Small digital marketing agencies are forever trying to balance the need to have cutting edge expertise in-house against the need to efficiently utilize these potentially expensive skills given the lumpy nature of their demand for those specific skills. Maintaining this delicate balance is essential to being profitable, and is complicated by the changing mix of projects and their attendant skill requirements. While this quest sometimes feels like a Sisyphean task, it is one of the key determining factors for agency profitability. Add the complexity of pitching deals that involve skills that are neither in-house nor within your network, and the challenge is even more formidable.
So how do you stay profitable, manage utilization and stay on top of the technologies that your clients and prospects are demanding when your mix of projects is fluid, and your needs evolving?
One of reasons that we started Digaboom was to help address this tension. We wanted to deliver a platform that allows agencies to augment their core staff when needed whether it is to address this lumpy demand or to leverage skills that they simply don’t have in-house, while providing Freelancers with the opportunity to either band together with other Freelancers or partner with boutique agencies to collectively tackle projects that neither could address individually.
In a sector as fast moving as Digital Marketing, it is impossible to have every skillset in-house. The ability to tap into a community of highly skilled people that complement your core team and allow you to pursue emerging opportunities is compelling. The ability to do so while using practitioners with demonstrated expertise and to integrate them into your team on either an ad hoc or an on-going basis is even more compelling. For some agencies whose model has always revolved around the expertise of their team, this can be disconcerting, while for others that have operated with a small core team and a network of “periodic contributors”, this is simply the refinement of what they are already doing.
For those of you in the first group, who have always relied on your core staff, a few things to consider when you augment your team:
- Alignment: How do you align your interests and those of the Freelancer? Your goal is likely to have a happy end client, a Freelancer may be thinking about their portfolio. Make sure that the Freelancer understands that your agency is their client
- Compensation: Are they paid on an hourly basis, or a flat fee? Do they get paid weekly/monthly upon invoicing or upon your receipt of payment from your client? Make sure that this issue is clearly discussed in advance of retaining a Freelancer to align expectations.
- Account management: How do you maintain account management control if you integrate a number of contractors? And how do you impart “your way of doing things” to people external to your organization? Talking about any organization specific processes and expectations that you have can help to ensure your desired outcome and will certainly smooth the delivery process.
- Skill internalization: For skill areas that are likely to be important to your organization downstream, how do you effectively integrate those skills into your organization during the course of the project when the folks with those skills are external to your company? One approach to consider is to budget a bit of extra time from your contractor to handle this skill transfer while allowing the Freelancer to work side-by-side with your in-house personnel. It may take a bit more time, but if the skill is something that ultimately needs to live in-house, it is a cost-effective way to internalize those skills.
Effectively handled, your agency’s margins will improve, your organization will be more nimble and your team will be much more adept at closing those transactions that take you outside of the same old, same old rut. And ultimately, your customer’s and your bottom line will both benefit.
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Image: Ryan McGuire and Gratisography
