Over the years I've worked with numerous media agencies, some global ones, some local, in the UK and Internationally.

Along the way I've met some really clever, interesting, technically brilliant, and much brighter people than me, so when I read the article (link below) about how much profit agencies are making (or not) I thought it worthwhile sharing my thoughts in the context of what is a rapidly declining industry.

One of the key advantages I've found working with, and building a strong relationship with an agency is it can help 'plumb' you, your team, and your company into talent that isn't readily available to you on a full time basis. 

For this to work the agency need to make sure they are billing you for the right amount of time their resource spend on your account, which is fair enough as its an overhead they carry along with other expenses for running an agency, but just remember, you are not their only client.

They also work on a margin basis when they handle your 'paid media' campaigns for TV Ads, PPC etc, but today we're also increasingly looking to them to provide advice, and skill set to help us navigate the 'earned' media space, in particular that of social media, and content marketing. 

But can an agency whose sole purpose is to cover head count and infrastructure cost really be in a position to make any real return if the 'paid' stuff is in decline? 

If you spend your marketing budget on TV commercials your agency will look to lock down your annual spend ahead of the new year, and this is because they gain considerable 'kick backs' from the TV networks whom they place the ads with. 

I won't go into too much detail around the commercial mechanics, but suffice to say if they have an aggregated client base spending circa £100 million+ on TV advertising, they look to forecast this spend and create a discount, this discount is partially passed onto the aggregated client base, and some of it is retained for the agency as part of the service.

Can an ad agency really guide, and advise you on how to generate engagement through an 'earned' strategy for content via social media, are they not conflicted, is their expertise really about 'paid media'?

Let's take a snapshot of the report that highlights how the agency world need to think, and some of it might very well surprise you, but before we do that here's a thought;

Responsiveness is key. Hard to do that on TV. Easier to do that on social. 

Agencies think in 3-6 month timelines. Brands need to execute in 3-6 hour timelines.

Marketing is moving away from traditional advertising and towards peer-to-peer recommendations.  Customers are the best form of advertising.

What can you do to improve your margins in 2020?

The best place to start is to raise your prices. I know, I know. That’s really hard to do with existing clients because many of them won’t be willing to absorb the increase. That’s OK! Start slow and increase pricing for new clients first. Then, strategically implement the increase to your existing ones. For example, if you’ve got a less-than-ideal client, increase their prices. If they love your work, they’ll relent to the increase and if they can’t afford the increase they’re not right for you anyway.

If you took the time to better understand the 'Superpower' within social media for something more than just moving your advertise and promote thinking, you will start to free yourself from that agency, who probably won't be around to service you in the near future anyway.