Build a Better Agency Podcast

Episode 517 The Secret to Agency Profitability with Michael Farmer

33 snips
Aug 31, 2025
Michael Farmer, a seasoned consultant and author, shares his wealth of knowledge on agency profitability and the disconnect between value and fees. He reveals how unclear scopes and excessive resource use can erode margins. Highlights include the importance of developing a data-driven understanding of agency output and how smaller agencies can thrive by focusing on client outcomes rather than just deliverables. The discussion emphasizes the need for agencies to adapt their strategies to navigate commoditization and prioritize meaningful relationships with clients.
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ANECDOTE

Ogilvy Scope Reconstruction

  • Michael Farmer reconstructed Ogilvy UK scopes and found rampant overuse of creative teams on briefs.
  • Implementing a rule of one creative team per brief reduced staff and restored margins.
INSIGHT

Doing Too Much For Too Little

  • Agencies routinely do too much work for too little money and respond by cutting talent.
  • The right response is to price work based on measured scope, not to downsize talent.
INSIGHT

Count Deliverables, Not Just Ideas

  • Agencies are factories producing measurable deliverables like TV ads and posts, not just intangible 'big ideas'.
  • Ignoring deliverable counts hides workload and undermines resourcing decisions.
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