really aware of as well. I do think change is good. I also encourage people, especially the young ones. We take people as interns and there does come a point where you’ve got to set them free so they can come back to you.
Darren:
Are you talking about an Amish strategy? How the Amish send their teenagers off to have a crazy year and then decide if they want to come back to the religion. Is this becoming like a religion?
Kath:
I’m confident enough to let people go, knowing that many of them will return with knowledge and experience. A lot of the big agencies might work people hard but they’re working on great work so you give them access to all of that.
When they’re ready they come back to you. And that has happened to us on numerous occasions. I think you need to keep new blood coming in. I’ve got a new managing director who was at VMLYR and that’s been a really good experience for us because Johnny has come in with all these preconceptions about how an agency works. And we’ve shown him a few things and he’s shown us a few things.
Darren:
You said very early on in this conversation that one of the reasons you take the team to South by Southwest is to get new ideas; cross-pollination. You do the exchange programmes with independent agencies overseas. It’s clear that you have an understanding that ideas come from sharing and collecting as much experience as possible so well done.
Kath:
Thank you very much.
Darren:
We’ve run out of time but this has been a great conversation. I’ve really enjoyed having you come and chat with us so thank you, Kath Blackham, CEO of Versa voice agency or is it Versa digital agency?
Kath:
Versa digital agency. We do everything.
Darren:
So before we go I’ve got a question for you. With all this work in voice do you think it’s possible that all our conversations are being recorded?
Ideal for marketers, advertisers, media and commercial communications professionals, Managing Marketing is a podcast hosted by Darren Woolley. Find all the episodes here
