The Drum Awards Festival - Official Deadline

-d -h -min -sec

Profit Revenue

Increasing revenue; back to basics for creative agencies

By Raymond Kieser, Global Director of Practice

April 4, 2016 | 3 min read

Increasing income is traditionally the first port of call for organisations looking to grow – but what happens when you’re operating in an industry where income growth is positive but margins are depressed?

Raymond Kieser is global practice director at Deltek

Raymond Kieser is global practice director at Deltek

In 2015 this was the situation the majority of creative agencies found themselves in, leading many to end up working harder for their money than ever before. Additionally, client expectations continued to soar with agencies pressured into working faster, better and cheaper. The big question here is what can be done to counteract this industry trend and ensure agencies are equipped to transform income into profit?

Arguably the most important thing is for agencies to keep track of every hour spent. Billable hours have traditionally been the backbone of any agency and key to recovering costs. However, the primary way to do this – timesheets – are often branded as unwieldy, complicated and a time suck for creatives resulting in inaccurate reporting which causes issues in the long term.

Additionally, it has been noted that traditional models of hourly rates, retainers and project-based work are no longer cutting it when it comes to fostering commercial creativity. Combine this with the issues around tracking billable hours and it becomes easier to see where the gaps between income and profit are.

With this in mind, we spoke with a number of industry players about how they are working to boost their fees and value. For some it was about revisiting the way they quote and introducing stricter terms and caveats – making sure everyone is clear right from the word go. For others it was about introducing new working practices or trying to be more strategic in deciding which projects to take on.

The conversation was also extended at a British Interactive Media Association (BIMA) roundtable breakfast, where discussions centred on encouraging successful financial performance within agencies. Attendees looked at choosing the right type of client, charging the right price on the right basis, recovering extra-contract work, collecting what you charge and resourcing appropriately – all of which are essential when looking to grow profit.

There is no quick fix when it comes to growing profit, especially within an industry battling with a ‘new normal’ environment where margins are squeezed and pressure is coming from all directions. But taking into consideration the tips and suggestions from industry professionals and evaluating which aspects will best suit your agency will set you up well to recover the revenue you deserve.

Raymond Kieser is global practice director of marcoms at Deltek.

Profit Revenue

More from Profit

View all

Trending

Industry insights

View all
Add your own content +