During our work with thousands of high performing ad agencies (and scores of ‘lower’ performers), we have identified a few ingredients that help create a nimble and highly profitable firm.

Tips For Running An Ad Agency

Change is inevitable. Leaders create order.

If you want to understand how an ad agency operates, you must first understand the crazy world they live in. Change drives everything in most agencies – changes to the project, clients, staff, art work, edits, redos, revisions, reprinting, repurpose and on and on. These are the words agencies live by. And somehow they end up making it all work. Most of the time.

For those times it doesn’t work, here are four simple ingredients that can help smooth out your daily operations. All of them are readily achievable and do not require that the agency ‘re-engineer’ itself in the process. Without them, agencies react ineffectively and inefficiently each day – squandering resources, frustrating staff and disappointing clients. They are as follows:

1. Job Classification Program

All projects, clients and tasks are not created equal – so why do they all have the same priority and follow the same process through the agency? Differentiating work by type and developing priorities and processes that reflect the nature of the job can quickly free up an abundance of agency resources.

There are three primary categories of jobs in an agency. Over 70% of jobs at a typical agency are relatively simple edits or revisions to existing campaigns – we call these the Bread and Butter (B&B) projects. Another 20% to 25% of the jobs of the agency require new thinking, new creative and/or provide the agency with an opportunity to truly demonstrate its capabilities – these are the Reels and Awards (R&A) projects. Finally, less than 10% of an agency’s projects represent opportunities to fundamentally re-position a brand or a client’s marketing strategy. These typically take the form of integrated campaigns and new business pitches. These are the Case Study (CS) projects.

Each of these different projects has a substantially different worth and impact on the agency. Attempting to run each type of project through the same agency development, review and production cycles creates a tremendous burden on the agency’s people and systems – and dramatically degrades the agency’s true capabilities. Agencies who harness the power of chaos have learned how to categorize and process each of these different project types so that, taken together, they focus agency resources where they can do the most good – and allow the agency to make money on even the smallest of projects.

2. Account Service Redux

Account Service has been unjustly neutered and emasculated during the last decade. Much of this they have brought upon themselves. When account service allowed themselves to believe that they were, in fact, order takers, bag carriers and client handlers, they quickly lost credibility with their clients and their fellow employees. There would/should be little or no need for Account Planning if Account Services had not ceded their rights and responsibilities.

Any good creative will tell you that their best friend is a good account person. There are two dimensions of Account Service that are even more critical to success in today’s chaotic environment. First, they have to reclaim their rights and duty to developing and managing the client’s brand and marketing communications strategies. They need to do this by being the first to immerse themselves in the brand. All of the ‘little’ things that account staff used to do need to be resurrected. This means everything from talking with consumers to walking the supermarket aisles to using the client’s product. Besides knowledge, all of these little things add up to credibility. Account Service must get back its credibility – and it starts in the trenches.

Secondly, a good Account Service professional totally manages the work of the client – throughout its life cycle – none of this throwing it over the wall stuff. Account Service must nurture, cajole, beg, borrow and steal to get its work developed, produced and, more importantly, valued by and billed to the client.

And lastly, Account Service staff must know how to grow their client in a win-win manner. They understand the power of  Value Based Initiatives and take control of setting up consultant arrangements with good clients. The answer for agencies is to train their account teams in new skills, showing them how to work smarter, not harder. And High Gear, a high impact, one-day on-site learning experience for account service is the best way to do that.

3. The Perfect Kickoff

One of the greatest contributors to wasted effort, rework, revisions and general staff frustration can be easily avoided by starting any and every project on the right foot. This kickoff varies depending upon the type of project, but it is a critical ingredient to any success. While every agency has some form of project initiation meeting, roughly 99% of them never follow them. Projects seem to arise out of the ether and just arrive in media or creative – typically a day or two before concepts are due.

The solution is to be absolutely rigid about project kickoffs. A different kickoff with differing requirements is created for each different job classification. Each project is classified into one of the three types, and that classification is approved by the executive chairing the traffic meeting. Kickoff meetings (for Reel and Portfolio or Case Study projects) follow an agreed upon agenda and are led by the newly empowered account staff. The people that must attend, do so, or send an appropriate designee (who fully briefs them afterwards). A preliminary draft of the Creative and/or Media Brief is circulated and finalized during the meeting. Critical target dates are agreed upon and responsibilities are clearly assigned. The accompanying box summarizes key attributes of successful kickoffs for each type of project.

4. Timekeeping for Fun and Profit

Finally, the age-old challenge of filling out time sheets. What used to be a chronic annoyance for agency accounting is quickly becoming a mission critical (i.e. profit) requirement for fee-based accounts. At one agency with a large fee account, the agency learned six months into the year that it had only accounted for 25% of 80 people’s time that had been budgeted into the original account agreement. That translates into at least $3 million missing from the bottom line – salaries were still paid, of course! That is a lot to try to recoup before the end of the year.

There is no magic bullet, of course – although one is tempted to find one and shoot the offenders. We’ve seen agencies withhold the direct deposit of paychecks and force offenders to pick up their check from the agency president (with completed time sheets in hand). Others have tried putting time and expense reports on the same form – no expense reimbursements without time sheets. You can try assigning responsibilities to departmental assistants who either get their people to fill them out, or fill them out for them. But the most effective has always been to make time sheet completion an employee evaluation criteria and tie them to bonuses.

Mostly, conquering the time sheet challenge is a cultural and leadership issue. Leaders must lead by example and not accept unprofessional behavior from their staff. Filling out time sheets must be treated as a fundamental part of being a professional and prospering in a career. Stan Richards of the Richards Group loves to share his approach with new hires. During their orientation he explains that for them to put one more hour on a job than they actually worked is the equivalent of going to the client’s accounting department and taking $100 bill out of the cash register – and to under-report their work by one hour is the equivalent of stealing $100 out of his wallet.

Reporting accurate time is more critical than ever if an agency is to get everything it has coming to it. Over time, it also is critical for the agency to have good ‘actuals’ so that it knows how to price its services in the future. This is one area where the consultants shine next to their agency counterparts. If agencies want to play in this arena, they must develop the same discipline, and ultimately, the same pride in the time they put into helping their clients succeed.

Tips For Running An Ad Agency 

Running any firm where your key product is subject to constant change would drive any leader crazy. And this is why, perhaps, so many ad agency leaders always have a slightly dazed and confused look about them. Agreeing to be the leader of a nut-house means you’re willing to give up any semblance to a normal life and that you’re willing to dedicate all your energy into making the agency work. Profitably. For you, your family, your staff, and your clients. You’re not trying to solve any specific problem; you’re committing to solve enough to get results.

Taking control of the things you can control: types of jobs, kick offs, account service, and time sheets, can make the rest a bit easier. Perhaps allowing you to go home early a few nights and tuck your family in bed.



Photo by Hazadess