Read on Twitter
1/ The agency apocalypse was knocking on the door pre-COVID, and now I don’t see how any mid-tier and more prominent agencies continue to exist.
I see the whole agency model shifting towards the Hollywood production model with scale-up/scale-down productions.
I see the whole agency model shifting towards the Hollywood production model with scale-up/scale-down productions.
2/ Most good/enterprising talent doesn’t want to work internally (except under unique circumstances/brands) because they can get paid more on their own while having more freedom.
3/ The overhead costs of micro agencies are tiny. They’re optimized and often focused on an “eat what you kill” type approach.
It’s simple, don’t land deals? Don’t get paid. They also don’t have these swankiest ass offices to pay for. #WFH4life
It’s simple, don’t land deals? Don’t get paid. They also don’t have these swankiest ass offices to pay for. #WFH4life
4/ In my convos, some agency arms are only dedicating 15-20% of their total budgets towards production. Think about how that looks like for the brand footing the bill.
5/ Example of a budget breakdown with a mid-tier agency. If you have other numbers, feel free to share that could add more insight to this.
$100K budget
$20K max goes to production (20% of budget)
---
$80K split between overhead/staff that exists regardless of workload
$100K budget
$20K max goes to production (20% of budget)
---
$80K split between overhead/staff that exists regardless of workload
6/ That same $100K budget for a smaller/micro agency looks like this:
$100K budget
$40K-$60K budget goes to production
----
$40K split between overhead/smaller full-time staff
$100K budget
$40K-$60K budget goes to production
----
$40K split between overhead/smaller full-time staff
7/ There are some caveats to this though...
- smaller agencies have fewer resources (obviously) but most pertinently in the roles of business development and accounting
- they need to have a robust creative network to draw on talent from
- less job security!!!
- smaller agencies have fewer resources (obviously) but most pertinently in the roles of business development and accounting
- they need to have a robust creative network to draw on talent from
- less job security!!!
8/ More caveats
- agencies still don’t build long-term equity, meaning it’s hard to sell an agency. You’re only as good as your talent + your clients
- also it helps a lot to have strategy/creative as part of the overall budget, pure commodities won't have similar margins imo
- agencies still don’t build long-term equity, meaning it’s hard to sell an agency. You’re only as good as your talent + your clients
- also it helps a lot to have strategy/creative as part of the overall budget, pure commodities won't have similar margins imo
9/ Interesting to hear/see how other people with brand/agency experience are seeing this shift.
I see things becoming far more efficient with the creative getting paid more which is nothing but a good thing.
I see things becoming far more efficient with the creative getting paid more which is nothing but a good thing.
