Delivery Margin Is the Other Half of Agency Growth

Every agency is working on bringing more revenue in. I’m working on how much of it you keep.

In a recent survey of agency owners, 51% ranked new business as the most useful topic for them right now. Only 6% put delivery and project profitability first. Out of eight topics, delivery profitability came in seventh, and it landed there at every revenue size in the survey.

I understand why. Pipeline is the pain owners feel every day. When a big client leaves, the hole shows up in next month’s revenue and everybody can see it. Margin leaking out of delivery doesn’t show up anywhere that loud.

The revenue you keep is what lets you grow or sell

There’s always going to be a need for more pipeline and more sales. The other side of that coin is how you keep more of what you bill. That means getting more efficient and effective at the work, and using AI and automation in a way that props up what makes your craft different while you capture the extra profit that comes out of it.

That margin is what lets an agency grow to $10M or sell. New revenue run through a delivery model that leaks margin gives you a bigger agency with the same leak, and more people to pay while you figure it out.

Every big shift I’ve lived through was a delivery problem

Delivery has been the throughline of my whole career, and I didn’t see how much until I looked back at it.

I started in SEO in 2010. Over the next couple of years Google rolled out the Panda and Penguin updates to go after spam and manipulation in search results, and agencies built around an algorithm had to existentially change overnight. Skill sets had to be developed. Pricing models had to be tweaked. The team we had when I started at that agency looked very different from the team that was there when I left, because we had to keep evolving.

A few years later I was running operations at a digital agency right when Facebook opened up self-serve ads to small businesses. I built that agency’s Facebook ads offering, trained the team, and built the systems and processes, all strung together with a buggy first-gen Ads Manager and a really big Google Sheet that constantly broke. In a short period of time we had more than a dozen people running Facebook ads, and we rolled out several more services at that agency after it.

Right now I’m modernizing legacy content marketing services and rolling out new AEO offerings with the agencies I work with. The questions are the same ones I was answering in 2010. What does the service look like? What are the expected outcomes? What do we charge, and how do we talk about it? What do we report? What’s the training, what’s the cadence, and what are the tasks that go into the project management system?

Every one of those questions decides how much of the revenue from that service the agency keeps.

Why delivery fixes sit on the plan for years

Most leadership teams I talk to know something in delivery needs work. Overhauling the content production service is on a lot of annual plans, and it sits there year after year because nobody on the team has the room to do it.

The fix usually gets delegated to a service lead, or it’s assumed the service lead is handling it. That person is so buried in client work they never get to it. Nobody holds them accountable for it, because their client work is what keeps the lights on. The service stays stuck in the stone ages, and the leadership team doesn’t understand why.

The options from there aren’t great. You can drop what you’re doing and somehow make the space to dig in yourself, and we all know that’s not going to happen. You can replace your delivery lead, who has usually been there a long time and is a cultural rock for the team. That’s a drastic move when the problem is that they never had the time.

You can hire someone above them, but at $3-5M the model usually doesn’t support another senior salary. Around $5M, maybe it does.

Whichever way you go, the work needs someone who isn’t billable. Somebody has to sit with the team, figure out where margin is leaking and how the service should be rebuilt, and then install it inside the team so it keeps running after they step back. That can’t happen in the gaps between client calls.

Keep working on the pipeline. Then give the delivery fix to someone who has the time to finish it, so it doesn’t end up on next year’s plan again.