Avoid being a ‘one-trick pony’: Clever financial planning for diversification
Creative agencies are increasingly having to find new ways to cope with the rapidly changing media landscape. New technologies are emerging, and agencies are experiencing change internally as well as externally.
Clients are beginning to demand more for their money and as a result of consolidation within the sector, businesses are seeking to expand their repertoire.
With new technology taking over, agencies that stick to one platform or process are now few and far between. Clients are looking for a ‘one-stop shop’ solution and are no longer drawn in by those with a boutique or specialist mantra. So how can agencies take advantage of this shift and diversify effectively?
When looking to expand, reputation and future growth must be an agency’s key motivations. Taking a long-term view is crucial to keep pace with competitors, and understanding what clients want should be the priority.
Clients demands may change as others in the market diversify, however key decision makers should ensure that they are continuously providing the best quality service possible in order to stay ahead of the pack and to maintain a sturdy reputation.
‘Diversification’ can mean a total overhaul, but it doesn’t have to. In a bid to avoid spending thousands and totally rebranding, incorporating a channel management layer is worth considering. Adding this extra service line is possible across various creative disciplines and enables agencies to provide a complete campaign, as opposed to focusing on individual parts. It allows newly expanded departments to work in tandem.
incorporating a channel management layer is worth considering
From a business planning perspective, this additional layer should not be complicated to implement and is unlikely to need expensive recruitment strategies to get up and running. By running in conjunction with the existing account management, media, technology and planning departments, channel management strategy can help create a more efficient team with better oversight, allowing some to manage and others do what they excel at – creatively selling the client’s story.
In order to diversify effectively, more often than not, additional spending is needed to update current technology and software. For smaller agencies in particular, this can put pressure on finances.
Software development, whether it be internally or through external consultants, and recruitment fees for individuals with sought-after skill sets will all incur a cost.
Careful consideration needs to be taken when deciding where any additional funding will be generated from. This should be considered as part of the agency’s overall budgeting process, and it is important that it is addressed early and planned for properly. Before planning for change, make sure there is sufficient cash available to cover any additional costs involved or work out how you can generate some.
Timing can also play a role in the expansion process and is often overlooked.
ensure the transition is seamless and any new departments fit in without unnecessary disruption
Market diversification has challenged the traditional creative model that many agencies refer to and is forcing the industry to adapt, putting pressure on agencies internally. It would be foolish to resist a much needed re-design of older business models to keep pace with change but should be considered alongside the existing skill sets and resource within the business. Campaigns are becoming increasingly focusing on the international arena as opposed to just the UK, which can have additional cost implications as agencies equip themselves to seek out the best talent, globally. Judging when the ‘right time’ to take this step is can be difficult.
Nonetheless, the decision to expand to a multi-channel offering should be made after carefully evaluating the current offering, clients, resource, profit margins and business structure. When looking to expand business offerings companies need to be a stage where they are able to cope with this development, and can ensure the transition is seamless and any new departments fit in without unnecessary disruption.
The creative industry has changed dramatically in recent years and companies are rightly focusing their efforts on diversifying service lines. Arguably, this has influenced client expectations with those agencies boasting broader portfolios being seen as the norm. Being able to offer clients an array of services means you are less likely to lose out to a more diverse or accommodating competitor.
Agencies need to be flexible and at the forefront of the latest technological advancements to ensure their reputation and growth strategy is maintained and continues.
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