You can interpret that title one of two ways. On one hand the model works, it has delivered growth and revenue over the years. On the other, it is broken, but what exactly isn’t working?
If you Google the title you’ll see lots of articles on the big boy media agencies, the likes of WPP and Omnicom. They discuss the disconnect between clients and agencies, billing practices and a changing market. All very interesting stuff but not all that relevant to small agencies. The UK has thousands of smaller marketing agencies, there are over 2,500 on Clutch alone. Others put that number at above 25,000.
We want to look at the small agency, in fact that’s the one of the main driving forces behind creating Catchworks. We’re especially interested in agencies that specialise in particular types of marketing. In our case that happens to be search and website design.
They are normal business problems
It’s worth saying that a lot of the issues faced by agencies apply to any service based business. It would be a bold claim that all service based business models fail to operate. In fact, it would be a lie. Countless business in the UK and globally operate the same basic model. It uses an in-house team that grows with revenue. As the business grows, it is able to acquire better clients and talent. Sometimes the business will invest in growing new teams and revenue streams. All normal stuff.
So on the face of it, nothing is wrong. Keep the revenue coming in and the staff available to service your accounts. Your margin should then result in a profit.
The numbers are important, after all, very few people like working for free. But if you distil everything to a purely numbers format, you leave out a lot of what makes a business a business. You omit relationships, enjoyment, culture, future planning and growth amongst others.
The principle of billing clients for a service that provides value will continue to work. Yet there can be better options available. Working practices are changing at an incredible rate and this provides opportunities.
It doesn’t mean that the entire model is defunct. It means that there are opportunities for restructuring and working practices. For smaller agencies this could result in better delivery, happier clients and efficiency. We also appreciate that Catchworks has been set up with this in mind. As such, we have an inherent bias towards this change, for good or for worse.
If you agree with us then great. If you don’t, leave a comment so that we can all discuss the merits as objectively as possible!
Why the long face?
When we introduced Catchworks, we listed issues that we experienced in small agencies. Our structure may not tackle each of these individually but we are working through them! The issues we identified are as follows:
- Access to expertise
- Delivery & value to the client
- Working Practices
Yes, there are other issues that will still exist. Clients will always have the option to develop their own in-house teams. Agency/client relationships will still need to develop more trust and transparency. For specialist agencies, they will need to work better with other parties. There will never be a perfect system.
We believe that the majority of issues holding agencies back are staff and/or cost related. And it can be somewhat of a self fulfilling prophecy. They can’t afford the relevant expertise to win bigger accounts, or deliver great work. If they do invest, they struggle to forecast revenue and as such the utilisation of said person is low. Layer into this added costs such as rent, rates, work perks, pension and it becomes inefficient.
These issues combine to stunt growth, both for the business and the team. Teams are stretched, and agencies make do with the team that they have. Employees end up having to do things that they either aren’t interested in, or aren’t good at. It takes longer, lowers the quality of work and doesn’t result in meaningful progress for the team member. This impacts the client in either billable hours or quality of work, not a good situation to be in.
A more flexible, but centralised approach
Remote working has been growing in popularity over the last decade. Not only are the numbers of digital nomads increasing but it’s likely that Covid-19 will prove the efficacy of remote working on a larger scale. As such, there is a vast amount of remote expertise available which we utilise at Catchworks.
An important point here is to challenge the perception of freelancers. We’re not referring to juniors who just want to sit on a beach and do minimal work. We’re talking about high calibre individuals who, for whatever reason, operate on a freelance model. They’re highly skilled, experienced and driven.
If agencies start to utilise remote expertise more, they can access the right level of talent. In turn, this should result in better costs and delivery for clients. They may pay more per head hour but if the work is completed quicker and to a higher standard, the total cost is lower. For the agency, it can result in lower fixed costs and overheads. It increases flexibility and profitability for both parties, especially in uncertain markets.
All well and good but somewhat theoretical. A 4-day week works in theory but if left unmanaged will fail. There has to be a central management function that is identifiable as a more traditional agency. Otherwise there’s no point. The client may as well save costs and go direct to their own freelancers. There has to be a core team that manages accounts like a normal agency.
Creating a Network
It’s not good enough to state that you are delivering greater expertise through third parties. That doesn’t have the desired impact, or results. Any agency that utilises this model (and we’re not the first) needs to be vigilant with their network. For example, we have spent a long time developing profiles that fit with our structure. Every individual in our network has to pass a rigorous vetting process, not dissimilar to an interview process. This is incredibly important to us. The whole point is to improve our delivery for clients.
We also recognise the importance for an agency ‘feel’, however you define that. Everyone uses the same platforms for reporting and communication. They are welcome to bolt on other metrics or make use of other platforms but there has to be a central theme.
Our network allows us to access higher levels of expertise on a head hour basis. Our clients receive better work, but retain single points of contact from the core team. They get to work with an agency and all the benefits, whilst limiting the restrictions of working with a smaller agency.
Marketing agencies, alongside tech companies, are generally known for their work perks. These can range from quirky offices to free beer, gym memberships and other benefits. Yes, these are good but for some, they only serve to plaster over the cracks. They certainly don’t apply to people who want a more flexible lifestyle.
There is an argument that creativity and productivity increases for these third parties. Call them freelancers, digital nomads, consultants, whatever you want. We want that. We want increased productivity and creativity because that means better work for clients.
We also want a motivated workforce. If these individuals are motivated by a lifestyle, without it impacting on the work they produce, then that’s awesome. Why should we be scared of using them just because they’re not in the office? If you hadn’t noticed, the world is connected like never before. Again, the Covid-19 outbreak demonstrated how teams can work without ever being in the same room together.
We see that as the agency perk. Apply to work for an agency and have the same freedom as any other freelancer.
It's work in progress
Our system works. Is it perfect? No. Is it actually better than the traditional service based model? Depends who you ask, it really does.
Some clients may prefer the normal agency and that is understandable. That means they’re not the right client for us, and we’re not the right agency for them. That’s why we have ‘works’ as part of our name and testament to Skunk Works. We’re specialists and as such, our work applies to specific companies.
Our use of a core team and a network of third parties will continually improve. We’ll make mistakes, but we’re committed to exploring the opportunity as far as it will allow.
If you’re wondering, and back to the biases, yes this flexibility applies to the core team as well. It applies to me. I don’t think we should be ashamed of setting up our work life for a better non-work life. It’s even better if both can produce greater results for everyone involved. That’s what we’re striving for.