Are you even better than you were last year?
The reason I ask is that it’s getting harder than ever to grow a profitable and successful agency. What worked in the past probably won’t be enough in the future. The market is more competitive, there are new competitors changing the dynamics of the market and it’s harder than ever to make the agency model work profitably.
I’ve studied what the most successful agencies do to grow profitably and also the least successful agencies do to remain stuck. There are clear distinct and different strategies these two groups are applying. I share these strategies in my workshops to help you decide how your agency will be more successful and profitable.
Let me give you some other examples as to how it’s getting harder for agencies to be successful.
Unilever have cut their 3000 agencies globally in half as part of an efficiency drive. They are also likely to produce fewer ads squeezing more viewings for each. This along with their ‘zero based budgeting’ approach means there’s only room for mission critical campaigns and projects which deliver real business impact. This rationalization of agencies means there will be winners and losers. If your biggest client did a similar consolidation which half would you be in? Those that the client carries on working with, or those who are ‘rejected’? Are you really sure you’ll be retained? What can you do to ensure you’re in the ‘winning’ 50%? If you aren’t delivering amazing work which delivers real business impact…. If you aren’t well differentiated from your competitors….. if you aren’t regularly having strategic business conversations with senior decision makers and the c suite, then be very afraid.
According to the AAR, the number of new business pitches has fallen dramatically this year by 25% overall across all types of agencies and fallen by over 50% for digital agencies and well over 30% fewer for CRM/direct marketing, integrated and media agencies. (Advertising agency new business pitches are only down by just over 3%). So, if you aren’t focused on growing your key existing clients and if you are pitching for the wrong clients and/or wrong projects, then be very afraid.
Whilst inflation is likely to be around 3% after having bumbled along for several years at 0-0.5%. So if you aren’t looking at annual price increases and rate card increases, if you chase any old revenue rather than profitable revenue, if you aren’t finding ways to improve efficiencies and effectiveness ….. then be very afraid.
Kingston Smith, the accountants, and my consultancy, Spring 80:20, recently collaborated on a study into agencies that had turned their business around. Those agencies which had turned their business around enjoyed phenomenal achievements in their fortunes. We called them “Thrivers” (as opposed to merely “Survivors”) In every case the Thrivers made significant changes in their business. The changes made by these Thrivers and their lessons learnt are shared in my workshops for agencies.
So simply being as good as you were last year probably means your agency could actually go backwards. It won’t ensure you thrive in a faster, more competitive, more choosy, more commoditized world.no comments