2022 is going to be a hugely interesting year for marketing growth and development. The lasting effects of the pandemic have altered many consumer patterns, creating new challenges as well as opportunities.
Here, we gaze into the crystal ball of 2022 trends and look at five opportunities you can take to develop your brand in the New Year.
Influencer marketing is set to reach $13.8 billion in 2021 and many anticipate this will only grow in 2022.
This was a huge growth market in 2021, the industry even saw the formation of more than 200 dedicated influencer marketing agencies. So, in 2022 and beyond, the space is only going to get more competitive and vying for positions. Attention will become much more strategic and partnerships must be much more considered and personalised.
What is intriguing is that engagement rates have proved to be better for micro-influencers than for the stars of social media. Brands will do well to factor this into their marketing strategies moving forward.
The digital fatigue experienced by the general public during the lockdowns of 2021 will likely shift into 2022.
A combination of furlough, work from home and overall online overload led to a massive digital fatigue in the later parts of 2020 and into 2021, with people actively moving away from digital platforms for rest and respite.
What is intriguing is that, for so long, industry individuals have been predicting the demise of offline marketing. But, if digital fatigue continues to grow, then there is an argument to be made that the offline space is there for those who seize the opportunity.
As Instagram continues to prioritise video content as well as the continued growth of YouTube shorts, it won’t be long before video content begins to shape social media metrics and algorithms.
To stay ahead of this curve, brands need to adapt their content strategies to focus more on the creation and delivery of high quality, short videos.
Brands have been finding huge success with TikTok and there’s no surprise to see the likes of Calvin Klein and the NBA as two of the year’s most popular accounts. However, it’s refreshing to see the likes of the Washington Post and the World Health Organisation finding huge success through this medium.
So, there’s an opportunity here for non-traditional TikTok brands to start carving out a niche for themselves.
Gen Z: content marketing
Marketers have been obsessively focussed on Millennials for the last 20 years, but now we’ve reached a point where the Millennial population has capped out, as the first wave are now approaching their 40th birthday.
Gen Z audiences now present a much more diverse and much more digitally native audience than their millennial predecessors. From a content marketing perspective, this can be an absolute dream as it potentially opens a brand to more opportunities and a more diverse crowd.
For many of us, the season of good cheer comes with the stirrings of looking ahead and contemplating new year’s resolutions. Various studies indicate that 50% of us make resolutions only for 20% of the cohort to follow through beyond February.
Surprisingly, we rush to set resolutions without stopping to consider properly our current status. To my mind, the drop off statistics are explained not by weakness of will, but rather by a lack of an informed resolution choice. It’s a bit like getting in a car for a long journey without bothering to check the fuel gauge.
If we knew where we stood on a few key life headings (exercise, sleep, relationships) before making bold promises, we’d be able to set the right direction and stay the course well beyond the arbitrary 12 months.
Before you rush to make pledges for 2022, why not check in with yourself meaning your resolutions will be from a position of insight and strength? If you need a helpful tool or two, do get in touch.
As we approach a new year, Bristol Creative Industries editor Dan Martin looks back at 2021.
It has been another very challenging year for business. We started 2021 with the pandemic continuing to take hold and we sadly end it with COVID-19 still very much dominating the headlines.
As restrictions eased over the summer and we saw a welcome return to in-person meetings and events, we were hopeful of a return to business as usual in 2022. However, Omicron looks set to have put paid to that with new restrictions very much on the cards in the new year, if not sooner.
But if there’s one thing we know about creative industries businesses in our region, it’s your resilience and creativity!
We’ve seen so much innovation over the past 12 months and we are delighted to see increases across all our membership categories as businesses looked to the network to boost knowledge and form new collaborations.
Our total membership is up 50% over the year with business membership seeing a 26% increase. In addition, individual membership has risen 20% and our student membership has grown by 123%.
Chris Thurling, chair of Bristol Creative Industries, said: “Despite the immense challenges of the pandemic, the year at Bristol Creative Industries has included many positives.
“The situation has encouraged more businesses to see the value of connecting, networking and collaborating. It’s great to see an increase in our membership, our events remaining very popular and the growth of many member businesses. At times throughout the year, our jobs board has featured more jobs than ever before!
“The prognosis for the creative industries in the region is a healthy one. In many ways, lockdown has liberated the creative industries from the south east. Many have realised that to build a successful business, you don’t need to be in the centre of London.
“People still want to be near a strong ecosystem and Bristol and Bath have got the combination of factors needed to be competing as alternative locations for creatives.”
The year kicked off with a big announcement as we revealed the new BCI board of directors. They are Julz Davis, Marissa Lewis-Peart, Heather Wright, Gail Caig and Dr. Susan McMillan.
As we said in January: “The diversity of Bristol’s creative industries is something we are immensely proud of, but we also recognised the need for our board to better reflect that diversity. We need individuals who can bring different perspectives and experiences and help us widen our reach across the city. That will help us to future proof the organisation and better support our members.
“We are extremely grateful to the stellar line-up of individuals who have joined our board. With their incredible expertise, they will help us build stronger connections with creative businesses, government organisations and individuals in all corners of the city.”
Talent and diversity remained a strong theme throughout the year and a focus of our efforts to support our members.
It’s a subject we discussed with Heather Wright, the BCI board director who spent 22 years at Aardman, during an in-depth interview in July.
She said: “You get a better quality of idea when you have lots of different windows on the world in front of you. Everybody comes with a different window and a different viewpoint. The more ideas you have in the room from different places the better.
“That’s the problem with the Westminster bubble; they talk to people like themselves all the time. The only way to break out of the bubble is to go further and have a greater diversity of ideas. That comes from a greater diversity of people including ethnic diversity as well as age, people who are less able bodied etc. It’s all about having people with something different to bring which is not the usual employing people in your image which is often the worst thing you can do.”
In September, we launched The Talent Network which gives 17 to 21 year-olds the opportunity to network with creative employers in Bristol and Bath.
The first event allowed young people to find out what skills creative employers are looking for – now and in the future – and to ask the questions they’ve always wanted to ask such as ‘how do I get a job in TV?’, ‘What skills should I focus on?’ and ‘How can I turn gaming into a career?’.
Chris Thurling, BCI chair, said: “A common challenge for our members is the struggle to hire a workforce with the right skills. There are, however, lots of young people with the skills needed but they don’t know the pathways in.
“BCI is there to do the things agencies can’t do on their own and by adding our unique capabilities, we can help tackle the challenge of connecting talent to businesses. We have already started with initiatives like the Talent Network but it is just the start of many things to come.”
We had a busy events programme this year including our monthly virtual members’ lunches where we love catching up with lots of you.
We’ve also had many workshops and keynote events. Big thanks to all the experts for sharing their expertise.
January:
BCI board member Marissa Lewis-Peart led a student networking event and Kit Altin led an online workshop on writing the perfect creative brief.
February:
David C. Baker, described by the New York Times as “the expert’s expert”, joined us from the US for a brilliant keynote event covering how creative businesses can write the perfect positioning statement. We’ve summarised his tips here.
March:
Social media expert Drew Benvie told us all about the app that everyone was talking about, Clubhouse. Read a summary of his tips here.
Digital agency mentor Janusz Stabik began a series of three workshops explaining the strategy needed to run an efficient and effective agency. Read Janusz’s blog post on how to attract better quality agency clients in three easy steps and download his free strategic growth planner for digital agencies.
Lawyer Rebecca Steer from Steer & Co delivered a Brexit and Covid-19 legal update. Find the latest legal news and advice on Rebecca’s blog.
Katie Scotland began a series of four workshops to help attendees use their strengths to feel more confident, have more impact, build better relationships & create more inspiring ways of working with others.
April:
Paul Feldwick worked at the legendary creative agency Boase Massimi Pollitt for over 30 years. His latest book, Why Does the Pedlar Sing?, examines what creativity really means in advertising. He joined us to share some of his insights. Read a summary here.
May:
The team at Tonic Creative Business Partners shared perspectives on what makes great content.
June:
Kit Altin returned for a workshop on how to be more persuasive, and Tom Evans, co-founder of strategy, design and communication agency BEHAVIOUR, shared advice on presenting creative work.
August:
We held our first in-person event for many months as a group of BCI members joined us to discuss funding for creative businesses. Attendees said it would be useful if we could provide regular updates on the finance schemes that are available for creative companies in the south west and beyond. As a response, we published this post and we’re keeping it updated.
September:
We ran a networking event with a difference as a group of members donned their walking boots to explore the beautiful Mendips. The feedback was very positive and we are planning to run another Walk & Talk event with Outside next spring.
Andy Nairn, who has been named the UK’s number one brand strategist for the past three years, joined us for a fascinating and entertaining event. In his new book, he explains how the history of marketing and advertising is full of brands that stumbled across great ideas by accident or turned misfortunes into huge successes. During the event, Andy highlighted examples and outlined the lessons for creative companies. We summarised his insights here.
Consultant Mette Davis-Garratt and Morag Ofili from Kiltered began a brilliant five-part series to help people make sense of what diversity and inclusion means for their business, why it matters, and how to turn the conversation into action.
October:
With the aim of giving 17 to 21 year-olds the opportunity to network with creative employers in Bristol, we launched a new collaborative initiative called The Talent Network. We teamed up with education provider boomsatsuma for the first event and gave young people the chance to find out what skills creative employers are looking for and to ask the questions they’ve always wanted to ask.
If you’re a creative industries employer and would like to get involved in The Talent Network, please contact [email protected].
Anne Thistleton, who has spent over 20 years as a marketing practitioner in the field of mind science, joined us from South Africa for an online event where she shared fascinating insights about how understanding the way the human mind works can help creatives build more effective campaigns. Here’s a summary of her brilliant advice.
One of the benefits of Bristol Creative Industries membership is publishing your own content on our website. We love reading your news!
BCI members have won plenty of awards this year including Unfold, Mr B & Friends and Launch.
Other reasons to celebrate included Atomic Smash becoming a WordPress VIP Silver Agency Partner, the opening of Gather Round’s second co-working space in Bristol and Gravitywell being named among the top app developers in Bristol.
Congratulations to you all!
We’ve seen some fabulous innovation by BCI members for great causes in 2021. Here are some examples:
We love behind the scenes peeks at our members’ businesses and this post is one of our favourites. It’s the story of how digital designer Mayumi Kurosawa has overcome incredible odds to get to where she is today – a much-loved member of the Proctor + Stevenson team.
Bristol is home to some of the best arts organisations in the UK and we were delighted to welcome two of them – art gallery Royal West of England Academy and concert hall St George’s Bristol – as members in 2021.
BCI members have also shared some brilliant business advice in 2021. Here are the 20 most popular posts.
You can read all the news, advice and updates from BCI members here.
Looking at wider happenings for the creative industries in Bristol and Bath, 2021 has been a huge year for film and TV production in the region.
In a very popular article, The Guardian said: “TV crews are falling over each other to film drama in ‘Bristolywood'”, with a 225% rise in production on pre-pandemic levels. There were four major drama productions under way in Bristol in 2019/20. That grew to 13 during the first quarter of 2020/21 and since January this year, 15 high-end TV dramas have been filmed in the city.
Among the high profile shows calling Bristol their home are The Outlaws, the comedy thriller from local boy Stephen Merchant, and BBC legal drama Showtrial.
Forget James Bond, here’s the red carpet event of the year. Premiere of my new show The Outlaws last night – and proud to hold it in my hometown of Bristol. #theoutlaws pic.twitter.com/YCmlFWhF3d
— Stephen Merchant (@StephenMerchant) October 5, 2021
Bath has also been popular with production companies including being transformed into a winter wonderland in the middle of autumn for the new Willy Wonka movie with Timothée Chalamet.
Animation is a big deal in the region too, thanks to the likes of Bristol Creative Industries member Aardman, which has recently launched Robin Robin on Netflix.
Speaking of Netflix, the streaming giant organised a special event in Bath’s Assembly Rooms in November to celebrate the success of its productions made in the South West. The location for the event is featured in global hit Bridgerton.
As the film below shows, the UK economy has been boosted by over £132m over the last two years as a result of Netflix productions created in the South West of England.
You are currently viewing a placeholder content from YouTube. To access the actual content, click the button below. Please note that doing so will share data with third-party providers.
In other broadcast events this year, Channel 4, which opened a creative base in Bristol in 2020, delivered its evening news programme from Bristol Beacon on 10 September. It was part of the Black to Front project, a day of programming featuring Black presenters, actors, writers and experts, contributors, and programme-makers. The one hour news broadcast featured a wide-ranging discussion on contested heritage, Black Lives Matter and Bristol mayor Marvin Rees on what has happened since the toppling of the Edward Colston statue.
Publishing its “blueprint for the future”, the BBC said it will expand its BBC Studios base in Bristol. BCI chair Chris Thurling said: “Spreading investment more evenly across the UK is the right thing to do, and I welcome the BBC’s explicit commitment to Bristol.”
The creative industries education sector continued to grow in 2021 with the breadth of courses on offer to the next generation demonstrated by this guide we published in October to further and higher education in Bristol and Bath.
BCI member bootsatsuma has done some great things this year including an innovative street poster exhibition showcasing the work of some of its brilliant students.
Access Creative College resurrected Bristol’s iconic Bierkeller as an events and education space. The venue previously welcomed some of the biggest names in music to its stage, including Nirvana, The Stone Roses and Arctic Monkeys.
Despite what has been another hugely challenging year for the arts, you could still get your cultural fix in Bristol and Bath with artists and others adapting to the need for safe and outdoor events.
Street art festival Upfest was cancelled again but more than 75 murals were created on the walls of south Bristol for locals and visitors to explore during their own personal walking tours.
Bristol artist Luke Jerram, who has achieved international success, brought his stunning In Memoriam installation to the city’s College Green in October. It was created from over 100 flags, made from NHS hospital bed sheets as a memorial to losses during the COVID-19 pandemic and in tribute to the NHS, health and social care staff and volunteers who have given so much to so many.
Luke Jerram’s spectacular Museum of the Moon, a suspended model of the moon measuring seven metres in diameter, went on show in Bristol Cathedral in August and is displayed in Bath Abbey until Christmas Eve.
As the COP26 conference took place in October, an art piece was installed in Pulteney Weir in Bath to highlight the climate change emergency. Sinking House is a red 5.5m by 3.5m house semi-submerged in the water.
The brilliant Love Bristol campaign continued with the painting of socially distanced hearts which were perfect for sitting with your household or group of six to enjoy takeaways from nearby businesses in the spring sunshine.
The festive edition of the campaign is Christmas Adventures, a trail of illuminated lyrics from classic Christmas songs.
Royal West of England Academy launched a multi-million pound renovation project with pop-up exhibitions in other venues around the city so people can still enjoy the art.
We end the year with uncertainty. As a new variant of coronavirus takes hold, it’s possible we will see in the new year with more restrictions. It may not be a full lockdown but we’re likely to return to Zoom calls, takeaway eating and quieter streets.
There is much to look forward to though. We have been so impressed by the continued resilience and innovation of our region’s creative businesses in 2021 which stands us in good stead for the future.
BCI is here to support and we urge you to take part in our super important survey so we can shape our future support and advocate to the government what the region’s creative economy needs.
As we wish you all a fabulous Christmas and brilliant new year, we’ll close with the words of Alli, our membership manager, from her interview in September:
“We help members to learn, grow, and connect. It’s through connecting that people learn and grow. We are a community of people who have a common interest of working in or being interested in the creative industries in Bristol and the surrounding area. We’re the central hub that brings everyone together.”
One of the big benefits of Bristol Creative Industries membership is the ability to self-publish content on our website. We’ve seen lots of great content published in 2021 including some brilliant business advice. Here are the 20 most popular posts of the year.
Chase Design Group examines the legacy that COVID-19 will leave for brands, and what newly adopted trends and ways of communicating should stay with us. Read the post here.
Having a strong organisational structure in place is key to growing your digital agency. Janusz Stabik explains your options and how to know which structure will guarantee employee and customer satisfaction and allow you to scale your marketing agency. Read the post here.
Carnsight Communications is one of the most prolific BCI bloggers so it’s no surprise that the business has made the top 10. In this great post, company founder Jessica Morgan outlines what her previous career in marketing taught her about public relations. Read the post here.
After the couple of years we’ve all had, the mental wellbeing of employees is increasingly concerning. Armadillo explains how the approach to mental health in the workplace needs a culture change. Read the post here.
Janusz Stabik makes his second appearance in the top 10 with tips on how digital marketing agencies can attract high-quality clients. Read the post here.
In another post from Carnsight Communications, learn five key things to remember when looking to secure engagement on LinkedIn. Read the post here.
Looking for your business to make headlines? OggaDoon shares top tips on how to write the perfect press release. Read the post here.
Brands can’t lead the conversation on social media, says AMBITIOUS in this great post. Read the post here.
“As joint leader of an independent agency, 2020 meant sleepless nights. But it provided opportunities to inspire others and galvanise our team,” says Andy Brown, chief financial officer at Armadillo, in this post outlining leadership tips for 2021 that will also serve us well in 2022. Read the post here.
How can an entrepreneur attract the perfect investor? Gravitywell outlines six qualities investors look for in tech startups. Read the post here.
Want to post your own content on the Bristol Creative Industries website? Become a member.
Some B2B brands find social media a challenge but there’s lots that you can do as this post by AMBITIOUS shows. Read the post here.
The winning agencies will be the ones with an uncompromising focus on their culture, looking at how they can support their people to be their best selves and do era-defining work, says Tonic Creative Business Partners. Read the post here.
If there’s anyone who knows about being successful at blogging, it’s Helen Savage from Blog Write Ltd. She shares some great tips. Read the post here.
OggaDoon shares a list of 10 essential features you didn’t know you could use with Google Ads. Read the post here.
Sparro House Creative Ltd outlines three tips to improve your content marketing. Read the post here.
If your primary audience is other businesses, then case studies are the perfect tool for creating authority, building trust and delivering social proof. George Devane shares some tips. Read the post here.
The phrase ‘SEO; now covers optimisation strategies and techniques on a wide range of different websites including Instagram. Varn outlines how to improve your SEO on the social media platform. Read the post here.
Leaders and managers have often received little to no training in how to have a ‘difficult’ conversation and so we end up avoiding the situation altogether until it becomes really serious. That can mean getting into performance management, grievance procedures or even worse. Jonathan Rees shares advice. Read the post here.
Chris Thurling from Armadillo provides his advice on what to consider when seeking out a marketing agency that’s suitable for your business. Read the post here.
As you prepare to hit send on your latest business mailing, ask yourself whether it would pass the ‘hover test’. Here are five easy ways, shared by Carnsight Communications, to make sure it does. Read the post here.
Please respond to our new survey about the creative industries in Bristol and Bath. It will help us design – and advocate for – future support for the creative economy in our region.
For many of us, sales and business development is the one part of running a digital agency that just doesn’t come easily. Sales calls can feel awkward, forced and sometimes completely disingenuous, and so, we avoid them altogether. But what if the most effective sales calls weren’t sales calls at all?
In this article, I’m going to share my top tip for helping you conquer the fear of communicating with your potential, existing or lapsed clients to land sales. I’ll also prove just how well it works with my very own, very real example.
In my experience, some of the most successful, fast-growing agencies are led by innovative, intelligent and tech-savvy operators. These agency leaders were obviously so successful in their specialist field, that they were able to form their own agency and offer their service to businesses and brands on their own terms.
The trouble is – being a brilliant developer, software designer or digital strategist means you’re often very comfortable behind a computer screen and usually not so comfortable making sales calls. And after all, the best sales and BD strategies usually involve a lot of face-to-face conversations, networking events and generally spending time without your noise-cancelling headphones on.
The good news is, there’s a hack to checking in with your clients & prospects while still being able to avoid those awkward sales calls (this is where I get to the part about chicken wings).
At Digital Agency Coach, my fellow coaches and I don’t take an awkward role-play or scripted approach to helping agency owners develop their sales skills. For years now, we’ve been helping agency owners circumvent the system and land sales without making awkward sales calls.
The trick is to a) remember that your clients are human beings – they’re people with hobbies, favourite sporting teams, pet peeves and favourite restaurants; and b) communicate casually, genuinely and informally with them on a regular basis – chat about your common interests or things that are important to them in order to build a relationship.
It sounds simple, and that’s because it is – but it genuinely works. If you’re dubious, take this real-life conversation below as an example:
Just this week, I had reached out to a former client to simply ask about the name of a restaurant he recommended.
This short, simple and motive-free message nudged me to the front of his mind and prompted a response about coaching.
This simple example perfectly demonstrates how building relationships and checking in with your contacts to spark friendly and non-business related conversation is a great way to make sales calls, without making sales calls.
Pro-Tip: Like all sales efforts this one works best when paired with manageable KPIs. Set yourself a target of 3-6 messages, calls or interactions per day and keep yourself accountable. For tips on setting effective KPIs, check out this article about Lagging vs Leading KPIs.
At Digital Agency Coach, we understand that while agency owners are all brilliant, they are human too (just like their clients).
That’s why we use tactics just like this one to help all agency owners land more sales and achieve stratospheric growth for their agency to gain more profit, more time and less stress – no matter where their strengths may lie.
This year we are celebrating Studio Giggle’s 15th Birthday. Like all great British ideas, the company was conceived in a pub over a beer. It was born out of a desire to create work on the cutting edge of technology and creativity, which is still at the very core of what we do.
When I asked Steve about the intriguing name, he smiled; it’s a question he’s been asked many times.
“Giggle really sums up the way we work. Creativity should be fun! It is often stressful, but by keeping a sense of humour and a lightness to our approach, we can make the whole process more enjoyable for everyone involved.
The creation of The Giggle Group wasn’t a spur of the moment decision. Steve had honed his skills over ten years, starting in theatre then working for various production companies as an editor, director and writer. He met James Carnaby and Adam Castelton, who helped him set up the company and whose continued support and advice are always welcomed. It was this experience that prepared Steve to open The Giggle Group in 2006.
In 2013, two worlds collided as Steve met Jonathan Brigden on a flight to Dubai as part of a UKTI creative industry mission. Jonathan had been running his own company, Knifedge, for 19 years. Knifedege created immersive and innovative events and groundbreaking projection content for an impressive list of global clients. It was evident that Steve and Jonathan shared similar creative ambitions, a love of immersive and live events and most importantly, a sense of humour. We also moved to our current home in the heart of Bristol’s creative community at The Paintworks.
In 2014 when Jonathan and Steve decided to merge their companies, they could create one cohesive animation and event machine.
In 2017 a new era of Giggle began when we rebranded from ‘The Giggle Group’ to ‘Studio Giggle’. This better reflected the growth and transition of the company over the years, from film to animation to creative studio. The “Studio” part of the name was to draw attention to the incredible team, which enabled us to deliver our award-winning work.
In its 15 years, Giggle has weathered some major global events. In 2008 Giggle overcame the financial crash by switching the company’s focus to animation over film production. In more recent years, the Giggle team showed extraordinary skill and creativity during the early days of the COVID19 pandemic. This was a challenging time for the company as we shifted to a remote working model and pivoted our production pipeline to deliver virtual events. This resulted in our most successful year to date. We won Manchester United as a new client, we hired 4 new staff members and developed XR and Virtual production solutions, all in just 6 months.
Studio Giggle in 2021 is a very different company from The Giggle Group of 2006. We now have offices in Bristol and Brighton, with our own Green screen virtual production studio which doubles up as our R&D test space. We can deliver live and virtual events anywhere globally, producing work for some of the biggest brands on the planet. As 2021 comes to an end, and we take a moment to celebrate 15 years of Giggle, we also look to the future. We intend to continue to create spectacular content for both live and virtual events, combined with beautiful animation and film with storytelling at their heart. We aim to always be at the forefront of our industry. We will continue to research and develop new technology solutions that can enhance the work we create for our clients.
We would like to take this momentous occasion to thank all of our team, suppliers, partners, freelancers, family and friends but especially our clients. Their continued trust and belief enable us to evolve and grow in ways we could never have imagined.
Roll on 2036 for our 30th Birthday!
If this has inspired you to work with us then please contact [email protected] or call 0117 972 0081.
Those extra special legacy clients were the reason you were able to build your agency up to what it is today…but are they now limiting your continued growth? Hear me out.
In my experience, a lot of digital agency owners have a number of legacy clients on their books, clients they’ve worked with for years and years, with who they love and who have really positive relationships. The trouble is, these clients have been around since day-dot and all these years later, they’re still paying day-dot prices which are breakeven at best, and entirely unprofitable at worst.
This is troublesome for a few reasons, some more obvious than others.
Firstly, these clients are unprofitable and are costing the agency money – but the long-standing relationship actually means the agency owner feels beholden to them so they keep the work and grin and bear the cost of doing so – which impacts your bottom line.
Secondly, in an agency environment, the service on offer is essentially time – time spent by your employees to complete certain tasks for your clients. When these legacy clients, who are already getting an absolute bargain, start to encroach on their fair share of the agency’s team and billable time, the loss to the business compounds.
Suddenly these breakeven clients are costing money, and worse still, everyone in the team is tied up servicing them and there’s no capacity left to service the profitable ones.
I’m referring to the Pareto Principle (or 80/20 Rule). Which in this instance, means that 20% of an agency’s clients, should be generating 80% of the overall revenue.
While this is essentially just a model, in my experience the Pareto Principle absolutely rings true for digital agencies – if you have doubts, export your own client list and test this out for yourself!
With that in mind, and given what we’ve just unpacked in the paragraphs above, it’s clear that the revenue potential and the path to success lies in the hands of an agency’s top 20% of clients.
Allocating your resources (human or otherwise) to servicing those highly profitable clients, rather than the unprofitable/breakeven clients, is what’s going to grow your agency.
This doesn’t mean over-servicing these clients and doing more billable work for free. Instead, think about what your team can offer in order to maximise your client’s business. Perhaps you have a PPC team, who up until now were tied up servicing an unprofitable client – you could pitch your PPC service to your profitable client to complement the SEO work you already might be doing.
Offering more services to these clients will a) make your client’s know you have a genuine interest in the success of their business and b) generate more profitable revenue for your agency.
Raise your prices, drop your unprofitable clients & make the profitable ones feel like royalty.
Start by exporting your client list, sort them by revenue and then calculate their gross margins. You’ll be able to see quick-smart which accounts are profitable and which ones are not. From there, your next step is to raise your prices to a profitable level so that both your clients and your business are winning.
In my experience, there are three potential outcomes when it comes to proposing a price increase – so here’s my advice for every eventuality:
Everybody Says Yes – Great, now all your clients are profitable and your agency will continue to grow, and they’ll continue to receive high-quality service as you can now afford to do so.
Some Say No/Some Say Yes – Fine, losing a handful of unprofitable accounts won’t impact the profitability of your agency. The reality is, they were costing you money, so by letting them go, you’re still in the black.
The ones you have retained, have agreed to your price increase. You’re now making a healthier margin that covers the cost of any clients you had to let go of.
Even better, the time your team were spending to deliver the service for the unprofitable clients, can be reallocated so you can give back to your top 20% of clients who are generating 80% of your revenue.
Worst Case Scenario, They All Say No – Another positive outcome. These clients were costing you money and now they’re out of your hair. With fewer clients, you might have to slim some costs and reduce the size of your team – now you have a leaner agency that is easier to manage.
This might sound a little counterproductive, but you’re still guaranteed to be generating the same profit because you’re no longer losing out on the unprofitable clients.
What I’m trying to get at is, don’t fret about losing some clients who aren’t prepared to pay you the margin that a) your work deserves and b) you need in order to grow your agency. Chances are, your loyal, legacy clients will want to support your business and continue working together and will happily agree, which will cover the cost of any who might say no.
If you need any help increasing the profitability of your agency then Get In Touch with my team at Digital Agency Coach.
We’ve helped hundreds of clients achieve stratospheric growth through strategies just like this and we’d love to help you too.
Me and my team of experienced and dedicated Coaches are here to help you understand your business better and the best growth strategies for you, your agency and your team.
In a recent value-packed webinar about what the high performing agencies do, I shared the importance of knowing, understanding and keeping on top of your gross margins and the impact this has on your agency’s long-term success.
I’ve plucked out the key takeaways from the presentation and put together a valuable and actionable guide to gross margins, to help you accelerate your agency’s growth.
In this article, I’ll unpack exactly what gross margins are (and are not), what a good gross margin looks like and how to fix your gross margins if they’re not up to scratch.
When it comes to digital agencies, gross margin is a simple calculation using the direct costs of delivering a specific service and the price at which you sell it out – the gross margin is what’s left in the middle.
In a product-based business, like a chippy, the gross margin will be what the customer pays for the chips, less the cost of the potato and the labour required to peel & cut them. It might cost the chippy £1 to buy the potatoes and 50p in labour to prepare them, which means when they sell them for £2 the gross margin is 50p (or 25%).
Whereas in an agency, where the offering is service-based, the question is how much are we selling our time for and how much does that time cost?
It’s crucial you calculate your gross margin against the separate groups of revenue within your agency. For some, this might be geographically (UK vs US) or by industry (eCommerce or Lead Generation), while for others this could be the individual services (PPC, WebDev, Design etc.)
For example, if you’re an agency that delivers PPC, and you charge £1000 per month for PPC, and the salaries and freelancer fees for your PPC team are £500, then your gross margin is £500 (or 50%).
Your gross margin considers the revenue the service generates and the direct costs associated with getting the job done. What your gross margin won’t include, is all your general overheads, like your office, accountancy fees, utilities and so on. These still have to be deducted in order to understand your Net Profit.
In order to make sure there’s still plenty leftover in your net profit, you need to ensure your gross margin is healthy enough to allow for all your general expenses. If your services are unprofitable at a gross margin level, then there’s no hope for your agency to be making any money at a net profit level.
In my experience, a lot of agency owners muddle the waters when it comes to their gross margins, direct costs, overheads and net profit – which is how they end up providing unprofitable services and losing money.
The key learning here is that your salaries and contractor or freelancer fees must be attributed as direct costs to the associated service, not in your general overheads. Remember you can also factor in partial salaries of team members such as account managers, who spend only a portion of their time on chargeable client work.
This enables you to look at your services objectively and understand which ones are actually profitable. Rather than taking note of a huge gross margin number on your P&L sheet that tricks you into thinking your services are 95% profitable because you haven’t calculated the wage bill.
Now to the bit we’re all here for – what does a good gross margin actually look like, what should you be aiming for in order to grow your agency and become one of the high performers?
In our experience, agencies with gross margins anywhere above 50% are doing great. North of 60% and you are doing brilliantly. On the contrary, if you’re numbers are anywhere less than 40% then you have some serious work to do to ensure your agency is still profitable once you get to your net profit.
Now that you’ve calculated your gross margins and know exactly what each of your services is generating, you can take an objective view about what’s actually making your agency money (and what isn’t for that matter).
For any services that are underperforming – ie. the cost (salaries & tools) associated with delivering them are higher than the revenue they bring in, you need to ask whether you can fix them. If you can increase your prices and/or decrease your costs by making the service more efficient and your team more productive and grow your gross margins back up to 50-60%, then brilliant.
If you can’t make these changes, then it’s time to drop the service and refine your offering to focus on the services that are actually generating a healthy gross margin. Without taking this action, your agency won’t be growing anywhere.
Digital Agency Coach is a team of coaches, consultants and mentors servicing digital agencies across the globe. Led by me, Janusz Stabik, we’ve helped hundreds of agencies transform their agencies to achieve more revenue, more profit, more time and less stress.
My team and I use this blog to publish insightful, valuable and actionable insights on a weekly basis. To make sure you never miss a tip – subscribe to our newsletter to be the first to know once a new article arrives.
The new ‘Intro to Game Art’ short course will give you an insight into the world of game art, exploring the range of roles and essential skills needed to get you started when exploring a potential future career in game art. There is a host of exciting modules that your tutor will guide you through, including:
Planning and producing work to a design brief.
Working in the games industry
Concept art for computer games
Modelling for computer games
This new and exciting programme is designed to equip individuals (aged 19+) with the technical skills, knowledge and understanding needed to produce digital content across several platforms, ensuring you can use social media most effectively for your small business, sports team or trade.
This course will provide a great opportunity for you to develop media production techniques, such as camera operating (on mobile devices, DSLR cameras and broadcast cameras), video editing, graphics and motion graphics to produce content for Instagram, TikTok, Facebook and more. There is a host of exciting modules that your tutor will guide you through, including:
Planning your Project
Camera Production Techniques
Sound Recording Techniques
Editing Techniques
You need to load content from reCAPTCHA to submit the form. Please note that doing so will share data with third-party providers.
More Information