Putting A Price On The Intangible: How to Balance Creativity With Accountability
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1 in partnership with: Putting A Price On The Intangible: How to Balance Creativity With Accountability
2 The conundrum Creativity is the lifeblood of the advertising and marketing agency and clients are committing increasingly vast amounts of money to their ad budgets. Figures released by the Advertising Association and Warc forecast that spend will top 20bn for the first time in But utter the term resource management to an agency creative and they are likely to run a mile. It s an image that captures the conundrum that many marketing and advertising agencies face - the notion of creativity appears at odds with that of accountability. After all, agencies are in business to make money, and their core product is their creative output. Yet the perennial question persists - how do you balance the mercurial with the accountable, how do you place a price tag on something as intangible as creativity, something that many would argue transcends the time-sheet? Lack of accountability Clearly creativity and profitability are not mutually exclusive concepts - the UK is one of the world s most reputable, and profitable, creative hotbeds and has been for decades; it is a sector that sells its wares to the likes of FMCG groups, multinational retailers and tech giants. These are clients who turn over billions, with much of their sales often driven by pithy marketing creative. But research from Deltek, published in its Hunt for Profitability report, found that 69% of advertising and marketing agencies believed that a lack of time accountability was impacting negatively on profitability. 2
3 The gulf between creativity and accountability For some agency execs, the idea that the value of a creative idea should be based solely on the time spent developing it, is bordering on offensive. At an event hosted by Deltek and Campaign, one agency chief summed up the sentiment prevalent among many agencies. Creativity isn t bound by time, said Richard Morris, the managing director of media agency Vizeum. It is bound to lots of other things. So why should you be paid on the basis of time? A great idea can come in a flash, or it can evolve over many hours, days, weeks. For instance, Comparethemarket s Comparethemeerkat campaign was an idea conceived in 2009 by creative agency VCCP, and which has ended up worth tens of millions to client BGL Group. Agencies would ideally like to be paid according to the value of their output. But the fact is that until agencies and clients achieve the Holy Grail of measuring the impact of creative on their clients bottom lines, they can only be remunerated on the basis of their input. Until you can calibrate the output, it s very very difficult to think of an alternative remuneration structure, admitted Morris. 3
4 Maximising the value of your input But in terms of maximising the value of their input, many agencies are missing a trick. Deltek s research found that agencies were failing to bill for all their work - in total resources were billable 75% of the time and yet ad agencies admitted that only 70% of this time was actually billed. The consequence? Agencies are struggling to collect the entire amount of billable work effectively leaving money on the table. Rectifying this scenario is surely a no-brainer for agencies. The majority even acknowledge the issue, with 60% claiming that improved accounting processes would improve company profitability. They need to focus on the less glamorous aspects of their business such as billing for time spent on projects. 4
5 Time-sheets - a necessary evil A key part of maximising profitability is making a business entirely accountable through effective time management. If time were completely unmanaged then an agency s profitability would suffer significantly. This notion spawns fiercely divided viewpoints. Agencies readily admit that while their businesses are not ruled by time-sheets, for some it is the only way that we know we re making money ; while others will argue that applying time strictures to the creative process was problematic. Unfortunately, in an industry where the balance between delighting clients with brilliant creative and turning a profit are challenging goals for each and every agency, time-sheets are a necessary evil. The best-run, and most profitable, agencies take steps to ensure these are not opposing goals and seek to ensure the process as painless as possible. The solution? Deploy an agency management solution that helps not hinders your creative and support teams. Time-sheets have always been a much-berated bugbear of the agency world, typically filled in at the end of a week. But, therein lies a problem, with most staff falling into the camp of I can t remember what I did yesterday and I certainly can t remember what I did Monday. Agencies should not continue to go through the motions of guesstimate time-sheets, which do not deliver the visibility required to properly manage the business and turn a profit. Agency management solutions such as Deltek Traffic LIVE are reinventing the time-sheet into something more appealing. By taking away the concept of having to find a job and a task and say how long it has been worked on, calendar integrated time-sheets can become an efficient part of any agency employee s day, not an extra chore. 5
6 Connecting the dots In order for internal processes to work together seamlessly, they need to be connected. But internal cohesion is clearly missing from many agencies. Deltek found that 55% of agencies said that jobs are set up using standalone project software, such as Microsoft Project of Microsoft Access. But only 34% integrate their project management with other aspects of the business with an integral agency management system, which also unites resource and financial management. Deltek s research found that only 29% of agencies creative teams are involved in budgeting for a client s work. This figure is particularly alarming in the context of another finding - that only 44% of agencies place some form of cost-control responsibilities on their creative teams. Deltek s Top 8 Best Practice tips to maximising profitability through effective resource management Resource management is an effective means of planning, managing and deploying the right people with the right skills at the right time on the right projects. Effective resource management enables business to maximise their profitability. Deltek has compiled a list of eight best practices to get agencies started. A full version of the guide is available as a downloadable PDF. 1. Recognise that busy doesn t necessarily mean billable 2. Don t base projects on guesstimates 3. Don t over-service clients 4. Match your long-term project pipeline against your planned capacity 5. Avoid different versions of the truth 6. Be prepared to take advantage of market opportunities 7. Regard Resource Management as the ultimate in Business Intelligence 8. Take traditional ERP, CRM and PM systems to the next level This internal dissonance between teams and limited collaboration are relatively painless to resolve. Having the right tools and processes in place through the foundation of an integrated agency management system is crucial for agencies ambitious to grow and focus on their creative output. Taking away the internal administration headaches of disparate systems will pay dividends in the additional time and energy made available to be billable and productive on creative tasks. 6
7 Conclusion Regardless of your agency s size, it is vital to instil financial discipline into the creative delivery process. This allows agencies to both meet client expectations and still achieve desired revenue and profitability targets. While for agencies, embedding financial discipline into their businesses and improving internal collaboration may require a degree of cultural change, the processes involved to do so needn t be that complicated. Technology that improves internal processes and systems can oil the cogs of a business, allowing it to operate more efficiently. While it will clearly never answer the age-old question: how do you put a price on creativity?, it can ensure that agencies are able to maximise the value of their creative output. Deltek is the leading global provider of enterprise software and information solutions for marketing agencies and other professional services firms. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. 18,000 organisations and 2 million users in over 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimise resources, streamline operations, and deliver more profitable projects. Deltek Know more. Do more. or 7 VML VML is a full-service agency digital marketing agency, with offices across several continents. But project management for its 75-strong London team was handled using just a single Excel spreadsheet. Challenges While the spreadsheet was visible to everyone in the business, only two administrators could edit it. This tended to result in a flurry of s every time it needed updating with projects, scheduling or task allocation. We needed to find something more efficient, that was clear, says Maurice Clark, VML s operations director. Solution VML chose to deploy Deltek s Traffic LIVE system based on its ease and simplicity for scheduling and time-sheets. Results About Deltek F ollow us on CASE STUDY Once Deltek Traffic LIVE was installed and in use across the agency, the creative teams gained much more visibility and control over what they had been asked to do. The studio scheduling and time-sheets functions of Traffic LIVE were the first functions we switched on, Clark says. Aside from the time-sheet and scheduling benefits, VML says that it now uses Traffic LIVE for quoting clients. We use it as a pipeline tool, Clark says. So we can see at a glance what s coming through. Other advantages include Traffic LIVE s chat function, Babble, which has allowed anyone working on a project to view relevant conversations that people have had.
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