Agency Trends For 2020 - What Every Management Team Should Know

A global survey by Deltek and Campaign has shed new light on today’s agency culture – here, we look at the top takeaways for management teams 

What’s really keeping agency professionals awake at night worrying? Deltek and UK ad industry bible Campaign recently surveyed staff at creative, marketing, media and ad agencies across more than 30 countries worldwide. The resulting report provided some revealing insights for anyone involved in agency management – here, we dig into the data to reveal some of the top global trends.

Feel like you’re doing double the work for half the profit? You’re not alone

If you’re working at a creative agency and it seems like you’re always being asked to do more with less, you’re probably not wrong! Our research showed that while the majority of agencies have grown and diversified over the past year, with broader services, bigger teams and increased output, these changes weren’t matched by higher profit margins.

Over two-thirds (68%) of agencies worldwide were offering more services now than they did a year ago, while 62% were producing more work, and nearly half (46%) had expanded their workforce. But in spite of some encouraging signs of growth, only a quarter (26%) had managed to increase profit margins, and over a third (37%) of agencies had seen their profit margins shrink year-on-year.

This will come as no surprise to agency managers working in today’s competitive marketplace, with a number of survey respondents explicitly commenting on the need to ‘do more with less’ to win and please clients. Complaints on this front included competitors virtually giving away their services to win business, or clients increasingly dictating pricing levels. In short: competition is tough, and it’s not going away.

Today’s top agency headache revealed (and it’s not winning new business!)

You might think any agency’s main worry would be gaining business – but you’d be wrong. Our survey revealed that most agencies are less anxious about adding new business than they are about managing their existing workload effectively, in terms of productivity, efficiency and proactivity.

The single biggest worry worldwide, reported by more than half (51%), was “Over-servicing and scope creep” on client projects; followed by “Being too reactive rather than proactive” (43%). 

Common sense suggests that this is a chicken-and-egg situation: if agencies can become more proactive rather than reactive about managing projects, this may help prevent over-servicing and scope creep occurring in the first place. And nipping those problems in the bud will free up more time to focus on what’s next. Agencies that are proactive about defining their scope of work with clients upfront – for example, by clearly specifying the number of rounds of revisions allowed on a project – are better able to control over-servicing and scope creep. 

But breaking the habit of going the extra mile for your clients isn’t easy, especially given the demanding client expectations that were reported by many respondents. Meanwhile, agency creative teams’ own desire to do the best possible work can often contribute to the problem. Regularly delivering over and above the client brief may feel creatively and professionally satisfying to the perfectionists among your staff – and earn brownie points in the short term –but ultimately, it’s not a sustainable way of doing business. 

As every agency manager knows, going the extra mile can take you beyond your allocated time and budget, ¬impacting on those all-important profit margins. What’s more, over-delivering can quickly become taken for granted by the clients who are benefiting from agencies effectively chucking in extra work for free. Yet a culture of over-servicing continues to pervade some agencies, with at least one survey respondent admitting how they always “invested too much from passion and to keep the bar high”.

To get on top of over-servicing, being able to see and track the problem is essential – and yes, that does mean honest timesheets. It also means identifying, and sticking to, key deliverables from the outset; closely monitoring progress and time spent on projects; and being transparent (and firm) with clients if projects start to spiral out of their agreed scope. 

The new challenges in hiring and keeping the best talent

Agencies are only as good as the people working there, so it will come as no surprise to managers that the third biggest reported worry – after over-servicing and being too reactive – is “Attracting and hiring the best talent”. 

Globally, 42% of agencies have experienced this issue, and nearly half of respondents (49%) identified “Attracting and retaining talent” as a key area for improvement. They’re not wrong about the importance of this: McKinsey cites a study that found high performers are up to 400% more productive than average ones. In complex professions that are information- and interaction-heavy – in other words, typical senior agency roles – the gap was even more pronounced: high performers are an incredible 800% more productive than their weaker peers.

It’s little wonder that sourcing top talent can be a headache, when many agency professionals (43%) told us they usually only have days to hire employees or freelancers ahead of a project start date. And as one survey respondent commented, even recognising what that talent looks like can be tricky: “With media moving so quickly, we care more about smarts and ability to learn, to think expansively, to problem-solve, than about experience – but those things are a lot harder to find on a résumé.”

Download the full report from Campaign and Deltek to get the complete facts and figures from this creative industry survey and read expert commentary from agency management professionals worldwide.