The creative industry has changed so significantly in the last decade that the term "new normal" is being used to describe today's environment, where it's tough—and keeps getting tougher—to make a buck and a great idea. Creativity needs to remain uncompromised at the forefront of all activity, but agencies are fighting fires from all angles, battling increased pressure from clients, lower margins, more intense procurement processes and changing leadership structures.
For many, it's adapt or die. To drive the people profit line in the right direction, agencies must change operating models, processes, people and client engagement.
The new normal environment is a burning issue for many agencies, a term they use to describe the complicated landscape they're now operating in. There is higher pressure on remuneration models and people, as clients demand work cheaper, better, faster. As a result, even though revenue appears to be recovering post-recession, agencies are struggling to turn it into profit and are operating with reduced margins—some below 15%.
It's not just a financial struggle, either. There are pressures on organizational structures, with the role of project managers and producers changing, disciplines integrating and client leadership structures taking on a more global horizontal form.
Laying it all out like this doesn't paint the most positive picture, but agencies should be reassured that with some smart strategic decisions, they will be able to turn their focus back to creativity, the bastion of ad land. So what can agencies do?
Business transformation is a very corporate turn of phrase, but in this instance it works in nicely with what agencies need to do. It is not enough to make superficial changes or just patch up issues. To succeed in this new environment, agencies need to adapt from the foundation upward.
The first step should be looking at technology options with regard to operational processes. A purpose-built agency management system will take care of the heartache caused by issues involving resourcing, capacity planning, project management and financial processes.
Whether it's managing individual time with a simple timesheet interface, always having an understanding of the capacity of your team or ensuring total financial transparency, being able to access this level of insight and data will directly drive strategic decision-making. Agencies sell the idea of big data to clients but are not capitalizing on their own internal data; an agency management system will help with this.
Reducing operational pressures will not only free up teams to focus on other areas of the business, namely the lifeblood of creativity, but will also ensure a flow-on effect for the whole business. For example, a better understanding of capacity across the team means that projects can be resourced more efficiently and effectively, so ultimately they will be completed on time, on budget and to the high standards clients expect.
Additionally, for the chief financial officer, an agency management system that connects the front end with a comprehensive and robust back end means a better understanding of financial operations, not to mention no last-minute hunts for timesheets and other such information from teams more focused on client demands than allocating time in 15 minute slots. The end result is a smoother process in all corners of the business and ultimately more insight into financial patterns that then play into management decisions around people, profit and growth.
We are seeing more and more creativity from an industry that lives to push boundaries, and this kind of thinking cannot flourish if time and headspace is taken up with processes and operations that could be managed more effectively. An agency management system can reduce manual processes and support smart decision-making. Having these insights at your fingertips allows for real-time decision-making that is critical in today's environment.
It's widely acknowledged that the new normal is a difficult environment for agencies to operate in, but those willing to adapt can still experience success in both creativity and profitability.
About the Author
Ray Kieser is Global Practice Director: Marcoms at Deltek, responsible for leading the marcom's business worldwide. A seasoned marketing leader, he has more than 20 years experience within the communications industry, running large-scale P&L and client business across multiple markets and disciplines.
His career began in strategy and swiftly moved into management. His most recent roles include global director in charge at JWT and group managing director-Europe at SGK. Ray has been honoured with Cannes Gold, IPA and WPP Partnership awards throughout his time in the industry and prides himself on being an entrepreneur at heart.
About the Company
Deltek is the creative industry's preferred cloud-based agency management platform. With Deltek, agencies can simplify their processes from pitch to delivery, proactively manage relationships, schedule the right resource for the right job, monitor client profitability, record time effortlessly and create more accurate estimates. Used by global networks, large independent agencies and small boutiques, Deltek is a solution that creative teams love and finance teams trust.