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I have been running a digital marketing agency for the last 7 years and I have met quite a few entrepreneurs who are in the same domain. Probably have met close to 50+ agency owners by far in my life and something that constantly worries me is the number of hurdles we all come across while running a digital marketing agency in India.

It is not an easy job and I see there is a rise and death of an agency every other day. India has 700+ digital marketing agencies at the moment and there are so many agencies that are taking birth every single day with no proper directions.

Agency businesses in India are at a saturation point at the moment, from here to where? This is a constant question that we all ask ourselves all the time. Why? Because there is so much uncertainty in the ecosystem and the way things are delivered and expectations.

With rising competition, market is getting dirty and it is not so easy to deal with the needs of the clients from India.

There are agencies that have shaped up really well and taken the companies with more than 100 Crores turn over, these agencies are on the happier side when compared to agencies that are playing local and catering to the need of smaller business.

The question one needs to ask constantly:

  • Why should I work with this client?
  • What’s the benefit to the organization?
  • Will their revenues help me scale or survive?

If you are here to survive, you are not going to run the show for long. Then, you are not running a Digital Marketing Agency you are running a Digital Marketing Shop and there is a huge difference between both.

Here are some challenges that digital marketing agency owners usually face:

#1 Client Winning and Client Retention:

Many start an agency with one or two clients in hand but later get stuck when they are not in a position to win new clients. Winning a client is one of the biggest challenges when there is a lot of competition especially in the markets like Mumbai, Bangalore and Delhi, there are agencies in every area, unlike Chennai and Hyderabad.

Many startup agencies don’t know how to win a client but yet start their journey with some years of experience. Client retention is yet another problem in the Industry, clients are not educated enough, on one side they are okay to spend thousands of rupees in traditional campaigns without any distinct ROI and on the contrary, they don’t see great value in Digital.

Most of the clients try to stick on to an agency on an average 3 years and then they think of moving away from them, there could be a lot of reasons for this:

a) Ask For Hike and Face The Consequences: When a small agency asks for a hike in their monthly retainer, clients usually threaten them with an exit statement, saying we will have to move out and find an alternative agency. This puts a lot of pressure on agency owners, while the team handling the accounts their salaries have grown but the retainers of the client haven’t, leaving a very poor profit margin.

Yet, the agency owners don’t say goodbye to these clients as they fear this would impact their cash flow and somehow they satisfy themselves saying, it’s one of our oldest clients and we would like to keep the relationship maintained.

b) New Marketing Head Doesn’t Like You At All: Clients generally move out for fresh ideas. Also, when there is a change of Marketing head or manager the agency becomes a cat on the wall perplexed between pleasing the new manager and maintaining the deliverables whereas, the new manager always aims to bring the agency that they are most comfortable with, ending up finding loopholes in the services delivered. It becomes a dirty affair.

#2 The Changing Landscape of Digital:

Half of the agency gets washed because they are not able to cope up with the rapidly changing digital landscape. Facebook’s reach was organic, agencies offered a lot of posts then, 3 posts per day and those sorts. The deliverables looked fascinating, it worked back then and there are still agencies sticking on to same old thing whereas, the industry doesn’t want many posts anymore.

It’s about minimalistic stuff which agency owners fail to understand. The changing landscape of digital demands for strategy first and creativity 2nd but the advertising agencies that got turned into digital agencies puts creativity first, failing to work towards strategy a strategy that defines ROI of the effort put in.

The Digital landscape changes overnight and the client in India needs to be educated about it, half of them don’t understand the value of advertisements on Social Media or digital. They would give you a fixed retainer and wait for magic to happen, they should learn agencies are not magicians to get you likes, comments and shares for Free.

This makes the agency gets into foul practices. I know of an agency that has hired people to like and comment on posts or write fake reviews for the brands. This doesn’t solve the purpose of using digital.

#3 Unrealistic Indian Client Expectations:

I want a viral video‘ – this is most commonly heard term by all the agency owners, I am sure all of us have passed that sheepish smile when the client sets the expectations like these.

A client of mine once asked me ‘I can’t see my advertisements, what’s the point in spending money’

I lost a client once because I couldn’t be part of the weekly client meetings whereas; the team that was fully equipped served them with all the dedications.

The client immediately removed me as an admin of all their social media account and called me to inform ‘you are too busy so let’s work together when you have time’.

A client that we worked with used to give us his professional KRAs to handle, the reports that he was supposed to make as the social media manager would come to us, the tweets that he was supposed to draft for a certain event that he was hosting, it would come to us.

Clients at times take agencies for granted, we have had requests for banners, wedding and birthday invitation cards, daughter’s naming ceremony card etc. In the initial years, we would do this to satisfy the client but later we decided to say them NO or put across a fee for this favour and you will realize they would never ask you again for a favour.

#4 Client Payments:

The biggest mistake agency owners do: they don’t sign a contract with the client before they start offering their services and don’t ask for payments on time.

An ideal agency would raise the bill on time, and demand payments on time and also stop offering the services if the payments are not made.

I have burnt my fingers with the client thinking they are really big and they would pay us, after a 6 months credit period it took us almost a year to extract only 20 to 30% of the retainer fee.

Client payments is the fuel for the agency’s happiness, don’t compromise on this.  Learn about payment history of clients from other vendors who they have worked it. A poor paying client slowly becomes blacklisted in the city and no one would like to work with them.

#5 Usage of Cards:

This is again one of the biggest challenges. For Facebook Advertisements we generally convince client to use their cards, as there is a lot more transparency.

Raising bills from your side, you will have to pay reverse service tax, charge client service tax upon billing and a client always think that the budget is not rightly optimized, asks for proof just to stay assured that the money has gone in the right hands.

As an agency we insist clients to use their cards and route their account under our agency account. Either take an advance payment from client for advertisements as this is something that you can’t chase them for later.

#6 Lack of Talent:

Digital Marketing is accidental for many, it’s not by choice. When it’s not by choice, the candidates don’t pour their heart in. Most of the SEO guys in Chennai city are still following what they learnt in 2011 – directory submissions whereas Google wants great content in first place.

Talent is the biggest problem in the digital marketing industry, most of them are freshers and you will have to mould them to become a good digital marketer.

Whereas, the experienced ones generally don’t like to hang out in agencies as they find their solace on the client side. This gap is yet not met, and it will take another few years to have good digital marketers in the country.

#7 Rising Attrition:

Most of the agencies in India are filled with millennials, and working with a millennial mindset is a challenge in itself.

Attrition is one of the key challenges that agency owners are facing, floating employees have become a norm. As the digital crowd starts becoming 30+, there is going to be a lot more stillness in the floating populace.

A recent survey I did with 100+ Digital Marketing Agency Owners in India on State of Digital Marketing Agency in India reported that 85% of Indian Agency owners have challenges in hiring the right talent.

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Digital Marketing Agency Problems

#8 Scaling Up An Agency:

Most of the agency owners get stuck here! They don’t know how to scale. Many think opening offices in new location is a new name to scaling up!

I once asked this question to Mahesh Murthy, CEO of Pinstorm on his visit to Chennai!

Sir, I have been facing this challenge of scaling up! How to solve?

He replied, ‘what do you mean by scaling up? I opened offices across India but now boiled down to only one office in Mumbai with a small but hard-working team and we work with only those clients who can afford us, as long as you are making your money, you don’t have to lose your peace.

I did a quick call with Vivek Bhargava, CEO of Communicate2India which got acquired by Dentsu,

I asked him how does a company get acquired?

and he replied ‘it is never about all the services that you offer but its about what you master the most’ he quoted an example of how their company acquired a small startup that was all about great UI designs, so when the entire team is offering only one great value-add it can become a great fix.

Every time you think of scaling up an agency, you might see your crucial employee leaving.

Everytime, you want to do something big you might see your existing client becoming unhappy!

There is a thin line between your current state and your state of imagination. I have also seen this trend Mumbai based agencies are scaling up much faster than other city-based agencies. Start signing contracts with your existing clients, take them in confidence to sign contracts with you for 2 years. First, secure what you have and this security will help you convince your investors.

#9 Work-Life Balance

I’m pretty much always sunk knee-deep in work. Not that I don’t like to take breaks and go on a vacation, it’s just that the market is so competitive that I might just miss out on something huge by the time I book my flight tickets.

It’s either the fear of missing out or your client might just urge to get something done really quick.

There will come times when you can’t refuse and end up pulling all-nighters. Times of this draw a lot out of you and you definitely have to find your own ways to strike a balance between your personal and professional life.

#10 Maintaining Employee Culture:

Your employees have to be in complete co-ordination with one another for maximum productivity. You wouldn’t be able to make them work as a team unless you keep them happy. As long as you give your employees perks and maintain a healthy working atmosphere, you don’t have to worry about being at their backs to get the job done.

I understand running an agency is a challenge but don’t lose heart! You are empowering people, educating the clients and helping India bring the radical change called ‘Digital’ so bear with the pain and you shall see the light. Consistency is the key! Keep doing your good work, set up processes and define great parameters of internal and external growth.

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