For agencies, client media spending is up (slightly). So why doesn't it feel that way?

According to Digiday's 2022 Media Agency Report, agencies report more clients are increasing their spending (34%) or remaining the same (31%) than are decreasing (33%) spending. More importantly, there are reasons to be optimistic for 2023 growth in the low teens with the 2024 Summer Olympics on the horizon.

The reason it may not feel this way is due to optics. Specifically accessible and actionable optics into "de-averaged" client performance and profitability. This simply means that agency performance is not solely based on universal truths and business health is dependent on unique variables across client business performance, teams, and media channels. However, optics across these variables are usually a blend of disconnected tools, spreadsheets, and guesswork.

For 2023, here are some ways to think about improving optics at the client level:

Centralized Job Management: Ensure teams utilize consistent processes and software for job costing, estimation, project management, and PO management and work to reduce the use of disconnected one-off software.

Team Utilization: This is tricky and I see a lot of resistance to this by agency leaders, but it is imperative that there are solid optics to how team members spend their time. Granular time tracking by activity is difficult to enforce so a simple daily or weekly retrospective on time spent by client and on administrative company work is a great place to start. If you get to a reasonable percent allocation on specific clients versus internal administration, you will be ahead of the game. You can then improve granularity over time.

Managerial Accounting Democratization: Provide team leads with visibility into profitability performance. This does not mean that you should flip the switch and base their compensation on financial performance at the outset, but you can talk to them about financial performance and strategies to optimize that won't negate client performance. I’ve found that strong team leads appreciate this visibility and as long as there is good coaching and consult on how to react (and not overreact) to information, this is a great way to build future agency leaders.

Client Leading Indicators: All too often, agency teams do not conduct detailed research into their clients to predict long-term performance. For example, teams may not listen to client earnings calls, they may not assess competitive traffic patterns and market penetration. Ensure that teams contribute to dashboards outlining leading KPIs and client news that may impact future growth.

Long story short, the name of the game right now is optics and agility. Start putting the pieces in place to succeed in a de-averaged world.