How Your Agency Can Thrive in 2023
Agencies and media buying outfits are under significant pressure this year. The last 12 months delivered more uncertainty for the advertising industry. There are a few things you can do to help weather the unexpected and perhaps even thrive in 2023:
Determine Client Profitability & Distribution
To begin with, do you know how your adjusted gross income is distributed across your client base? Are your profit streams split relatively evenly across your clients? Or are there one or two clients that represent an uncomfortably high percentage of your profits? Once you know the value each client represents and the percentage that value represents of your overall profits, it’s essential to examine the time and resources that are allocated to each client.
When you track the time and resources your agency invests for each client, you can quantify the profit margin. If a client is taking up too much of your employees’ time and thereby cutting into profits, you know that you either have to raise rates for that client or find a more efficient way to manage the projects associated with them.
Lower Operating Expenses & Increase Agency Efficiency
One of the first measures any business can take during times of economic uncertainty is lowering its operating costs. There are various ways to do this, including implementing an all-in-one agency management platform. Paying for multiple systems is not only costly; it complicates your process. Compare the total cost of separate tools for Accounting, Project Management, Media Planning and Buying, Time Keeping, Expenses, etc., to an all-in-one system. If that isn’t enough to convince you, consider how a single integrated system can save time and increase efficiency, therefore lowering operating costs.
Be Prepared for Inquiries and Audits
It’s a fact of life in the industry that every agency of a certain size will be audited at some point. Whether an audit is requested by a client or it’s triggered by the due diligence associated with an acquisition or merger, an audit is coming for your agency, and it might be waiting for you sometime in 2023.
For an agency that doesn’t provide an audit trail and an easy way to retrieve documentation, an audit can spell chaos. Operations are thrown all out of whack as employees are reallocated to hunt down records.
But an agency with accounting that’s fully integrated with media buying or project management, has little to fear when an audit comes around. If you have a centralized system for all of your documents like purchase orders, estimates and AP invoices to be stored with related records, you don’t have to hold your breath and hope your team can track down everything.
If 2023 is the year of the audit for your agency, make sure you have a system that tracks and stores all of your essential documents and makes them easily searchable and reportable.
The Advantage Software Solution
The Advantage agency management system is an all-in-one software designed for advertising agencies, creative teams, PR firms and media buying outfits. Advantage offers agency project management software and media planning/buying software which are both fully integrated with robust accounting software designed specifically for the needs of agencies. To find out how we can help you, contact us for a demo.