The Disturbing Truth About The Digital Agency Landscape
Maybe the digital agency landscape is not a bell curve.
You know the spiel: the world is a bell curve with a big, fat rump in the middle; look at any industry and there will be a precious few earning more than the rest etc., etc. The assumption is that all you need to do is check out the parameters and look at where you are to establish your position in the food chain.
I am not so sure that it is as simple as that.
For a start, the distribution is not even. Secondly, the high-performers really start to sizzle when they get a whole series of characteristics aligned, and not just revenue or profit. After all, every picture tells a story.
We have been able to assess the full range of performance indicators from agencies as far afield as Warsaw, Prague, Brussels and of course, London, Manchester, Cardiff, Edinburgh and Dublin.
As we’ve assessed each dataset and looked at the common trends, we’re seeing a clearly skewed bell curve. There are a few real high-performers and close behind them come next year’s contenders who will be hot on their tails. Alas the rump isn’t squarely in the middle of the distribution. The rump is disturbingly to the left of where you’d expect to see it.
This is the case (plus or minus 10%) wherever we have looked.
In layman’s terms, there’s an awful lot of mediocre, run-of -the-mill agencies that are making little or no money. No surprise really when the barriers to entry to the industry are zero, and the majority of smaller customers are not totally clued up on what a good agency looks like.
Why are the mediocre agencies making no money?
Well, most suffer from a whole series of ailments you could sum up as small-business-itis. They don’t charge enough, they don’t collect quickly enough, they don’t have a clearly defined proposition, they are pants at marketing and sales (ironic that) and so on and so on. They are just not very good at a whole series of business basics; they may be brilliant at working IN the business but they lack the education, wisdom and knowledge skills to run a profitable business.
In layman’s terms, there are precious few agencies who have avoided the mediocrity trap and are making real money.