Cutting Cost

Trimming Budgets for a Better Way Forward

There has never been a better time to look at trimming budgets for a leaner agency.

In this post-Covid era, trimming budgets to maximise profits without adversely affecting business is arguably the most important issue facing advertising agencies. Creating a cleaner, leaner company has never been so important. The challenges caused by the pandemic have affected all aspects of all businesses. Coming out of this long tunnel, we can help you find the best way to make this a great year. 

Where to Start When Trimming Budgets

The starting point for any cost-cutting exercise is to take a long, hard, honest look at where the money is going. Either get your finance team people to do this or preferably collaborate with them on a joint fact-finding mission. Key points here would be:

Investigate where the general spend is going within your company: It is crucial to match your spending with your goals. The most common cause of wasted resources is the misdirection of them.

Identify which departments are showing the best returns on investment: Analyse the spend and return of each of your departments. You will then get a feel for which are reaping rewards, and which are underachieving. Remember that non-profit making does not necessarily mean that a cull is needed. It may be a case of simply tweaking the department to get it back on track. 

Identify and eliminate overspend: If there is an area of overspend in your company, take a long hard look at why. It could be your fault for misdirecting resources, or it could be that the department is not on the same page as your company game plan. Trimming budgets here should be relatively easy. 

Ensure your resources are being used efficiently: Check that your project plans are in sync with where the resources are going. If not, investigate all departments to find gaps in communication and failing areas.

It is crucial to be brutally honest with yourself when analysing goals and expectations moving forward. Always ensure that you track everything from the ground up. Often the truth is to be found at the coal face.

Integrate Technology and Utilise Remote Working

Many agencies have failed to recognise the ease with which a centralised enterprise resource system can be implemented. Also, the enormous benefits that this will bring. Check out our recently published article on this subject here. As the world shrinks both through working from home and the increase in technology, there is no need to have individual enterprise resources in your different territories.

The pandemic has massively increased the world of home working, and probably permanently. As businesses see the positives on their balance sheets, they will be less likely to go back to the old ways of permanent office working. Carl Witton, Chief Growth Officer & Partner at Tangram, looked at the most effective ways to get the best out of remote working in a recent article.

Of course, staff working from home will mean a streamlining of your outgoings. Efficiency is key. There is often a tendency to look at staff reduction as the go-to place when streamlining; this is not always the right approach. Short-term gains can soon turn into long-term problems. Instead, take a look at your business processes. By improving your processes, you will realise the same cost savings without losing your most valuable assets, your staff.

Cutting Costs Without Cutting Corners

You have reached the point of identifying what is happening in each of your departments. Now it’s time to plan a strategy to work within your new budget. Sit down with your senior managers and look at a balanced approach for everyone. Of course, equal cuts in all departments sound fair, but it rarely works like that.

Start with the positives. Single out the highest performing departments. Now, look at ways of trimming budgets here to fine-tune what is already working. As you look at each department, try to see it in the context of the whole team. Each department should be an integral part of the whole, rather than an individual group working outside the company. Try to balance the numbers of ideas people and action people. Some people do, and some people think; both are important to any successful business. 

Save From the Ground Up

Assuming that all cost-cutting has to come from the top and trickle down is a common mistake. This approach rarely works. Senior managers look at how much they are required to save then pass on the responsibility to department heads. Invariably this then means that short-term strategies are implemented rather than a measured long-term approach.

We recommend working from department floors up. Over the last half dozen years or so, companies like Dell have adopted zero-based budgeting systems. Success has been better than many people had forecast. Individual departments bring ideas on budgeting to their senior managers. Software spend, client meetings and entertainment, and advertising; just about everything is included. They then have to justify these budgets and the expected return on investments. This forward-looking approach is based on activity and is usually more accurate than looking back at previous trends. 

Avoiding Scope Creep

Possibly the single most worrying problem faced by the advertising business, and it often goes completely undetected. It occurs simply by the addition of unauthorised additional features or functions of a new product or project. It builds insidiously. 

Generally speaking, scope creep happens when new components of a project are added after work has started. These changes are often not correctly reviewed or even reviewed at all. Your team is then expected to deliver the project with the same resources and in the same time frame as the original scope of work.

At this point, proper resource management software comes into its own. 

Clock Watching is Not Necessarily Trimming Budgets

The chances are that more and more of your staff are now working from home; this creates much greater flexibility, as discussed in the aforementioned article. While time spent is less of a factor, as long as results are in line with expectations, time waited is still a factor; a difficult balance. As a Manager, you don’t need to be breathing down the necks of everyone, but at the same time, wasted time means unrealised results. 

Now is the perfect time to look at your current systems. Are they assisting you correctly or costing you money? Is your team constantly wasting time searching for documents, or using multiple platforms, as previously discussed? Are they spending many hours learning new systems when a short tutorial would solve the problem? 

Communication is key here. Talk to all your team members to learn where they are spending time and possibly wasting it. Ask them what they want; they might not always have the confidence to ask. In most cases, their needs can be met with a software or process solution. Make sure your resource management system is doing what it is supposed to be doing. 

When you have a fuller idea of what is happening in every department, you will be in a position to act. At this point, it may become apparent that external help will be the best answer. Expert advice taken now can save you in the long term. 

Trimming Budgets

Get Agency Insights Monthly

We host monthly webinars where we share our knowledge and expertise in advertising, digital and creative agency operations, workflow, agency management systems, and finance processes.

See what we have on offer this month and register to join.  

Scroll to Top





Helen Johnson
+61 404 458 797


Christian Arpe-Hansen
+45 31 36 66 03