Britain’s top track private companies
reading the Sunday Times’ 100 biggest private companies list this morning, it is not surprising that no agencies are on the roster. The smallest has sales of over £400m and most are companies that make and sell things not services.
One of the underlying issues with our industry is that fundamentally we are selling hours. Hours of creative expertise and experience. But we are trading our hours for dollars. There’s a limit to how much you can grow on that business model. WE know larger agencies are not necessarily more profitable or more creative and so the creative services industry risks remaining full of SMEs - unless the business model changes.
A while ago, Tina Fegent, sent me a copy of Beau Fraser’s article on "Compensation". He claims that Gate Worldwide is trying to work its timesheets better such that the areas where true value is added get paid at higher levels than lower value work like revisions.
He has five stages to a project: Discovery; Strategy; Development; Production and Revision. Pretty standard stuff. But if timesheets were aligned to stage not just overall project, agencies would have a better idea of where they were adding value, making highest margins / profits and be able to adjust their pricing for clients and for staff accordingly.
When you find one team moves more smoothly with a client through to the production stage but then spends too long on Revisions - you know you start losing money. And so agency staff compensation and client pricing could be adjusted to reflect this.
it is possible.
Maybe this is one change to the agency business model that can move someone into the large public companies list….
Download AdAge_BeauFraser.pdf