Is Your Advertising Agency Underpaid?

This post is about the underpaid advertising agency. As in, your advertising agency is probably underpaid – or under managed. Or both. Believe me, they are connected.

To be cute, this post is about the three P’s…

Profit, Process and Podcast.

Don’t forget to scroll down and listen to the podcast. In the meantime…

I recently had the opportunity to meet with Michael Farmer, author of Madison Avenue Manslaughter. Michael’s is a disturbing must-read book on the business of advertising agencies. Michael covers the reasons for the advertising industry going from high profit to low profit. From being paid almost too well (as in the 15% commission on media) to underpaid for its value (as in cost-plus or fixed fees). Mega-point, agencies do not know how to manage SOW — scope of work. I urge you to read the book.

To further one of Michael’s major points, I recently got an email newsletter from him where he discusses the “agency of the future” – a subject I have written about. Michael points out, and titles his email, “The First Step for The Agency of the Future: Become a Well-Run Business”. His point:

Much has been written about the “Agency of the Future.” It is integrated, digital, efficient, agile, analytical, creative and effective. It is adaptive and reflective of clients’ needs. It is completely transformed. It walks on water. However, the Agency of the Future cannot be created unless it first becomes a well-run business that generates the necessary financial resources.

So, Is Your Advertising Agency Underpaid & Undermanaged?

You are undoubtedly underpaid. I am not going to belabor this unfortunate point. However, other than charging correctly for your work (a yikes if I ever heard one), I suggest that many agencies are simply undermanaged.

Or, poorly managed. Or, without a sound process. A process that goes from the master business plan to execution.


Let’s Go To The Digital Project Manager Podcast

I was recently interviewed by Ben Aston of the Digital Project Manager for the, DPM Podcast: Project Management & The New Business Process.

I highly recommend this podcast because:

  • I was particularly eloquent. (Must have been drinking a highly caffeinated cuppa or two.)
  • I hammered agencies on their lack of process when it comes to managing accounts, client promises, workload and deliverables.
  • I railed about the importance of project management and scope of work consciousness, or lack thereof when it comes to being profitable.
  • I discussed how absurd it is that project management is rarely at the main agency table.
  • I discussed that project management is often given a new client brief after the business development group has won new business. I am talking new business that could never be highly profitable. You know, that $100,000 project that actually costs you $100,000 just to get out the door.
  • That most advertising agencies have no business development process and worse no standard operating procedures for RFP and pitch development. I suggest you buy my book, The Levitan Pitch. Because you will win more profitable business and make more money.

You can get to the podcast on the Digital Project Manager website and on iTunes, Stitcher and Google Play. There is also a transcript if you want to read it and easily share it across your agency.

Here is a small bit on new business management from the interview…

Peter: Well, I think the agency itself has to have a very clear process and a very clear understanding of the kinds of business that it wants and the kind of business that it might win. One of the issues I talk about, and I talk about it both at the beginning of the new business process and by the time an agency gets into the pitch, is really understanding who you should be talking to, why you think that clients should be hiring you, and how you’re going to run a process to manage the business development system.

So I cannot imagine a smart agency not involving product management in developing a system from scratch and having that system be a set in place before the agency does any business development or deals with any incoming. I think that they have to have a major seat at the table and the agency has to have a program and a system that is repeatable, that makes sense, it’s a template, and it’s run in many cases through the PM person. So what that does is, one, it makes the agency smarter and much more efficient, and it hopefully reduces the anxiety at the product management level.

Process + Process + Process = More Profits

Does discussing “process” and project management bore you? If it does, you have to get over it.

Today’s advertising, digital, design or PR agency cannot be profitable if it does not approach its business – and business development  – with a sound process and system – and put project management at the big kid’s table.

There are few things more painful the service industry than “Winning” that new account only to find out that you underbid and are working in the hell of being underpaid. it affects your bottom line, your staff morale and worst, how you manage your current clients. They will get short shrift.

Go Here…

I wrote at length on ‘process’ in a 3,500-word highly detailed guide. It provides a blueprint for agencies – it is how I managed my agency. Check it out…. Process = Advertising Agency Profitability. 

My rap: as you can tell, I think that having a sound process is critical to managing an advertising agency. Process means how you manage your business, its systems, employees and should reflect your business plan. No plan – no gain.








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