What is an agency?

Here’s an existential question to begin our look at the foundations your agency business is built on: What is an agency?

But it’s important, because most people running agencies have never thought about it much — and some basic misunderstandings on this tend to be at the root of many problems.

One word, multiple uses

The confusion is not helped by the fact that the word ‘agency’ is variously used to describe:

1. Government bodies: The Central Intelligence Agency, the Environment Agency.

2. Brokers who represent one group of people/organisations to another group in a certain market to facilitate the trading of goods or services (usually commodities): Estate agency, Literary agency, Recruitment agency, Insurance Agency.

3. Professional services firms who provide specialist expertise and creative talent to achieve specific outcomes for business clients: PR Agency, Advertising Agency, Digital Agency, Design Agency, Marketing Agency, SEO Agency, and many many more. (Also, Law firms, Accountancy firms, Consulting firms, etc, even though they use the term firm rather than agency)

It’s fairly clear that your agency isn’t a government body.

You probably instinctively think that you’re in category (3).

But most creative agencies fall into a trap between being (2) brokers and (3) professional services firms.

This is particularly true with those billing for time.

The agency can then slip from being a professional services firm into simply being a broker.

For example, a client wants some copywriting, coding, or something specialist doing. They contact an agency, agree on six weeks of work for $x (probably also getting quotes from other agencies who could do exactly the same), and the agency arranges someone who will perform the task for them. Doesn’t matter if that person is staff or a contractor, the agency is essentially just acting as a broker. Pretty much just a recruitment/temp agency.

The Convivio Way is for creative agencies who want to be healthy and wealthy.

Falling into being brokers is the opposite of that.

You end up with a commoditised offering that anyone could provide.

To even make a living you have to constantly chase the deals, bargain over every detail to make a trade, play games between each side, and then just eke out your margin on the gap between the two sides. It’s joyless and not what an entrepreneur like you started a business for.

So the first foundational rule of understanding what your healthy creative agency is, is to focus on being a professional services firm, rather than a broker.

The client buys your agency’s expertise and talents to achieve a specific outcome. Who does what, when and for how much are secondary details you organise behind the scenes in your own business, not as an arbitrage between the client and the skills-provider.

The focus is the outcomes provided by your whole agency, being bought on the belief that your business has the expertise and talent to deliver them.

Nobody contacts a law firm and says “I need a lawyer for six weeks, who’ve you got and what’s their day rate?”, they say “I’ve got this messy HR issue and I need you to help me settle it in my favour.”

So your thinking of ‘what your agency is’ should not be arranged around the activities you do, and the people you can supply, for certain amounts of time.

Your agency should be defined around delivering outcomes.

What kind of agency?

You’re probably used to speaking of your agency as a very specific kind of agency: Digital, PR, Advertising, Marketing, Design, SEO, CRO, the list goes on.

All these words are focused on the ‘low altitude’ of the business. The things you do down in the fields. These words are fine for use in your marketing and positioning if that is useful.

But, at a high altitude, all these businesses are fundamentally the same. Clients hire them to deliver outcomes using their creative expertise and talent.

The business principles, economics, opportunities and challenges are the same. They’re not dictated by the digital/PR/SEO/whatever bit — they’re dictated by the ‘agency’ bit.

If, in your mind, you run a ‘digital agency’ it gets too tempting to focus on the ‘digital’ bit, and that will keep you down in the weeds.

So, for our purposes as founders, it’s more useful to think about what our agency is at a high altitude.