Projecting Revenue In a Project-Based World

Polygamy Is Difficult, but It's the Reality

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Marc Brownstein Marc Brownstein
It wasn't long ago that it was easy to staff a piece of business. You analyzed the scope, and calculated the fee, which was then earned by the agency on a monthly basis. Pretty simple. And if you did a good job, and your campaigns drove awareness or sales or succeeded at whatever the goal was, you got to keep the business.

It's a little trickier now.

Clients have more projects. Agencies have less media capabilities, which demand monthly human capital. And "retainer" has somehow become a dirty word.

That has made projecting revenue -- so that you can staff properly -- a guessing game. Guess right, and you deliver the right team on the right project and make your profit margins. Guess wrong, and you have some tough issues to deal with.

We in the agency business are not alone. Executives in the media property business (TV, print, online, radio, outdoor) are wringing their hands with the same issues. They used to receive a media buy for the year. Now it's quarter by quarter. Or even a month at a time. That creates the same staffing and revenue volatility.

Now I don't want to make it seem like every piece of business at a small-to-midsize agency is done on a project basis. Far from it. Our agency, for example, continues to be retained when we are the agency of record, or when we are engaged for a scope of work that endures for the foreseeable future. I believe our clients know the benefit of retainers: They can budget for their agency expenses, without any surprises. And, more important, retained agencies build closer relationships with their clients, so that they "get" their clients' business; and drive business-building ideas, without having to get an estimate approved to do so. But the trend of projects is nonetheless a factor to be dealt with.

Seems like we are in a world of increasing business polygamy. Lots of agencies married to lots of clients for lots of projects. But that means fewer agencies enjoy the sole client commitment of a monogamous relationship -- for richer or poorer.
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