Kantata, partnered with Salesforce, has published “The State of Agency Operations Survey” (email required to download). The report is based on what is a very small sample of only 51 professionals working within agencies. Unusually, the organisation behind the research, Canam Research, named some participating organisations.
- RPA, a mid-sized advertising and marketing agency with over 650 staff
- 9th Wonder, a full-service, independent marketing agency with over 130 staff across 3 countries
- Publicis, a French multinational advertising and public relations company with over 75,000 staff
- Horizon Media, US-based full-service digital services company with over 2,300 staff
- Iris Worldwide, a global integrated marketing agency with over 1,400 staff
- GKV, a full-service integrated communications agency with over 200 staff
- Infiniti Research, a global leader in next-gen custom market research and market intelligence services with around 500 staff
The report looks at the challenges faced by agencies and how technology is helping them address those challenges. The report is ten pages long and provides some key observations followed by the survey results, laid out clearly in graphical format.
Agencies face challenges
Recent global events and economic challenges have put significant pressure on agency businesses. While the top two challenges agencies face are client acquisition (58%) and employee retention, many of the others are financial.
Pricing pressure is seen by 39% as a challenge, possibly caused by increased costs (28%) and competition (19%). This has impacted another metric. 19% saw lower-than-expected profits as a challenge. As a result, 74% plan to change their business strategy.
The report states, “The most common responses to changing business conditions include increasing focus on customer retention, expanding products and services offered, revising the proposal process, and revamping pricing.”
Whether these are strategic changes is debatable; they appear more tactical. What is missing from this research is qualitative feedback from interviewees that specifically addresses that question.
One area called by the authors is the lack of digitisation amongst agencies. 32.61% cited that the manual effort of using spreadsheets is a big challenge, only surpassed by integration challenges. The Kantata Professional Services cloud helps address that, with integrations with finance solutions and other applications and strong resource management to better manage the business.
Michael Speranza, Kantata’s CEO, notes, “The demands on agency leaders aren’t new or unusual, but economic uncertainty is prompting many to reconsider their business strategies to minimize the impact of external factors. All professional service organizations, and especially agencies, rely on their employees’ expertise and creativity to serve clients. Optimizing resource management to meet shifting market dynamics is more critical than ever to deliver exceptional client experiences both now and in the future.”
Technology at the heart of challenges
The survey is limited to the areas the Kantata solutions solve. For example, it doesn’t highlight how agencies use CRM to capture new clients, rather than once the business is won. 6.52% see onboarding as difficult or very difficult. There are challenges in working with existing clients. For example, only 30.43% see resource capacity planning as easy, and 32.61% see resource allocation and staffing as easy or very easy.
Project estimation, project management and project accounting are also a challenge for many. As Speranza notes, “While spreadsheets have their uses they are not effective for resource or project management, client servicing, and business development. Solutions like Kantata can help transform how agencies operate, improving productivity for increased performance and profitability,”
Sadly, spreadsheets are still dominant, with 72% of agencies saying spreadsheets are important to client engagement management. This is less than specialist applications such as resource management, project management and PSA solutions.
What does the future hold?
The report looks at the technology investment agencies are planning, and their organisation’s status. 50% of agencies plan to invest in client experience software over the next 6-12 months, and 45% plan to improve/streamline agency operations using technology. Will they replace spreadsheets?
The third highest investment is in employee experience and L&D technology, an important factor in talent retention. Speranza added, “Happy customers are not possible without happy employees who are engaged in their work and believe in the mission and vision of their business. To achieve both, agency leaders should seek solutions purpose-built for how their business operates, and include talent development, and centralized access to the data needed to efficiently deliver outcomes consistently.”
The survey also looked at the business strategy relating to M&A. 36% of agencies plan to remain independent, though 23.8% have already acquired another agency in the last year. It seems that M&A activity may slow down, with only 12.82% open to the idea of M&A. However, 7.69% plan to make an acquisition, 5.13% plan to be acquired and 2.56% plan to merge with another agency within 3 years.
Enterprise Times: What does this mean
Surprisingly, marketing agencies are still not using more sophisticated software than spreadsheets. The Kantata Professional Services Cloud platform, especially its Kantata OX solution, has many Agency customers and solves many of their challenges.
While this report has a very small sample, the results are worth noting, and the analysis, though light appears on point. This report would certainly have carried more weight if a larger, more focused sample size had been used. How many organisations participated in the survey is unclear, and the entities mentioned above might have provided all the answers. If so, Kantata might have obtained more insights and value from a qualitative survey.