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6 signs your agency is dying


It's no secret. The agency business is a tough one these days. Small shops come out of nowhere and either get gobbled up by agency holding companies or disappear into the "where are they now" file. Established agencies face a myriad of challenges, such as keeping talent and laboring under an old business model that many say must go (even if a clear replacement has not yet arrived). And across the board, many brands are taking more of their work in-house, often because budgets are leaner and the demand for better ROI is that much greater.

6 signs your agency is dying

But while plenty of pixels have been spent on the systemic problems facing agencies, we thought it might be a good idea to hear from veterans of the agency business -- both current and former. What warning signs have they seen that have given them cause to worry about the health of an agency? And can you apply what they've learned to keep your agency afloat in difficult waters?

All your eggs in one basket

Don't put all your eggs in one basket. That piece of advice goes back centuries. But it's still true today, and it's especially true for agencies.

"Having all of your eggs in one basket, even if it's a big basket, is a sure fire sign that your business isn't doing great," said Mark Rushworth, head of search for Blue Logic. "You don't want to rely on one big account, even if it's a multi-faceted account."

The reason behind the advice should be obvious. If that one account goes under or decides to take its business elsewhere, your agency will evaporate. But according to Rushworth, it's surprisingly common for agencies to make this mistake. For one thing, big accounts mean big money, which makes it harder to justify new business that may not pay as much, especially at first. At the same time, failing to diversify your roster can also make it harder for you to see the big picture. One client, after all, means one perspective on the world, which means that you've effectively swallowed the Kool Aid because you literally can't imagine a world without your client's brand. Being myopic and dependent on a single source of revenue is not a recipe for long-term success.

Ignoring the bread and butter

So your agency's portfolio is diverse to the point where no single account can make or break you. That's a good thing, but there's still one piece of food-related advice you need to hear.

"Don't ignore your bread and butter clients," said Rushworth. "If the bread and butter clients are devalued and you start marginalizing long-term but low fee-paying clients then your service will suffer overall."

Those bread and butter clients may not be the new cash cow for the agency, but according to Rushworth, they're just as critical because they represent the day in and day out work you do, and while their fees may not be huge, they are steady. And if you let service to those clients slip, Rushworth says you'll see a "knock on effect" with your larger accounts. And soon enough, your whole business may be up for grabs.

We're the specialists, and we only do...

There's nothing wrong with specific knowledge. And there's nothing wrong with marketing your agency as one that has that specific knowledge. But just as an agency can go too far with one client, it can also go too far in one specific direction.

Here's a telling story about going all in on one thing from John Childers, who is currently the president of Many Hats Creative, but who previously spent eight years working as a senior copywriter and creative lead for a digital agency that also developed software solutions.

"Along with my whole creative team (about eight people) I was let go in one fell swoop in July 2008. The company continued to dwindle in size until very recently, going from a high of about 35-40 total employees down to about 6-8 just a year or so ago. In hindsight, the single most telling sign that we were going to fail was that we began focusing on a single industry vertical.

"We initially developed a general sales and marketing solution that we then customized to work for clients from a wide variety of businesses and industries (we did work for just about every industry, including healthcare, pharma, technology, finance, etc. We even created a solution for a company that manufactures cast stone products).

"About halfway through my career there we began focusing almost solely on building our solution to work best for online lenders. They were at the peak of their successes, new ones were starting up left and right, and we had a series of demonstrable successes in the same industry we could use to sell, so it made sense from a revenue and sales point of view, but we failed to look at the long term and did nothing to hedge our bets against the possibility (which soon became a probability, then a fact) that the industry we were focusing on would tank (much less be at the center of a worldwide recession) the way mortgage lenders did.

"I still feel that if we had maintained our more general focus, or focused on two or three verticals where our solution was a good fit, we could have maintained sufficient sales to make it through the recession without reverting to pre-startup size, and would now be positioned to grow with the growing economy."

How much for what?

It's no secret that agencies use vendors to produce deliverables for their clients. The vendor gets its fee, the agency marks it up (hopefully providing value along the way), and the client gets what it wants. But in today's world of fast-moving technology and fluid rates, an agency can sink its own ship if it doesn't constantly re-evaluate the vendor relationship, according to Steve Barton, director at Advokator, who shares this story.

"The slightly more entertaining anecdote that proves your agency is dying is when a digital producer tells you that it will cost £42,000 to produce a basic YouTube channel redesign. And the specification includes an extensive round of testing...true story. You may well know that most people can produce a YouTube channel redesign on their own for free after watching a YouTube video on how to design a YouTube channel. Paying for design to go into prescribed formats is an investment that many premium brands make in order to achieve a level of quality and consistency. Fair enough. This should be in the £500 to £3,000 range. The point being that when you have people in delivery positions who are out of touch with how to deliver in digital platforms as well as what the market rate is for that work, then you are in a very unhealthy position."

You're nowhere near the cutting edge

One advantage agencies are supposed to have over their clients -- and just about every other company on Earth -- is that they're supposed to be nimble and quick to pick up on the latest trends, whether they be cultural ("there's this meme I think we can use") or technological ("so we have this idea for a Snapchat campaign built for Google Glass").

Put simply, the agency makes its money living at the cutting edge. Sure, a lot of what's out there at the cutting edge gets cut and dropped off a cliff, never to return. But some of it makes its way into the mainstream (like, you know, the internet), so it's essential for your agency to know about the next big thing because a client might be willing to pay for it.

"I'd worry if you haven't suffered the humiliation of getting laughed at for being a Google Glass-wearing, Nike Fuel-burning, Arduino-meddling early adopter," said Ian Cassidy, executive creative director at TBG. "It's all about wearable tech or the 'internet of things,' don't you know?!"

It sounds funny, and maybe it's hard to justify an afternoon spent with wearable technology, but if you want to keep working in the digital space, standing still isn't an option.

When did you last innovate?

There are plenty of agencies that will tell you that they're innovative. But there's a big difference between adopting an industry buzzword as a core value of your agency and actually doing it. Soon enough, all agencies either put up or shut up on the innovation front, and those that are just blowing hot air are deluded themselves, according to Amy Marshall, who co-founded Webbed Marketing, which was acquired several years ago by Fathom, where she now works as VP of social media strategy and research.

"Coming from a digital agency, if we look back over the last quarter or last year, if we can't point to a major innovation we executed, then we are in trouble," said Marshall. "In a marketing space where innovation is the livelihood of our business value to clients, we have to be constantly innovating. Once that stops, we know we are dead."

Michael Estrin is a freelance writer.

On Twitter? Follow Estrin at @mestrin. Follow iMedia Connection at @iMediaTweet.

"Heart attack and heart beats cardiogram background" image via Shutterstock.

Michael Estrin is freelance writer. He contributes regularly to iMedia, Bankrate.com, and California Lawyer Magazine. But you can also find his byline across the Web (and sometimes in print) at Digiday, Fast...

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