“To scale is to hire!”

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That’s what a 9-figure agency founder told us when we asked him about his plans to scale.

They’ve been in the business for over 15 years and easily manage over $1B+ in ad spend. Yet, they are struggling to grow as fast as they want.

This is not surprising at all.

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Every year in the US alone, over 1200 new media agencies are founded with about 150,000 in existence today.

Over 83% of them NEVER even get to 8-figures in revenue. For those that do, it takes over a decade.

So what's holding them back?

"It comes down to 2 things", they said.

1. Operational Efficiency &

2. Unit Economics

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If you think about it, both of these are a result of a cause-and-effect relationship. Poor operational efficiency leads to poor margins and vice versa.

Over the last 6 months, we had the opportunity to chat with over 60 leaders from media agencies - right from founders, and CEOs, to heads of media operations and media buyers.

Using what we learned, we broke it down into the core functions that directly affect revenue.

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1. Sales & Account Management: Understanding requirements of prospective clients, figuring out if the agency can be a good fit, and setting up commercial aspects

2. Media Planning: Planning and strategising the budget allotment across media based on analysis of past performance and industry trends

3. Media Buying & Operations: Implementation of media plan and campaign optimisation regularly, including the setting up of new campaigns, handling technical issues, and more

4. Reporting & Client Services: Reporting performance, collecting feedback, and gathering recommendations for future media buying

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The first and perhaps the most important step is to understand where time is being spent in each of these functions.

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Case Study: The Life of a Performance Marketer at a Mid-scale Media Agency

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About:

We closely followed a performance marketer at a leading media agency that specializes in performance marketing and has over 300 full-time employees. Over 60% of their team are performance marketers. They manage over 250+ brands under their portfolio. 

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Situation:

The agency had set a goal to add 100 more clients over the next 3 years but it has been an uphill task. They have only managed to add 30 over the last 3 years which shows that it might take them 10 years to get to their goal! Clearly, it's not sustainable and nor do they have the patience to wait for so long.

So we decided to get into the weeds of what their team is doing to figure out potential areas for efficiency improvement.

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Day in the Life Of:

Michelle is a performance marketer on all social and search platforms. She manages 1 enterprise client and is responsible for media buying as well as client reporting. 

Michelle started her day by checking the budget pacing and performance of the active campaigns on all social and search platforms (Google, Meta, Tiktok, Snapchat). She saw a drop in ROAS (which is the primary KPI for her account) on Meta. She spent the next 30 mins debugging the drop and finally concluded that 4 ads had been auto paused because of an approval issue. She then reached out to her manager and the client POC to double-check whether the creative needed to be replaced. By the time they reached a conclusion, it was afternoon already and she had to get on with the next task.

The client had opened up an additional budget of $3500 for the week which needed to be deployed on Meta across 3 retargeting campaigns. She spent the next hour figuring out the best adsets where this could be deployed. 

The next task was to complete the draft of the media plan for the newly onboarded account. While she was about to get started, she got another email from her client with a few follow-up questions on the last weekly report. The client said it was urgent. She immediately got on it and realized where the mismatch in numbers was coming from. An hour later, she finally found what was wrong and sent the updated numbers to the client.

The day ended with a daily sync-up with her reporting manager where the pending media plan was brought up. The media plan is needed urgently too and it's 7 in the evening. The panic starts hitting. Should she start brainstorming for the proposal with a tired brain or go home and rest?

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What we learnt:

There was nothing special about this day. Almost every working day of every performance marketer at an agency is filled with multiple redundant tasks, leaving very little room for innovation and implementing new ideas. This sometimes leads to errors, which are a poor experience for the client with a potential risk of churn!

As an agency founder, the most intuitive solution is TO HIRE MORE PEOPLE!

But hiring, being the short term solution to this recurring problem, is a really profit-killing solution for the agencies. 

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What can AI and automation do for you?

With Gen-AI becoming mainstream since 2022, almost everyone of us has become used to ChatGPT. On the other hand, clients are demanding AI and innovation from you as an agency. There couldn’t be a better time to really explore the depths of what AI could do for you.

Let’s take 3 simple examples from Michelle’s day and figure out how AI could have helped her:

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1. Recommendations on investing the additional budget 

LLMs can now analyse large amounts of structured data to figure out trends and patterns. Likewise, it can identify opportunities by looking at the performance of campaigns, ad-sets, and ads across various parameters like audiences, creatives, and demographics.

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2. Creating a first draft of the media plan

Most recent developments in AI have made it possible to include real-world events in the analysis. For eg. AI can now notice that the next quarter has events like Prime Day and Labour Day and include this seasonality into the media plan.

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3. Debugging Technical Issues

Debugging the technical issue manually can sometimes take hours to find out what exactly has gone wrong - is it the creative? Is it the headline? The caption? Or something else? AI can do this instantly and come up with possible hypotheses.

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In conclusion, scaling an agency isn't just about hiring more people—it's about addressing the root causes of inefficiency and optimising your operations for long-term success. By understanding the hidden challenges, such as operational inefficiencies and flawed unit economics, agency leaders can avoid the common pitfalls that stunt growth. While the instinct might be to add more hands on deck, the real key to scaling lies in smarter, more innovative approaches that will ultimately drive sustainable and profitable expansion.

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Curious about how to overcome growth challenges in your agency? We can talk more here.

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