The Biggest Pitfalls That Agencies Keep Making

April 25, 2022

TwitterTweet it:'Our recent global survey of the advertising, media and marketing industry revealed where many are getting it wrong – here’s how to learn by their example.'

Our recent global survey of the advertising, media and marketing industry revealed where many are getting it wrong – here’s how to learn by their example.

Spring is always a good time for a refresh, a rethink and a shakeup of old habits; and that’s as true in agency land as it is anywhere else. Our 2022 industry report in partnership with Campaign shed light on what successful creative agencies are doing to outperform their peers – and conversely, the common pitfalls that many are falling into. Read on for four of our 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 talent gap. When agency professionals were asked what was holding back their digital transformation, the biggest single obstacle (cited by 34%) wasn’t their available capital or stakeholder buy-in, but simply a shortage of specialist skills.

This, of course, chimes with many other global reports into 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 likely to be 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 overall business strategy.

Whether you plan to hire, upskill or outsource, getting the right skills and systems in place to drive digital transformation could make a huge difference to future performance.

Mistake #2: Delaying their 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 management systems and a clear digital strategy in place. One of the key findings from our report was that most digitally mature agencies were enjoying a noticeable advantage over their less tech-savvy rivals.

More than half (55%) of those at digitally mature agencies had added clients 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.


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Mistake #3: Not acting on your data to stop costs spiralling

Most (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%) 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 think; 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 is how they monitor and handle those changes. Project managers need to be able to keep a close eye on costs, and course-correct if they veer off track – for example, by going back to the client and negotiating for extra time/resource in a well-evidenced way.

Agency professionals told us that being able to review and respond to reporting data in real time was a key advantage of adopting digital management systems. “A lot of the time, the scope changes and people are scared of going back to the client and saying they need to pay for that,” one creative agency manager told us. “With the squeezes we’ve seen on client projects in recent times, the only way you can manage that efficiently is with a system that keeps clear track of costs.”

Which brings us neatly to…

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. Management systems that give you clear visibility of previous project costs and time/resource requirements can help ensure you’re costing projects accurately.

“Where a lot of agencies are going wrong is not understanding their cost base,” admitted one agency leader. “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 media, marketing and advertising industries are heading in our full report Talent, transformation and growth: creative agencies in 2022.

Read Next: Things Are Looking Up For Smart Agencies in 2022


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