Episode 450

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In 2023, about 45% of agencies took an AGI hit — the biggest number we’ve seen for as long as we’ve been tracking agency trends. Last year was tough, but agencies are finally starting to bounce back from growing their AGI.

With some of our profitability struggles finally behind us, many of you are wondering how to get ahead of the curve once again. This week, we’re taking a deeper dive into some of the biggest influencers of agency AGI during this time and what agency owners can learn from the trends.

We have a ton of data on agency biz dev trends, specialization and niching, client ghosting, and much more. So join us to dive into the data and learn what your agency can be looking out for to help prevent a big AGI hit in the future.

A big thank you to our podcast’s presenting sponsor, White Label IQ. They’re an amazing resource for agencies who want to outsource their design, dev, or PPC work at wholesale prices. Check out their special offer (10 free hours!) for podcast listeners here.

agency AGI
agency AGI

What You Will Learn in This Episode:

  • The work that has been super profitable for agencies in the past year or two
  • The biggest hits to agency AGI
  • Proving ROI to clients is more important than ever
  • Why you need to raise your hourly rate if you haven’t already
  • Finding ways to get more work out of your existing clients
  • Overservicing clients is costing you money
  • Why it might be time to cut some of your staff
  • Clients want more from their agencies, and they’re not afraid to ghost
  • Investing in first-party data and data analysts

“They want proof that the $1 they spend will make them $2 after you work with them. Being able to demonstrate that is valuable for clients.” - Danyel McLellan Share on X
“If you haven’t raised your billable hour rate in a while, you need to catch up. It's super challenging to be profitable even at $175 an hour, let alone if it's something less.” @DrewMcLellan Share on X
“Rooting down deeper with existing clients to upsell different ways for them to reach their goals was a savior because that's where they really profited.” - Danyel McLellan Share on X
“Every hour we give away for free costs the agency hard dollars. We can't spend that time in a better place, either servicing another client, chasing after new business, or working on the agency's marketing.” @DrewMcLellan Share on X
“Clients are telling us that the reason they fire their agency is either because we’re too slow or we can't tie efforts to ROI.” - Danyel McLellan Share on X

Ways to contact Drew and Danyel:


Hey, everybody. Drew here. You know, we are always looking for more ways to be helpful and meet you wherever you’re at to help you grow your agency. It’s one of the reasons why we’ve produced this podcast for so long, and I’m super grateful that you listen as often as you do. However, there are some topics that are better suited for quick hyper-focused answers in under 10 minutes. That’s where our YouTube channel really comes in. For quick doses of inspiration, best practices, tips and tricks, head over to youtube.com/the at sign Agency Management institute. Again, that’s youtube.com/the at sign or symbol.

And then Agency Management Institute, all one word. Subscribe and search the existing video database for all sorts of actionable topics that you can implement in your shop today. Alright, let’s get to the show.

Running an agency can be a lonely proposition, but it doesn’t have to be. We can learn how to be better faster if we learn together. Welcome to Agency Management Institute’s Build, a Better Agency Podcast, presented by White Label IQ. Tune in every week for insights on how small to mid-size agencies are surviving and thriving in today’s market with 25 plus years of experience. As both an agency owner and agency consultant. Please welcome your host, Drew McLellan.

Hey everybody. Drew McLellan here from Agency Management Institute welcoming you to another episode of Build a Better Agency. Welcome, if this is your first episode, it’s a great one. We’re gonna talk about the trends that are impacting agencies in 2024 and beyond. And if you are a regular, we’re glad to have you back. This is one of our solo cast. So as you know, every fifth episode, no guest, just us talking about something that is on our radar screen. As you know, sometimes I do the solo cast by myself, but today, and actually next month, I am lucky enough to be doing it alongside my business partner and my life partner, Danielle Newcomb McClellan. So, we’re both here to talk you through some of the trends that we’re seeing as we work with agencies throughout the land.

Before we do that, though, every solo cast, we announce a winner of a free workshop or summit seat. Now, as you remember, hopefully you remember the way you get in the drawing to win one of these tickets is super simple. You just go wherever you download the podcast and leave a rating and review. Take a screenshot of that rating and email it to me. So just send it to [email protected]. And the reason why I ask you to do that is because we look at all the reviews and we are super grateful for them. But yes, thank you. Honestly, your screen name doesn’t tell us who you are or where you work. So that your cat lover 73 does not tell me your name or your region.


Like Cat Lover 73.

I know she’s one of our favorites. I know. Yeah, yeah. But anyway, this, this month’s winner is Eric Morley from Blue Sea. So Eric, congratulations. We would love to have you join us for one of our live workshops here in Denver, or the 2025 Build a Better Agency Summit if you want to use your free prize for that. So can’t

Wait to see.

Yeah, so here’s the deal. We keep your name in the drawing until you win, so sooner or later you’re gonna win. And the workshops and the conference tickets are about two grand. So not a bad prize for just leaving a rating and review. So we hope that you will do that and it doesn’t even have to

A good one.

Yeah, that’s, I get technically that’s true. I You’re gonna make me cry, that’s fine. Right?

Yeah. And then I’ll have to, you know, come

Console me. Yeah. Yeah.

So you do you though, and you choose however, whatever review you’d like to leave and Yep. Fair enough. Yeah, big winner.

Big winner. So Eric, we will reach out to you by email as well to let you know that you’ve won. So, congratulations. So we have so much content that we are actually gonna break this up into two solo casts. So for the May solo cast, the one you’re listening to right now, we’re gonna talk about trends around money and clients. And then in June we’re gonna talk about the trends that are impacting owners or employees. So settle in lots to cover. Lots to cover for sure. So on the money front, 2023 was brutal for a lot of agencies. Many of you have shared with us your own sort of horror stories of the challenges. And for the first time since we’ve been doing these trend reports, which has, gosh, almost 15, 20 years now, we really saw a lot of agencies struggling to get to the finish line in a way that was profitable.

So about 40% of agencies held steady, meaning their AGI and their profitability sort of stayed the same. About 15% grew their AGI and about 45%, which is the biggest number we’ve seen actually shrunk in size in terms of their AGI. Many of you were struggling to win new business. Many of you told us that you didn’t land one new client in all of 2023. The good news is the first half of 24 is looking much better.

It is. I think that one of the big things we’ve heard is that a, a term that has come out is the clients or prospects have ghosted their agency where either they were given proposals and then they sit on them and they don’t respond, or they don’t give you a no, but they don’t give you a yes. Or they’ve actually pulled RFPs and said, okay, we’ve, everybody’s gone through the process, but now we decided not to do it.

Or worse, they’ve signed a

Contract, signed a contract, and so,

And then don’t start the work.

Which has been problematic because so many of us have, so many of the agencies have kept their team together because they’ve said, oh, the good news is we’ve had the best team that we’ve ever had, but all these,

And, and we won this business,

Need the people, right? We want this. But then they pause it for three months, six months. So you’re keeping a fully loaded team prepared to do these big projects, but the clients have been dragging their feet haven’t started, and you have no, and you haven’t billed, they haven’t paid that bill for what the work they’re running to

Do. So you’re, so you’re carrying an a heavy load in terms of salary and benefits without the AGI to offset that salary. So that’s one of the reasons why everything shrunk. Yeah. So, so it’s been a tough year for a lot of folks. So when we look at the work that has been super profitable for agencies, we look at it in terms of countable work. And what we mean is work that you can really demonstrate an ROI, there’s a direct correlation between the spend and the ROI and Noncountable work on the countable work front. Some of the work that agencies have had really great success with profitability is PPC and SEO work, digital media buying and planning. And for most of those agencies, they’re not just living off the commission, but they’re charging a planning fee and a buying fee, and then a commission on top of that.

And then we’re seeing a lot of really interesting new things coming out with email marketing and lead gen. And so lots of agencies have sort of reinvigorated their ability to drive leads for clients. You know, 2023 wasn’t just a hard year for agencies. It was a hard year for our clients too. And so a lot of agencies had more requests around sales enablement and sales work that is closer tied to actually driving to a sale than brand. And some of the more sort of upper funnel kind of marketing work,

They want proof that the $1 they spend will make them $2 after you work with them. So being able to demonstrate that is, is one of the most valuable things for clients right now. Right?

So in terms of noncountable work, but still super profitable, a lot of agencies are, are really making a shift as, as the work we do together gets more commoditized, right? So anybody can find someone on Fiverr or Upwork to do just about anything, right? So as the, as it gets harder to charge, and I’m not saying that the people you find on Fiverr and Upwork do it as well, but the clients often can’t tell the difference. So as the, as the work we do, the the deliverables, the stuff we make gets more commoditized. A lot of agencies are shifting to spending more of their effort selling strategy and consulting. So a lot of the things that you used to give away for free to get the work to, to get the permission to make the things, now you’re getting more strategic about not giving that away.

’cause honestly, that’s, that’s what can never be commoditized, right? That’s you being super smart, you leveraging your decades of experience, you leveraging your industry knowledge to create a marketing plan or strategy that works for the clients.

And clients want you to, they’re, they’re hiring you to make sure that they’re making the right decision with each of their dollars. So that’s why the strategy, the thinking space, is in such high demand because our clients are hesitant in spending their marketing dollars. So they really want that expertise to tell them how to, to spend their money. Well, so the thinking space has been much more profitable than the, the doing space. So obviously the doing is still part of the bread and butter, but when you start with the, the thinking and you charge for the thinking, then that’s just gravy on top is all the

Bridge pure AGI, right? Yep. So on top of strategy and consulting, we’re seeing a lot of agencies making good money in video, and we’re not talking three day shoots. And, and you know, the, the big beautiful video we used to do on film, we’re talking about kind of run and gun social media video. And you’ll hear as we talk through the trends, that that’s something that clients are planning on spending more and more dollars on, is that idea of that they know that they need to have video in, in their, in their play set. The other place we’re seeing agencies making more money, where that is not really, countable work is in web, but interestingly, it’s not on web builds, it’s on maintenance and update packages.

So agencies are able to leverage that sort of monthly retainer kind of work where you’re constantly helping your clients improve their website. And that’s been super profitable.

One of the great things about that is that web builds tend to be project based. So after they’re done, a lot of agencies have struggled to have that, that ongoing revenue that goes after a website. So this way, at least every single website you build, you’re going to be building out those, those maintenance and strategies of how to use the website after the build, which keeps that ongoing revenue coming to the agency. So

For the agencies that didn’t lose AGI, one of the things that really saved the day was early on, actually probably back in 2022, last half of 2022, we were sort of ringing the alarm bells and saying, look, $150 an hour just isn’t cutting it. Our employees are more expensive, their benefits are more expensive, everything has gotten more expensive. And we as agencies haven’t raised our rates in like a decade, right? And so we really recommended that agencies raise their rate to $175 an hour or higher, and the agencies that demonstrated that they were profitable took that advice, right? And did that.

There’s a lot of fear when people say, well, I have legacy clients that there’s no way they’re gonna spend another, you know, go up to 1 75. And, but the truth is, is that our clients have kind of expected it. I mean, with inflation being what it is, cost of employees more, most agencies have reported that their clients have not batted an eye at the rate increase. And the truth is, is that most of the clients that didn’t agree with a rate increase we’re commoditizing the work anyway. And so, right. So a lot of client, so many of our agencies that we’ve talked to have said that it has really saved the day to have that 1 75 an hour.

And most of you don’t bill by the hour anyway. And so, again, unless the 175 is in your contract somewhere, it’s really just about your project pricing or your flat fee pricing changing a little bit. And most clients don’t notice, right? And so if you haven’t done that yet, you are behind the times and you need to catch up because it’s super challenging, I think it’d be profitable even at, at a buck 75 an hour, let alone it’s something less,

Right? And again, that’s the minimum really, because a lot of agencies are, can charge more depending on what they’re, again, not thinking strategic space tends to demand a higher dollar amount. But another thing that really saved the day was upselling to existing clients. We talk about this often, how important it is for your account team to really be the thinkers and the strategist with the client, and think of different ways to be able to add more value, look at what the client’s marketing objectives are and, and even what business KPIs. And really the business KPIs. So really rooting down deeper with the clients to be able, the existing clients to be able to upsell different ways for them to reach their goals.

That really was a, a savior because the client, the agencies that have kept the clients that they’ve already had, that’s where they really made some of the more profitable, more profit Yep. From those existing clients, for sure.

Another thing that saved the day was those of you that are doing sort of flat fee pricing. If, if you’re doing your estimates well, and you are using a, a tool like the hack that we teach, which is, you know, you figure out what you think your estimate is, and then you multiply it by 1.3. And that’s actually the estimate you serve up to clients, agencies that were able to build good estimates with flat fee pricing so that hopefully there was profit and margin built into that fee that it also helped them sort of stay.

One thing else I wanna say about upselling to clients that I think agencies that were really successful with this thought about new ways to serve their clients as well. So if you have a certain niche or they were really hearing what their, their existing clients were asking for and they found new ways to serve that need tended to even deepen the relationship with the existing clients and keep adding value, which essentially adds to the bottom line for sure.

So one of the challenges, of course, and we’re gonna talk about this in a second, but one of the, one of the demons that bites away at your profit is the way we over service clients. So we’re gonna talk about that in a little more detail in a minute.

Can I just say one thing? Yeah. I hate that term. It’s so interesting to me. We are over servicing. I think we get it in our term. A lot of agencies that talk about this that sometimes feel like over servicing is a good thing. And so we use that term. I think the industry uses that term. And I just want to say that I don’t think that’s a good

Term. What term would you use instead? Mm. Giving crap away for free.

Maybe that’s better.


Yeah, that’s better. All right.

Well, many of you give crap away for free.

Yes. Thank you.

Because you aren’t keeping track of time, you aren’t making sure that you’re sticking to your estimate. And so one of the way, one of the cures for that is we talk a lot at a MI about the idea of really understanding how billable your people are, meaning how much of their time is spent on billable tasks and how much of that time is actually translated to an invoice. So again, most of you don’t bill by the hour. So it’s not a, it’s not a, oh, drew worked 10 hours and all 10 hours showed up on the invoice, but it’s really about looking at the project fee and understanding how many hours went into servicing that project and did we line up dollar wise with how much we billed in terms of how much we clocked in our time sheets and how much of our that time showed up inside the bill that actually went to the client.

And here’s the thing about that. I think that it’s most important that you realize when you’ve had less work going through your account team wants to over service or give more crap away for free because they have the time to do it, we’re

Gonna want to trademark that.

So, okay, we should, okay. No, we’ll get that. But I think the most important thing is that it’s become a habit and our clients are starting to expect that, right? Even though the reason that that over servicing is happening for, for a lot of agencies is because they don’t have enough work to actually keep their account team busy on the things that they need to Well,

It’s not just the g it the production team.

Exactly. So we can do more rounds of revisions, we can do, because we have the space and we are, most of us are overstaffed because of all the things that have happened in 2023. So we want you to stop that. ’cause it’s one of those things that you’re, that are always going to chip away at your profitability. And it’s really, really important that the giving crap away for free stops. Stops.

So that’s actually based on Parkinson’s law. And Parkinson’s law says a task will expand to fill the amount of time that we allow for the task. And so for many agencies, to your point, that kept o basically stayed overstaffed because they had an amazing team and kept waiting for the work to come in. They had capacity. And so people wanna be busy and they wanna feel busy and they would rather feel busy doing billable work, right? Even if it’s not work that contributes, you can

Invoice billable, right?

So that, you’re right that, so when you start to track billability and utilization, and not just, you track it as the agency owner, but you track it and you talk about it as an entire team that actually solves a lot of the over-servicing or the, as we’ve now trademarked, giving crap for free issue. Because now your team’s sort of paying attention and when you help them understand what it costs you, every dot every hour that we give away for free costs, the agency hard dollars salary and overhead expense. And we can’t spend that time in a better place either servicing another client or chasing after new business or working on the agency’s marketing.

So there’s, there’s a huge cost in using those, do those hours inappropriately when we can’t sort of recoup dollars for that.

I’m really passionate about this, so I’m only gonna add one thing. I think that, again, as we’re saying, we want you to stop giving away things for free. We also want you to think about, again, to Drew’s point that that you pay for both the billable and non-billable hours of your team. So if you don’t have enough billable work and you’re keeping a team that’s too big for strategic reasons, they really, you need to be optimizing those non-billable hours to serve the agency. Those is, that’s your time. So although we focus a lot on billable time, there’s also the things that each position in your agency, each position, your agency might be lighter or more full during the waxes and wanes of your business.

And to be able to use that non-billable time to serve what the agency needs, right? Is really important. Then your people will feel that they don’t have to overserve clients, they can serve them in the way that they need to, but they can still add value to your agency because you’ve directed where those non-billable hours should go and given the the bumpers to be able to allow your team to really bring back more value. Right?

You know what, before we go into the trends that impact clients and biz dev, why don’t we take a quick break and then we’ll come right back.

Sounds good. All right. See you soon.

I promise I’m only gonna keep you a minute before we get back to the show. But I wanna remind you that the Build a Better Agency Summit, the annual conference where we bring 350 agency owners and leaders together is coming up May 21st and 22nd. May 20th is a MI Family day or member day. But whether you are a member or not, we would love to have you with us May 21st and 22nd to read more about the conference, see who the speakers are, or register head over to agency management institute.com and the very first button on the nav is BABA summit. Click on that and all the information is right there and we would love to see you in Denver in May. Alright, let’s get back to the show.

Alright, we’re back. So let’s talk about the trends that are impacting clients in biz dev right now.

Let’s do it.

So again, if you’re not tracking it, which is sort of the point of this trend, when when you’re paying attention to billability and utilization number one, your team starts to understand the importance of both of those metrics. So they stop over-servicing clients sort of willy-nilly. And two, you now have insight into how much capacity you have, where to your point, you can apply those hours to other more important non-billable tasks. Right? Something billable that we can’t actually put on an invoice isn’t any more valuable to us. And in fact, I would argue it’s less valuable than non-billable time that’s applied in the right place.

Agreed. For sure. Absolutely agreed. Yep.

So the bottom line is that when you start to pay attention to your staff’s daily time sheets, how billable they are, how much of that billable and billable, how much of the billable time shows up on an invoice value using the non-billable time, you start to sort of maximize the productivity of

Your team. And then you’re not just waiting for new clients or waiting for proposals that are out there. You’re still adding value to your agency. You’re paying for those out, those hours are yours. Right? So you are paying for those hours. So optimizing them to the best benefit of the agency, it’s incredibly important. Yeah.

So there were two big threats that are trending in terms of profitability, not a big shock, these are not, I would say new trends, but they continue to sort of plague agencies. The first one is what we just talked about, which is over servicing or giving crap away to the client. But the stat that I thought was sort of staggering was 55% of agencies wrote off more than 10% of their annual AGI. That is a, that’s crazy staggering

Amount. That’s crazy. It is a staggering amount

And and if you’re shaking your head and you don’t track how much time you write off, you could be in that category. Exactly.


So the other trend, and we will talk about this a little bit more when we get to the client trends, is there’s a, a dangerous combination of bad estimates plus clients being more fluid in how many changes they want and how often they wanna make adjustments in mid project. And if agencies aren’t holding clients accountable when a client changes the game or changes the scope of work, most agencies are not kind of raising the red flag and saying, absolutely we can do that, but we can’t do it for the same price because you’re changing what we agreed the project was so bad, estimates already put us in sort of an uncomfortable position.

And then when the client keeps moving the ball and we stick with our original estimate, which was not great in the first place, and now we’re adding more time and more energy because they’re, they’re moving the ball a little bit now the likelihood of us being profitable is even less.

Right? And I think, again, this is to the point of if your team doesn’t have enough work, they more readily accept those changes. And what we’re doing is we’re training our clients, our existing clients to be, be to be less than ideal clients. Right? So it’s really important, and I know a lot of agencies talk about that. They don’t wanna nickel and dime their clients and they feel like, oh, we worry about change orders or that’s a problem. But the, here’s the deal, you can decide if you wanna do more change orders without a cost, but the fact is that you should have them in your contracts. And because then it’s a conversation you’ve stated at the beginning that this is how many change orders changes you get.

And then during the life of the project you can say, Hey, I only have one more. You only have one more change left, or we’ll give you this one, one change more. But it allows the clients to have a shared expectation with you that it is not acceptable to do that, do the disservice of you as an agency business. Right?

And so one of the stats that was sort of staggering is that over 50% of agencies do nothing when they realize that they are over servicing the clients. So you at some point in time are looking at project projections or profitability numbers on an ongoing project and you realize that you’re out of scope, that you are doing more or have done more than you should and, and that 50% or more of us don’t raise a red flag, don’t say to a client, wait a second, we have to pause here. Things have gotten sort of off track again, is a huge threat to your profitability. The other threat to profitability, which we’ve mentioned before, is that a lot of agencies did make a very conscientious choice to not cut staff despite the fact that the numbers made it very clear that they were overstaffed.

And so, you know, a lot of you are coming out of covid and the great resignation and all of that, and you suffered through not only having bad employees, but having to hire whoever you could find at a premium price, right.

Need warm body.

Yep. And now you’re feeling like, I have a good team, we’re in a good spot in terms of sort of salary ratios. So you’re really loathed to let somebody go because you’ve kind of have, you know, a little bit of sort of a twitch around trying to find good people because it was so hard in the past.

Right? And so there’s this PTSD around it and understandable. So, but here’s the problem is that when we still keep the staff as long longer than we should and we don’t give ourselves a deadline, like if our numbers aren’t good in the next three months, then we have to make these hard decisions or six months we have to make these hard decisions. You know, it, it really impacts the bottom line and we all understand that PTSD going back from, again, not being able to hire good people and having over price salaries, but I think the bottom line to that is we

Yeah, well we’re sort of course correcting too far,

Right? Right. And so really getting, looking at how much it costs you to actually onboard and hire both in time and money and then making sure that that number is kind of balanced with you keeping your staff. So there has to be a time where you have to raise the red flag, like, okay, we cannot keep the staff. But again, we understand that it took a lot to get the staff that you have.

Yeah. But many of you, many of you carried that extra weight through all of 2023 and you can’t keep carrying the weight. You’ve burned through a lot of retained earnings. So the good news is, again, new business is sort of turning the corner in 24. And for some of you, you were able to avoid having to do layoffs, but we saw a lot of layoffs in the first quarter of 24 because you just couldn’t sustain that overinflated staff for as long as you wanted to.

All the promises or maybes from prospects were finally at the degree that you had to make a decision. Yeah.

So as we said before, the agencies that raised their rates to a buck 75 an hour or higher PR agencies are typically over $200 an hour just FYI. But the agencies that raised their rates in 23 were 45% more likely to be one of those agencies that did have a year over year increase in AGI.

So good for you agencies that did it. Yep.

Another thing we saw is the agencies that that posted profit in 23 were the agencies whose owners were out of the day to day. And the reason for that is really simple. You could actually do your job. And your job of course is wooing new clients, putting some effort and energy into loving on your existing clients to get more opportunity for them. But if you’re in the day-to-day throes of being the creative director or the lead account person on a big account, it’s hard for you to do your job. And what we keep reminding agency owners is if you don’t do your job, there is nobody else in the shop who’s gonna do your job. So profitability and agencies who didn’t serve clients every day was a direct correlation.

Absolutely. Well now we’re gonna jump into clients and business development. We’ve talked a little bit about business development as we’ve talked through the money, but some of the trends that we’ve seen regarding clients is that the data shows that they want more from their agencies and they change their minds with greater frequency. Right? So a lot of times clients will really put the pressure on their agencies to perform and get more and to do it more often. and they don’t let you know that they’re not happy until they’re ready to, to actually break break up with you. Right.

But in this case, what we’re really talking about is that inside a project, they are a pressing against budget and then on top of pressing against budget. So you’ve maybe already compromised on the budget. Now throughout the project they’re like, oh wait, we don’t want a four page brochure, we want an eight page brochure. Oh, we don’t want a landing page, we want a whole separate website or whatever. Right? And think back to the trend we talked about earlier, which is when a client makes a change over 50% of the time, 50% of the agencies don’t say, we absolutely can do that, but we can’t do it for the same price

Or in the same timeline. Right? So really we would need to figure out how to create more agile building to align with the client’s desire and the market’s reality of agile marketing. So this really is forcing agencies to rethink how we do the work and how we, how we lead the clients through the process to make them feel like they’re getting the value that they need and they at the speed that they need it at. Of course there’s always been that push and pull against, you know, time and budget, but the pressure on a lot of our clients and a lot of the marketing that our clients are doing is with the C-suite that they’re saying, we need more, we need it faster. And we have to figure out a way to adjust to the those needs because there’s always gonna be an agency that will or can show the value of what they’re doing to press back at the timeline.

Well, and again, if we, if, if we stick to the way we’ve always billed, which is oh, you want a thing, that thing is $10,000 and then we don’t change the $10,000 no matter how the client changes the project. Right? So your actual billing and sort of how you manage the client’s budget also has to be more agile to reflect the fact that they keep changing their mind.

Right? Exactly. So a lot of agencies that were successful at that would have these rebooting sessions with their client every quarter to really align their budget to the, depending the need, the success of what had happened with the marketing campaigns the prior quarter, and were able to utilize those dollars, their client dollars in a way that maximized the, the ROI, which we talked about earlier, or

To show the client how the fact that they keep making changes or they don’t show it to the CEO until the very last minute or whatever is actually burning through the budget Exactly. In a way that’s not really effective and it’s not helping them get to their KPIs.

Right. Exactly. Right. So going back to how clients break up with their agencies, we talked about how prospects to ghosting our agencies. So clients have also really made decisions about if they wanna still date their agency or be married to their agency very quickly. And the reason they fire us is they say we are too slow or we can’t tie efforts to ROI. Right. And this is something that you can see earlier when we talked about where clients are spending money is being able to understand if they pay a dollar, they’re gonna get $2 back. Yeah. And their data to be able to, to show that.

And the clients can prove that worth.

Yeah, for sure. Well,

I mean our agencies can prove that worth,

But clients have to prove it some somewhere inside their organization, they have to justify that spend. Right. So a lot of us are working with a VP of marketing or a director of marketing. They’re answering to somebody, whether it’s a CEO or a board or a business owner. And so when we can’t do that dotted line, right, between our efforts and the ROI, it’s difficult for them to justify the budget. But they’re also saying that, again, back to that sort of word, agile, that we keep using that our systems and processes and how long it takes us to do things they need to move faster. And if we can’t move faster, they’ll find somebody who can

Correct. Or we have to be able to show value sooner, even if we’re in the works of the how we need to do our process, our discovery, and to be able to do good work. Yeah. We need enough time to dig in. So I think it’s important for agencies to redefine how they show value earlier on in the process, while still being able to do the process they need to do. But we need to give them deliverables. We need to, we need to show that there’s action being done that actually allows them to get more dollars back for the dollars they spend sooner.

Yeah, for sure.

So here’s the data. So many clients did say goodbye to their agencies in 20 23, 20 4% of agencies reported they have no client losses. 37% of agencies lost about 10% or less of their AGI from clients breaking up. 11% of agencies lost about 20% of their AGI, and 21% of agencies lost 30% or more of their AGI last year. That’s, that’s, that hurts significant.

That hurts. Yeah. And we had, we had some agencies, granted it was a handful, but we had some agencies that were at 50 to 75% of their clients walked away. And, and one of the things we heard in the 2023 research was that when clients, when they first get in their head that they might wanna fire their agency, we have less than a month before they actually fire

Us. Right.

Right. and they often are not having the I’m not happy conversation. Exactly. They just break up with us.

Exactly. and they ghost you. So it’s really important that we understand that this is especially important for agencies that have a gorilla. Obviously when we lose a client or lose a series of clients and it really hits our AGI, like the statistics show, think of the agencies that have the gorilla that when the gorilla leaves it, it puts your AGI, you know, 50% out the door. And we talk often how important it is to diversify your client base. We know that no agency will say no to a gorilla. However, it’s so important that we diversify enough so the gorilla cannot cause as much damage as it will because when clients say goodbye, they’re ready to go.

And if that’s a gorilla, the the repercussions are a lot greater and steeper for agencies.

Yeah. Just This week, I had a client text me and then we got on a phone call, but they had a, they had one client that was a gorilla was 55% of their AGI and they got 90 days notice. And

So, and that is not the first,

That’s, you know, a third of their staff Yeah. Has

To go. Right. Right.

So it’s painful.

It’s very, very painful. So diversify, diversify, diversify. For


So first party data is finally on the minds of our clients. They, we’ve been talking about it for a long time. They’re finally feeling the pressure on what that will mean for them. They don’t necessarily understand it or how to get it, but they know it’s important. So agencies that do understand and can walk them through the process are really, are, are thriving in this space with our clients.

I think it’s a huge opportunity for agencies to be able to offer programs and efforts to build first party data. But honestly, I don’t think we’ve done a great job of helping clients understand Agreed. Even what it means.

Right. Or the

Consequence of not having

It. Right. Yeah, exactly. Yeah. I think we underestimate our role as instructors and teachers with our clients. Sometimes we decide that we are just gonna react to their needs. However, it’s part of our job and our expertise to walk them through and educate why it’s important. And being able to put the, that learning with your account team, with your new business team so they can understand how to talk to their clients about it and why investing in it matters. Yeah.

That’s probably true about a lot of things, right? That we don’t often, we don’t often think about how can we better educate our clients or our prospects.

Absolutely. Yep.

Alright. The last trend for this episode is a big one.

All right. It’s a big one. Clients are demanding attribution. That part’s not new. No, that isn’t. So I was gonna say no. So they are demanding attribution as we talked about. So it’s really important that we are able to do that. And the way that agencies are doing that or how they’re exploring how to serve that need is they really are looking at data analysis in a new way. We agencies just need to use advanced data analysis. I hear this all the time. We hear it all the time with clients that they send all of this important data to their, their clients. and they don’t read it. They don’t look at it. But the, here’s the deal, we have not actually told them how the data matters and why they need, how their marketing will adjust based on that data analysis.

So some agencies are actually, this is a new role for many agencies. They’re looking to invest in an actual data analyst or their role in their agency, even the small and medium sized agencies that we talk to and ai as we obviously that’s a huge trend. Well can help us get there as well. So understanding the data that makes a difference in the work that you do and how to teach your clients about what that means, how it adjusts to their changing business needs will really help us get there.

Yeah. So one of my favorite sessions at the 24 Build AED Agency Summit was a guy named Jim who, he was one of the keynotes and his topic was data, data everywhere, but not a thought to think. And what he talked about was there’s, we have a plethora of data, but we don’t know what to do with it. And agencies, our clients are looking at us and saying, what does this mean? And we have to be able to really dig into it. Because when you think about the, the, the demand for attribution, that’s not new. But when you think about all the trends we’ve talked about today where most agencies were flat or lost money, most agencies, if a client broke up with them, it was 30 days or less.

Yep. We are over servicing clients, we are bleeding in all kinds of places. We have clients that want accountable work. Right. It all kind of rolls up to this idea of we have to be able to be very clear about demonstrating how we actually add to the bottom line that’s all about attribution.

Absolutely. And the key to this is that it can’t be just really having a data analyst is one thing, but our AEs need to be well versed in being able to show attribution and how to talk about it. So even before this data analysis became even more prevalent and needed, our account team always felt a little behind because we focus on how they serve clients, how they communicate clients, but they really need to understand what we are doing for them and how it’s impacting them through the data. Right. So training your account team to be more comfortable in, in talking about it with the clients is really beneficial. Yeah.

Okay. So this wraps up the money and clients and biz dev side of the trends and, and we’ll be back next month to talk about the trends that are impacting agency owners and and employees. But before we let you go, of course we need to say thank you and send a lot of love to our friends at White. Label IQ.

Yes, thank you.

As you guys know, they are the presenting sponsor of podcast and have been with us for several years and we’re super grateful to them. So they are born out of an A MI agency. Actually, they understand the problems that agencies have around web dev design and PPC. And in fact they, they came into being because they as an agency, were trying to figure out how to do those things more effectively and efficiently and ended up creating a whole separate business, which they then decided to offer to other agencies. So to learn more about them and how they partner with agencies, how they price in a way that is favorable to agencies, head over to White Label IQ dot com slash i and you can learn all about how your first project with them.

They have some free hours for you. So many thanks to them and thanks White label. Yep. They’re awesome. Many thanks of course also to all of you for listening and being with us every week as we publish a new episode. So we’ll be back next week with a guest and five weeks from now, Danielle and I will finish this trend series by looking at acting owners or employees. Until then, you know how to reach us. We are happy to hear from you in the Facebook group or by email and we will see you next week. Yeah. Thanks for listening.

Thank you.

That’s all for this episode of AAMIs Build. a Better Agency Podcast. Be sure to visit agency management institute.com to learn more about our workshops, online courses, and other ways we serve small to mid-size agencies. Don’t forget to subscribe today so you don’t miss an episode.