Insights

The storm clouds are gathering…

Is there a perfect storm on the horizon for agencies? Inflation is now predicted to reach 13% and “a long recession” according to the Bank of England.

As if resource issues/staff shortages/war for talent weren’t enough, there’s some more challenging news! The latest New Business Pulse from the AAR shows a clear slowdown. “A 31%* drop in the number of agency appointments (ie new business pitches) during the first half of ’22 compared with the first half of ’21”. Even Google’s profits have slumped. With increased uncertainly comes indecision. Clients procrastinating. Clients focused on the short term only. So what does this mean for agencies?

*Advertising/integrated down 42%, CRM/CX/performance down 42%, digital down 38%, Media bucking the trend with 3% more agency appointments.

I’ve got 7 recommendations. Some are very obvious but need stating.

1. Increase your rates, fees, prices, invoices, budgets……. A 13% increase in the cost of overheads could wipe out ALL or most of the net profit of many agencies. Inflation is like a juggernaut racing towards your business. Do not wait for these cost increases to filter through into your figures. Review your numbers now. Increase your fees NOW. 13% inflation is a headline figure. It could be a much higher figure within your business. So don’t simply work on 13%.
2. Focus on retention of your clients, especially the most profitable and those with the potential to become profitable clients. How happy are your clients? They need to be delighted – satisfied is not enough. Are you making a real measurable impact to their business? Does your client’s C-suite love what you do? Can you and they see the tangible value of your work?
3. Focus on organic growth particularly of your best and most profitable clients. Where are the growth opportunities? It’s not just about doing more of the same. Have business conversations with your clients to see where else they need your help.
4. Get closer to the senior decision makers within your clients. Build that trusted partner relationship through your strategic advice that really moves their business forward. Get better at partnering with your clients. Don’t just contact them when you want to sell them something. Be proactive. Show them you’re thinking about them with insights that “blow their socks off”. How can you be the agency the senior client turns to first?
5. Choose carefully which new business opportunities you pursue. Despite the slowdown in new business appointments, I’d recommend still being very selective about which pitches you decide to pursue. New business pitching is seriously expensive so choose wisely where to invest your new business talent and time.
6. Invest in developing you and your people to think smarter, work smarter and be commercially minded business people advising their clients to navigate the unclear future coming towards us. Warren Buffett said “the best protection against inflation is investing in your own skills’.
7. Get out into your clients’ offices. Don’t do everything on Zoom, Teams and email. Go and spend time in their offices. ‘Walk the corridors’ as we used to.

I’m working with agency senior teams to help them grow their business PROFITABLY. The above 7 points are a flavour of what we’re discussing.