The annual ‘Bench Press’ report from the accounting firm The Wow Company, reports on agency life in the UK and creates an interesting benchmark for agencies to compare themselves to. The Wow Company explored the trials and tribulations facing agencies all over the UK; from London, the South West and the North. Agencies of all shapes, sizes and sectors participated in the survey with the aim to provide a benchmark for organisations over the UK. Pitching, pricing, charge outs and salaries were covered all providing very interesting results.
46% of agencies will create strategic alliances with other agencies
When asking agencies what they will be focusing on this year, the top three issues were recruitment, increasing marketing spend and creating strategic alliances with other agencies. 46% replied that they will be creating strategic alliances with other agencies; whether that be building a professional relationship or working together on projects for clients. This shows a slight shift in the traditional way that agencies have worked in the past, and a willingness to collaborate and learn from peers. Increasing marketing spend and recruiting also suggests a deliberate focus on improving agency culture. Recruiting and retaining talent was cited by 41% of agencies as one of the biggest challenges they face, therefore a shift in focus towards an engaging and rewarding work environment is clear in the agency scene this year.
55% of agencies see winning new business as their biggest challenge
55% of agencies surveyed that the biggest challenge they faced was winning new business. New business keeps agencies alive, with a constant pipeline keeping morale and cash flowing. However, pitching for new business takes time, money and pressure to do and will not always be worth an agency’s time. Only 56% of agencies always pitch for new business, leaving only 35% who occasionally go out for new business and 2% who never pitch for new business.
It was found that 45% of agencies always pitch for free and only 2% will always charge for pitching. More and more agencies are pitching and only 8% of agencies allocate 1-10% of their turnover as a resource for following briefs and potentially winning new business.
The report also found that the pitch conversion rate amongst agencies varied. Around 8% of agencies had 0% conversion rate on their pitching, clearly needing a little more practice. Only 5% saw a successful 91%-100% conversion rate with a varying number of pitch conversion rates in between. From the results it is clear that pitching is a daily part of agency life, the majority of agencies seeking it to find new business to keep afloat, and more astonishingly half of those agencies pitching for free in order to potentially win the new business.
13% of agencies are planning to grow more than 50%
There is a hunger for growth amongst UK agencies in 2016, with the majority of agencies seeking to grow and expand overseas, in staff count and turnover. Only 6% of agencies were not planning on increasing their profits. A minority of agencies have seen no growth over the past three years or have remained stagnant over the past three years, in contrast to a third of agencies who are more than doubling their turnover every three years. The research reveals a positive attitude to growth in the UK, economic uncertainties are not acting as a barrier to an ambition to grow and expand.
Clients who aren’t paying the bills on time
Cash flow generally is a major hindrance in agency life, nearly a fifth of agencies reporting that it is the biggest challenge they face. Getting paid by clients is the river in which the cash should flow and this shouldn’t be a problem for agencies in an ideal world. However, clients can be tricky and the lack of cash in your agency business can seriously affect the running of it.
Agencies have started to ask for deposits on work upfront, with 35% of agencies surveying that they will demand more than 50% of the project’s worth. Smart agencies are invoicing regularly throughout the project and only leave a small percentage to the end. This allows for any cash flow issues on the project completion.
Managing director of The Wow Company, Peter Czapp, will be hosting a webinar on Friday 20th May to discuss further the findings of the BenchPress report, focusing particularly on what traits the fastest-growing agencies all share, what the agency owners who earn the most have in common and what you need in your agency to become the best. You can register for the webinar here.