Half the agency's margin came from business I had won
A marketing director knows how to spend. The question nobody asks in an interview is whether they know how to bring money in. In my case the answer sits in a commercial tracker closed at 31 August 2013, which was the basis for the following year's budget.
Over the year, the new business I won accounts for 51% of the agency's gross margin. Against a volume of lost business fifteen times smaller. The annual gross margin target, set at the start of the year, is beaten on the closing projection.
The margin rate on the business runs at 69.6% over the first eight months, and the following year's budget is built on a 10% increase, not on a presentation ambition. This page is about holding both ends, sales and margin, inside a service business.
A communications agency in an island market, with a portfolio of large international brands and major local accounts. An agency's economics fit in one line: gross margin, meaning what is left after media buying and subcontracting. Everything else, salaries included, is paid out of that. I was digital marketing director and then partner-director there, with the double job of running a division and bringing in business.
In an agency, business development is done by the same people as production. Every hour spent pitching is an hour not serving a paying client. Add a closed market where advertisers can be counted, where everyone knows everyone, and where losing a pitch is common knowledge within the week. And the underlying constraint: on an island market you do not make up a lost account with volume, because there is no volume.
1 · Week one: listen and decide.
On site. Understand what the cooperative does, what its buyers and partners need to believe, and what the members are proud of. Positioning written and validated in the room, not by email.
2 · Week two: build the identity.
Visual identity designed against the positioning: name system, marks, colours, typography, and rules simple enough to be applied without a design team. Every choice tested against one question: does this raise institutional trust?
3 · Week three: ship the assets.
The working kit the cooperative actually needed: documents, signage, presentation materials, templates. Delivered with a short guide and a working session so the members could produce their own materials next month.
4 · Spend where perception changes.
The budget went into the few physical touchpoints partners actually see. Nothing was spent on deliverables that flatter the consultant.
2013 financial year, closing projection and 2014 budget.
- 51% of the agency's annual gross margin brought in as new business
- Lost business fifteen times smaller than won business over the same year
- Annual gross margin target beaten on the closing projection
- Margin rate of 69.6% over the first eight months of the year
- Following year's budget built on a 10% increase, backed by committed business, against a +24% version that was dropped
- Monthly commercial tracking with realised sales, realised margin, committed and projected
A marketing director who can only talk about spend is half a leader. Knowing what you bring in, at what margin, and being able to show it month by month, changes the nature of the conversation with a board. If your marketing is only ever described in budget consumed, nobody will know what it returns.
Do you know what your marketing returns, not just what it costs?
The first call30 minutes. We talk about your traction and what is blocking it. You leave with 2 or 3 moves you can act on. No pitch.