Spring is always a good time for a refresh, a rethink and a shakeup of old habits; and that’s as true in the agency industry as it is anywhere else. Our 2022 industry report in partnership with Campaign sheds light on what successful agencies are doing to outperform their peers – and conversely, the common pitfalls that many are falling into. Read on to learn our top four key takeaways.
Mistake #1: Failing to Mind Your Technology Skills Gap
Agencies told us that talent and resourcing was still their top priority in 2022, yet many were failing to rectify a key digital talent gap. When agency professionals were asked what was holding back their digital transformation, 34% of respondents said the biggest single obstacle wasn’t their available capital or stakeholder buy-in, but simply a shortage of specialist skills.
This reflects the looming technology skills gap that all sectors are facing. Given that virtually every business is now a digital business, the competition for specialist talent is fierce. But agencies neglect this at their peril. Research by McKinsey has found that today’s top-performing companies are nearly twice as likely to have strong technology leaders who help shape their overall business strategy.
Whether you plan to hire, upskill or outsource, getting the right skil¬¬ls and systems in place to drive digital transformation could make a huge difference to your agency’s operations and future performance.
Mistake #2: Delaying Your Digital Transformation
The pandemic has undoubtedly accelerated the pace of digital transformation, with more agencies, 28% in 2021 compared to 19% in 2020, saying they now had mature digital project management systems and a clear digital strategy in place. One of the key findings from the Creative Agencies in 2022 report was that most digitally mature agencies experienced a noticeable advantage over their less tech-savvy rivals.
More than 55% of digitally mature agencies had added client’s year-on-year, compared to 50% of those at digitally immature agencies. Conversely, just 9% of those mature agencies had lost clients, compared to 15% of the digitally immature.
Over a third,35% of the digitally mature agencies had managed to increase their profit margins in the same period, but only 23% of the less digitally evolved had done so. Meanwhile, only a quarter of the digitally mature reported seeing profit margins decrease, compared to a hefty 39% of the least tech-savvy agencies.
Quite simply, the 11% of creative agencies who still say they have no digital initiatives or strategies in place are already losing out to rivals who have embraced technology.
Talent, Transformation and Growth: Creative Agencies in 2022
How have creative agencies evolved to meet the current challenges, and what are their top priorities for the year ahead?
Mistake #3: Not Acting on The Data to Stop Costs Spiralling
58% of agency professionals told us they were highly or very highly confident in their company’s ability to accurately report on budgets. Yet this optimism around reporting may be misplaced, as often it didn’t translate into keeping projects on budget. Nearly two thirds,63% surveyed, admitted that between 10% and 100% of their current projects were going over budget.
There seems to be a bit of a disconnect going on here. Either agencies are not as clued up about their budget reporting as they would like to be; or they’re failing to act on that data in a timely fashion to nip spiralling costs in the bud.
The reality is that there are always going to be projects that go over budget as the scope of work evolves, initial estimates prove unrealistic or clients prove impossible to please. What sets successful agencies apart from less successful ones are how they monitor and handle those changes. Project managers need to keep a close eye on costs, and course-correct if they veer off track.
Mistake #4: Being Over-Optimistic About Costs
Optimism is generally a good thing – but not necessarily when it comes to budgets! To keep projects on track, it’s vital that your initial budget estimate is competitive but still grounded in reality. Marketing agency project management systems that give you clear visibility of previous project costs and time/resource requirements can help ensure you’re billing projects accurately.
“Where a lot of agencies are going wrong is not understanding their cost base,” noted one agency leader in our recent survey with Campaign. “Jobs often go over-budget because the budget estimate was wrong in the first place. You really need to do the groundwork to make sure your estimate is as accurate as possible. You might not ever get it completely right, because nothing ever goes completely to plan – but it certainly helps to have the previous numbers to inform you.”
Get more insights on where the agency industry is heading in our full report Talent, Transformation and Growth: Creative Agencies in 2022.
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