Preparing an advertising agency business plan and turning it a reality is a big challenge. But, making it profitable for the sake of longevity is an even more significant challenge. Due to the competition in the market, many advertising agencies are fighting to earn higher profits. Now, don’t let that daunt you. Despite the saturation in the market, your advertising agency can still earn profitability. How? Well, by maximizing profits. So, in this blog, we’ll discuss with you eight strategic ways to maximize the profits of your advertising agency.
Establish a Positive Branding and Reputation
Businesses with positive branding and reputation are likely to attract more clients than their competitors. That’s because it implies that many people found their services satisfactory and trustworthy. Countless studies have suggested that individuals tend to trust a business if other individuals gave it a positive review or feedback. With those in mind, you have to work in building a positive branding and reputation for your ad agency. In every project, make sure that your team is delivering quality and timely output to each of your clients.
Aside from winning the trust of clients, you also must promote your ad agency across multiple platforms using effective marketing strategies. That move will increase the popularity of your brand in a broader market. Always remember that brand awareness is a crucial component in optimizing profits.
Charge Clients for Your Planning and Strategizing
Other agencies don’t charge clients for devising tactics to make their advertisements more marketable. They do that to win the hearts of their clients, but it doesn’t help in increasing profits. Planning and strategizing is a significant component of your agency’s service. So, you shouldn’t give them away for free like what other agencies do. Include them on each quotation that you’ll charge to every client.
If you plan and strategize for free, your clients will overlook that particular service because they won’t have to pay for it. They’ll take it for granted, and you’ll lose a significant portion of your potential profit.
Make Operations Scalable
Scalable operations will improve the efficiency of your team. The quality of their work will reach optimal levels, which helps in achieving client satisfaction in return. To make your agency’s operations scalable, you need to set standards, formulate a strong organizational structure, and invest in training and advanced tools to enhance the skills of your people.
With scalable operations, the amount of time and resources your agency spends on clerical tasks and other business processes will lessen. Thus, enabling you and your staff to focus more on activities that generate profit directly, such as onboarding more clients and handling projects.
Implement Value-Based Pricing
Value-based pricing is somewhat an unorthodox pricing method. We said “somewhat” because it isn’t actually unorthodox. It’s just that only a few service-based businesses have adopted it.
In implementing value-based pricing for your services, you’re allowing your agency to earn money in proportion to the weight and significance of a client’s project. So, the larger a project’s value, the larger revenue you’ll get from it. You see, with value-based pricing, you can negotiate the highest possible fee based on value. For this to work, you need to discuss the critical components of a project with a client. That gives you a clear understanding of how valuable his or her project is. Furthermore, value-based pricing will help you avoid instances of being underpaid by clients.
Based on a report by Bain & Company and Harvard Business School Professor Dr. Earl Sasser, increasing customer or client retention by 5% can increase profits by 25% to 95% potentially. If you look at it, those are big numbers, no doubt. That said, you should start focusing on retaining clients in your agency. To retain clients successfully, you just have to continue showing excellent results to keep them happy and satisfied. Don’t let their trust in your agency falter. The more clients your agency can retain, the more regular clients it’ll have. And, the more regular clients it’ll have, the more profit it’ll get.
Hire Excellent Entry-Level Prospects
In maximizing profits, hiring young prospects might not be in your to-do checklist, but it should be. Entry-level prospects, especially those with great potential, can deliver quality service without paying them a big salary yet. Hiring a promising entry-level employee is more cost-effective than hiring an experienced employee who can provide similar outputs. In fact, some entry-level employees have better skills than experienced ones.
Overtime, entry-level employees, will be able to develop their abilities by a mile. When that happens, you’ll have to pay them a bigger salary. The increased wages you’ll pay them will be worth it because their highly-tenured skills can help in maximizing profits.
Manage Time Well
Time management is an important practice to apply if you want to optimize profits. As much as possible, your team must finish as many projects as they can within a period without sacrificing quality. Make sure that they consistently provide quality results to clients on schedule. You can also set a weekly or monthly quota to prompt them to improve their productivity. Send a memo to employees who can’t meet the quota. Higher productivity translates to higher profits within a period.
Explore Other Revenue Streams
Clients aren’t your only source of revenue and profit. There are other things your agency can do to maximize profits. One good approach is offering educational or training courses for aspiring advertisers or marketers. You can also conduct seminars for business owners and entrepreneurs. Other than those, your agency can start publishing books or magazines about advertising and marketing. By diversifying your revenue streams, your agency will obtain higher profitability margins in no time.
By tomorrow or next week, present a proposal to your colleagues detailing how these eight strategies can maximize profits. Once you convince them, start devising action plans collaboratively. Use a meeting minutes sheet to document your discussions with them. Soon, your advertising agency will become a more profitable business. And, it’ll be sticking around in the industry for many years.