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Update: January 29, 2022 1:38 p.m. STI
New Delhi [India], Jan 29 (ANI/PNN): It is widely believed that India is currently witnessing an agency boom.
Even in the midst of a pandemic, when most businesses have had to close shop, many agencies have sprung up across the country.
(LBB, 2020) But starting an agency and running an agency are two very different things. And a quick, deep dive into the numbers or even a short chat with any industry insider would help you see the real picture pretty quickly. The number of agencies that fold in a few years is quite large.
But it would be naive to assume that the failure of these agencies should be attributed to some major reason or lack of capacity on the part of the people running them. The truth is that these agencies work in a market with reduced margins and increased competition, with multiple factors that make it difficult to simply survive. But that doesn’t mean running a successful agency is a pipe dream. What’s more important than ever is to avoid mistakes that could kill your business before it starts. To put it simply, a list of “what not to do”.
Goal – The very first reason many of these agencies fail is the lack of a concrete goal or vision. You think you have the necessary skills or relevant knowledge to start on your own. So you take the plunge assuming that once people see your work, getting clients will be a breeze. But within months, reality hits.
To put it bluntly, sheer talent is not enough to run a successful agency. You need to have a solid vision to stand out from the crowd. Why did you create your agency? How is it different from the competition? Are you ready to take risks? It is imperative to have clear answers to all these questions before you start. It is also important to be prepared to take risks. Starting out with no vision and an aversion to being disruptive in the market is probably a death knell before you even start.
Pricing – Another reason why many agencies fall back in India is no doubt the low cost of inputs or investments involved. Although this is touted as one of the major reasons for the agency boom in India, it has led to a situation where the market is filled with indistinguishable agencies competing with and ultimately cannibalizing each other. Thus, the only way for many agencies to distinguish themselves from the competition is through pricing. To survive and grow, they accept prices well below an acceptable level. This is a serious mistake to make.
The moment you start undervaluing and undervaluing your work, you are effectively communicating that your work is substandard. While it’s true that most customers are price-sensitive, it’s also a fact that quality-seeking customers aren’t shy about paying the price if they think the result is worth it. It’s also the only way to get long-term loyal customers and build a reputation. Clients acquired through low prices will just jump the shark when the next agency offers them an even lower price.
Another aspect of this is the exhaustion and disillusionment that comes with accepting an unchallenged, underpaid job. Today, most agency workers work longer hours and think they are underpaid. (Digiday, 2020) Therefore, a big part of running a successful agency is the ability and courage to say no to underpaying work.
Collaboration – In India, the top agencies get most of the advertising pie. These agencies have well-established departments and areas of operations offering a variety of functions. On the contrary, most small or medium-sized agencies have one area of activity: SEO, copywriting, design, etc. This then becomes another hurdle they struggle with when acquiring customers. This is one of the main reasons why many medium-sized agencies die. In other words, these agencies are quickly becoming the Blackberry phone of the advertising world.
The solution to this problem lies in collaboration. To survive, small agencies must join forces to maximize their strengths. The benefits of combined synergies are not just limited to survival and growth, but also to improved performance, increased creativity, time savings and new access to previously untapped customers.
People and Process – This is the step that is probably the most overlooked when it comes to running an agency. Most agencies believe that by hiring talented people, they can ensure the success of their business. But that couldn’t be further from the truth. Hiring the right people and investing in the right people, after all, are two very different things. Running an agency means you work with highly creative professionals – people with strong opinions, artistic tastes, and possibly egos. How you treat your employees is an important factor that could make or break your agency. In an article published in January 2022, building healthy relationships with employees was seen as imperative for the success of any business, especially agencies struggling with high turnover rates. (Forbes, 2022) Therefore, it is important to build honest relationships and bond with your employees based on mutual respect and appreciation.
Another important aspect is to set up simple, efficient and fast processes. From creative presentations to frequency of communication and reporting, it is necessary to have clear systems in place. This can be extremely helpful for employees to know what is expected of them, how to go about it, and help them review and take corrective action if needed.
Finances – Since most agencies are run by people whose main strength lies in their creativity, mismanaging the financial aspect of running an agency is an all too common mistake. The lack of strong systems and processes in place leads to a situation where an agency becomes a prime target for exploitation. It is therefore necessary to ensure that established processes are in place and that they are followed regardless of the job or the client. Strong and transparent contracts are also necessary to gain the trust of customers. Many large advertisers have long felt a lack of clarity in their dealings with media agencies. (McKinsey & Company, 2018) Being upfront with customers early in negotiations and ensuring payments are received at pre-determined intervals can help alleviate these concerns. Being honest with your finances every step of the way is paramount to ensuring longevity in the market.
It is also important to be aware of the many programs and policies put in place by the government to help small businesses. In recent times in particular, there are many programs aimed specifically at aspiring entrepreneurs in the MSME sectors, such as the “59-Minute MSME Business Loans” for easy and quick loans, the “Market Development Program” for expansion into international markets, as well as multiple tax credits. (OkCredit, 2020) It is important to research these policies thoroughly to ensure that you get the maximum benefit from them.
Like any small business, running an agency also depends on a host of complex factors that must work cohesively and harmoniously at all times. And while success isn’t something you can predict or guarantee, avoiding the crucial mistakes listed above can certainly help you sustain and grow in this highly competitive market.
Agam Chaudhary- With 15 years of experience in digital marketing and technology, Agam brings with him a wide range of knowledge as well as innovative and exceptional processes that will deliver organization-wide transformations. Having run a successful agency for over a decade and worked with brands in various industries and geographies, Agam has a unique insight and understanding of the contemporary yet disruptive digital sphere. Over the past 5 years, he has also helped various agencies and e-commerce businesses to increase and multiply the size of their billings/profits. His last missions were the launch of NFT Marketplace and Metaverse game. He can be reached at [email protected] / https://www.linkedin.com/in/agamchaudhary/
Bibliography
LBB. (2020, December). The class of 2020: 14 agencies launched amid a pandemic.
Digiday. (2020, March). Digiday Research Report: Ad agency employees are overworked and underpaid.
Forbes. (2022, January). how-agencies-can-ensure-strong-relationships-with-employees-at-the-hiring-stage.
McKinsey & Company. (2018, May). Truth in advertising.
OkCredit. (2020, December). https://okcredit.in/blog/government-policies-for-small-businesses/.
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