The gravy-train days are done.
21 December 2018
“The days of marketing agencies ripping off clients are over.”
There was no greater motivator to setting up Turncoat Marketing Agency than hearing this:
“The time of agencies ripping off their clients is over.”
Spoken by a disgruntled client to an ex-boss of ours, this sentence gets to the heart of why people are moving away from traditional agencies: the bloated hourly rates that prop up large overheads, slick offices, and the employee thumb-twiddling that agencies build into their bills.
A harsh sentiment, some would say. After all, you need a studio, right? You need full-time staff even if you don’t have full-time work. You need to make a profit.
But clients see things differently. They look on with horror as their budget is chewed up by exorbitant agency rates, unnecessary account management, and the myriad of tiny problems that can beset any project. So that, in many cases, the project is only done within budget if it’s done badly.
According to The Wow Company’s Bench Press report, agencies charge an average of £86 an hour, whilst a mere 3% of agencies charge £50 an hour or less. No wonder, then, that over half of agencies won’t work on a project worth less than £5,000.
It makes sense when you look at the maths. A £5,000 project at £86 an hour leaves just 58 hours of allotted time. At a 7.5-hour day, that’s only 7.75 days of one person’s time. Need to budget for a designer, copywriter, and account manager? Then the project has to be done in 2.6 days.
Five thousand pounds. It doesn’t get you much these days…
To respond to this, marketing agencies need to start re-imagining the ways they do business in this changing landscape.
Can they build a trusted network of freelancers to come in and do a job when they’re needed, so that a client isn’t paying for times when they’re not?
Can full-service marketing agencies pivot to specialisms that streamline processes and enhance their reputations as trusted experts instead of Jacks of all trades, masters of none?
Can agencies make use of co-working spaces instead of renting out that eye-wateringly expensive studio? Sure, it might have a treehouse and craft beer on tap, but that’s not going to hold much water with your clients when £5,000 lasts fewer than three days.
Yes, these are tough questions to ask and even tougher to answer. But, at a time when clients are beginning to understand the agency gravy train is grinding to a halt, the result of not addressing them might result in learning the toughest lesson of all.