Cures For Poor Advertising Agency Profits
I work to provide cures for low advertising agency profits. That is my specialty. I do not get many calls from super successful, as in high-margin agencies unless they are very very hungry to expand. I LOVE those call from the relentless.
Here Is A Key Question
Within the range of the business questions that I use at the start of an agency business development assignment, there is one simple, but revealing question:
Why do you run your advertising, PR, digital agency?
This question generally yields a somewhat standard answer…
The marketing communications industry (advertising, digital marketing, PR) is fun.
No surprise here. Marketing hits many sweet spots including working with a wide array of clients and their issues (great for advertising people with ADHD); delivering marketing that drives sales is fulfilling; the daily use unique skills; being paid for creative thinking; working with fun people; it beats owning a dry cleaner shop. I don’t usually get told that people make a pant load of money. For most ad shops, those days are (unfortunately) over.
Super high-profit days are in the past due to the move to fee-based compensation; absurdly competitive price cutting; the art of giving services away for free; incessant cost-cutting; increasing workload; increasing advertising platforms; staffing issues; the commoditization of services; claiming the impossible to own “we are creative”; not zeroing in on the most important client need of all… business results.
OK, OK, Enough!
Elemental Cures To Grow Advertising Agency Profits
This isn’t a list of every cure since many are very specific to an individual agency. However after working with agencies of all sizes and types, this a good list – as in questions – to think hard about. I suggest taking the time to get out of the office and review the issues and potential cures. My last agency did quarterly reviews. These reviews even got us to a position where we cold sell the agency. Planning is a good thing.
Have you spent the time to analyze your positive and negative business practices? One of my last agency’s issues was a Creative Director partner who was a perfectionist. He demanded perfection even on small jobs that did not need four solutions. This ‘over-work’ is not an uncommon issue. In addition to reducing profits, it can kill staff morale.
Do you have a strategic program that is designed to help you increase pricing? I mean really having a plan.
How will you get paid for all the work you do? Dry cleaners get paid for all the dry cleaning they deliver.
Do you track and analyze agency workload and profitability by individual clients on a quarterly basis?
Do you ever consider firing a bottom feeding clients? The excuse that they pay for overhead is a poor reason to give work away.
What does you agency actually do? Can you express this simply? Example: “We are a mobile marketing expert.” Experts are more attractive to clients and make more money.
Do you have an agency brand that stands out? Two examples: Momentum (experiential); Canada’s John St (their videos) or VaynerMedia (in your face – at least for awhile).
Is the CEO dedicated to sales? This is critical.
Do you market your agency? I mean are you dedicated to running a smart, well funded, agency priority, thought-leader oriented SALES plan? Does it run 24/7 — all the time?
Have you really narrowed down you client prospect list vs. wanting to pitch and work for anyone? Do you do Account Based Marketing?
Are you easy to find? Most agencies are not. Try it. Have your cousin Julia try to find you.
Do you run a content marketing program that gets attention by being unignorable and high-value? Would you ignore you?
Have you considered hiring expert marketing help? A SEM/SEO specialist? A PR partner? A great videographer?
Do you want to sell your agency someday? If yes, would you buy you? Why? If you don’t know why you’d buy you, go out and rebuild your agency’s value proposition. This will take a couple of years.
Call me. better yet, book a meeting using this.
Without question, I’ll at least give you one brilliant tactic to help you grow profits.