September 27, 2023

5 Common Mistakes to avoid while running an agency

6 min read

New Delhi (India), January 29: It is widely believed that India is witnessing an agency boom at the moment. Even in the midst of a pandemic, when most businesses had to shut shop, many agencies were springing up all over the country. (LBB, 2020) But starting an agency and running an agency are two very different things. And a quick deep dive at numbers or even a short conversation with any industry insider would help you see the real picture pretty quickly. The number of agencies that fold within a couple of years is pretty significant.

But it would be naïve to assume that the failure of these agencies is to be blamed on one big reason or lack of capability on the part of the people running them. The truth of the matter is that these agencies work in a market with squeezed margins and increased competition, with multiple factors that make mere survival difficult. But that is not to say that running an agency successfully is a pipedream. What’s more important than ever is to avoid mistakes that could kill your venture before it starts. To put it simply, a ‘what not to-do’ list.

(A) Purpose – The very first reason many of these agencies fail is the lack of a concrete purpose or vision. You think you have the necessary skills or relevant knowledge to start out on your own. So, you take the plunge under the assumption that once people see your work, getting clients is going to be a piece of cake. But within a couple of months, reality hits.

To put it bluntly, mere talent isn’t enough to run a successful agency. You need to have a solid vision to make yourself stand out from the crowd. What is the reason for you to start your agency? How is it different from the competition? Are you willing to take risks? It is imperative to have clear answers to all these questions before you start. It is also important to be willing to take risks. Starting with no vision and an aversion to being disruptive in the market is probably a death knell even before you start.

(B) Pricing – Another reason why many agencies fold in India is undoubtedly the low cost of input or investment involved. While this is touted as a major reason for the agency boom in India, it has led to a situation where the market is filled with indistinguishable agencies competing with and eventually cannibalizing each other. So, the only way many agencies know how to distinguish themselves from the competition is pricing. In order to survive and grow, they agree to prices way below an acceptable level. This is a grave mistake to make. The moment you start undervaluing and underpricing your work, you are effectively communicating that your work is substandard. While it is true that most clients are price-sensitive, it is also a fact that clients looking for quality do not mind paying the price if they think the output is worth it. It is also the only way to get long-term loyal clients and build a reputation. Clients acquired through low pricing are just going to jump the shark when the next agency offers them an even lower price.

Another aspect of this is the burnout and disillusionment that comes with accepting work that is unchallenging and underpaying. Most agency employees today are working longer hours and believe they’re underpaid. (Digiday, 2020) Hence, a big part of running a successful agency is the ability and courage to say no to work that underpays.

(C) Collaboration– In India, the top agencies get the major share of the advertising pie. These agencies have well-established departments and areas of operations providing a variety of functions. On the contrary, most small or mid-size agencies have one area of operation- SEO, copywriting, design, etc. This then becomes another hurdle they struggle with while acquiring clients. This is one major reason why many mid-size agencies are dying off. In other words, these agencies are quickly becoming the Blackberry phone of the advertising world.

The solution to this problem lies in collaboration. In order to survive, small agencies need to join forces to optimize their strengths. The benefits of combined synergies are not just limited to survival and growth, but also better output, increase in creativity, time saved, and new access to previously untapped clients.

(D) People and Processes– This is the step that is probably most ignored when it comes to running an agency. Most agencies think that just by hiring talented people, they can ensure the success of their business. But this cannot be further from the truth. Hiring the right people and investing in the right people, after all, are two very different things. Running an agency means you are working with highly creative professionals- people who have strong opinions, artistic tastes, and possibly, egos. How you deal with your employees is a strong factor that could make or break your agency. In an article published in January 2022, building healthy employee relationships was seen as imperative to the success of any business, particularly agencies that struggle with high turnover rates. (Forbes, 2022) Therefore, it is important to build honest relationships and make bonds with your employees that are based on mutual respect and appreciation.

Another important aspect of this is to set up processes that are simple, effective, and time-saving. From creative pitches to communication frequency and reporting, it is necessary to have clear systems in place. This can be extremely helpful for employees to know what’s expected of them, how to go about it, and help them to review and take corrective action when needed.

(E) Finance– Since most agencies are run by people whose main strength lies in their creativity, mismanagement of the financial aspect of running an agency is much too common a mistake. The lack of sound systems and processes in place leads to a situation where an agency becomes a prime target for being taken advantage of. It is, therefore, necessary to ensure that there are set processes in place and that these are followed irrespective of the work or client. Having robust and transparent contracts is necessary to gain client trust as well. Many large advertisers have long felt a lack of clarity in their relationships with media agencies. (McKinsey & Company, 2018) Being upfront with clients at the start of negotiations and ensuring that payments are received at pre-decided intervals can help ease out these worries. Being honest with your finances at every step is paramount to ensure longevity in the market.

It is also important to be aware of the many schemes and policies put in place by the government to help out small businesses. In recent times especially, there are many schemes intended specifically for budding entrepreneurs in MSME sectors like ‘MSME Business Loans in 59 Minutes’ for easy and quick loans, ‘Market Development Program’ for expansion to international markets, and multiple tax credits as well. (OkCredit, 2020) It is important to do extensive research on these policies to ensure that you’re getting the maximum benefit.

Like any small business, running an agency also depends on a multitude of complicated factors that need to work in cohesion and harmony at all times. And while success is not something you can predict or guarantee, avoiding the crucial mistakes listed above can definitely help you sustain and grow in this highly competitive market. 

Agam Chaudhary- With 15 years of experience in the digital marketing and technology sphere, Agam brings with him a vast array of knowledge as well as innovative and exceptional processes sure to deliver organization-wide transformations. Having run a successful agency for more than a decade and worked with brands across various industries and geographies, Agam has a unique view and understanding of the digital sphere that is both contemporary and disruptive. In the last 5 years, he has also helped various agencies and e-commerce businesses to scale up and multiply the size of their billings/profits. His latest assignments have been launching NFT Marketplace and the Metaverse game. He can be reached at [email protected] /


LBB. (2020, December). The Class of 2020: 14 Agencies That Launched in the Midst of a Pandemic.

Digiday. (2020, March). Digiday Research Report: Ad agency employees are overworked and underpaid.

Forbes. (2022, January). how-agencies-can-ensure-strong-employee-relations-at-the-hiring-stage.

McKinsey & Company. (2018, May). Truth in advertising.

OkCredit. (2020, December).

26 thoughts on “5 Common Mistakes to avoid while running an agency

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