There are three things marketers should consider when evaluating profit: people, product and technology. At an event held by The Drum Network and productivity software specialists Scoro, agency leaders discussed why profitability is a difficult balance to strike.
As the economy endures increasing turbulence, the definition of profitability inevitably must change with it. What was once solely about financial gain has now seemingly become a mindful concept for businesses.
Today there is a clear moral obligation to address the business model and protect the workforce, according to Chris Jones, managing director at Space and Time. “I think, if we were all honest, we’re yet to find the silver bullet,” he says. “There’s still a lot of reactive work going on, a lot of late hours, a lot of overcompensating on pitching, overcompensating on pricing.” It’s a learning curve, but a necessary one if businesses are to simultaneously stay afloat and show up for their employees, while not undervaluing the work that they do to the point of being undercut.
In support of the need to preserve the work-life balance – and, in effect, precious resource – is Fred Krieger, chief exec and founder at work management platform Scoro. “To be profitable, it’s not just about cutting costs and making more revenue; it’s not about maximizing utilization, it’s more about optimizing utilization,” he says. “We need to understand the profitability of every single customer, every single project […] because the only way to avoid burnout in the long run is to constantly try to find ways of working smarter.”
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How can we make marketing more attractive?
As Iris’s co-founder and global chief executive officer, Steve Bell is hyper-aware of the elements that make up profitability. He believes there is work to be done to earn the trust of clients, but also to attract new talent.
“The minute you think [increasing your revenue and cutting your costs] is the answer is the minute you underestimate how complicated or multi-layered the industry we work in really is,” he says. “For me, it’s the make-up of talent […] and how the industry attracts the best talent, because I just don’t think it is [attracting the best talent] at the moment. I don’t think we’re as attractive as we used to be as an industry.”
Hannah Kimuyu, managing director of performance at Brave Bison, agrees: “Most of our people are based in London and the salaries are insane right now. The challenge is about, ‘how do I find the right talent?’ But also, ‘how do I keep it?’” Essentially it comes down to people, which demands that the marketing industry is a space that people still want to enter.
We have to keep producing the work that clients can’t do themselves; brands must be able to justify their marketing spend, now more than ever. “Clients are saying, ‘we’re actually going to do this ourselves now, because we feel as though we can do it much cheaper,’” says Bell. The third crucial element, he says, is technology – and making sure we’re using it in the right way.
Krieger is strongly for technology when it comes to providing good service, although it shouldn’t be synonymous with being always available. “The irony is that there is a lot of technology that should help us get better at communication, but is secretly making things worse. We’ve started calling these tools ‘weapons of mass destruction,’” he says, hinting at the professional instant messaging platform Slack. “We should really be careful about what we’re using it for and how much we’re letting it intefere and interrupt our workflow.”
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The ROI of doing good: sustainability is a key differentiator
At Space and Time, Jones claims that they are no longer just chasing revenue – they are rethinking their business model altogether. At Good-Loop, an advertising agency and B-Corp connecting global brands with charities, they too are thinking about the bigger picture: specifically, how they justify their social impact and the ‘ROI of doing good.’ Its founder, Amy Williams, is optimistic about the collective attitude toward sustainability among brands.
“The reality is that living a sustainable life is often a privilege,” she admits. “It costs more to make those decisions and it’s not realistic to expect people to prioritize the planet when they’re thinking about their families. But we are seeing brands lean into sustainability in affordable ways, and when the price consideration is the same, sustainability is the number one [reason] a consumer will choose a brand over another.”
Sustainability is a key driver of talent and contributes generously to company culture. Space and Time introduced the ‘carbon kickback,’ scrapping long-haul business flights and instead offering free strategy time to clients over Zoom, while Good-Loop has allocated a whole new role to qualifying the company’s overall sustainability. These initiatives are modern-day motivators for both clients and employees. Why? Because “people can see that we care about something beyond what we’re trying to do with our clients,” says Kimuyu.
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Has leadership in marketing lost its way?
If time is money, agency leaders should spend it wisely. Bell firmly holds this view, arguing that lack of leadership can often be the culprit in the loss of clients. “There’s an interesting link where the more senior people get, the less time they spend with clients,” he says. “[They] spend less and less time with clients and spend more and more time doing the things that they think board directors, managing directors and chief strategy officers should do.”
Bell’s comments suggest that if they want to be more profitable, agencies must first look at the structure of their business: “If they’re not spending time with your clients, they are an overhead cost to the business, and that is just draining your profitability.”
It’s important to remember a two-way dialogue when it comes to client relationships, “to not only give people a voice, but to shape what that proposition looks like,” as Jones puts it, reminding us that it’s necessary to stay close to your clients at this time and nurture those relationships in a way that aligns with your business. While what you do and how you do it is crucial, it’s the ‘why’ that really matters.
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