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The 2023 Agency Valuations Report

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During 2022, Productive developed a questionnaire with one goal in mind – to better understand agency mergers and acquisition trends. Whether you’re trying to sell your agency or are just curious about the value you’ve created, understanding factors that impact your agency’s value is a crucial part of steady growth.

From January to June 2023, Productive managed to gather responses from 796 agency businesses on questions related to agency valuations. The data was gathered from a wide range of agencies, from more than 60 countries through the Agency Valuation Calculator.

The gathered data was analyzed and consolidated into the 2023 Agency Valuations Report with the aim of providing insights to agency professionals that are based on recent data.

cloudways-campaign-blackfriday

Keep on reading to get the latest scoop on agency valuation trends.

The Basics: Size, Agency Revenue, EBITDA and Growth

Agency size might not seem like the most obvious metric you should keep track of, but oftentimes it correlates with revenue, meaning that bigger agencies usually bring in more money.

When looking at the size, agencies were divided into four categories:

The-Basics Size-Agency-Revenue-EBITDA-and-Growth

Source: Productive.io

When speaking about agency revenue, respondents were divided into 2 categories: above and below $1M USD in revenue. This revenue category, combined with EBITDA, determined the multiplier used to value your agency. This means that the more you earn the higher the multiplier and, in the end, the higher the valuation.

The findings were as follows:

The-Basics Size-Agency-Revenue-EBITDA--

Source: Productive.io

In terms of average annual revenue growth, in a 2 year period from 2020 to 2022, around 22% of the companies grew below 10% a year while almost half of the agencies said that their average yearly growth was over 30% for the same time period.

Client concentration is another key aspect of your agency’s value. It shows the percentage of yearly revenue brought in by your largest client.

You’re probably thinking: “Why would this be important?” and it’s understandable. At first, it doesn’t seem like something all too important, but it shows how much risk your business might be carrying. If your biggest client churns, how much of your yearly revenue will be lost? It’s generally agreed upon that when looking at client concentration, anything below 25% is favorable.

Around 26.3% of the surveyed companies reported that more than 30% of their yearly revenue comes from their largest client.

The-Basics Size-Agency--Growth

Source: Productive.io

In terms of revenue, it’s also important to know how much of an agency’s revenue is recurring. Knowing your recurring revenue is valuable because it provides investors with a certain level of safety in regard to the business they’re acquiring. More than half of the agencies participating in the survey reported that 50% or more of their revenue is recurring.

The-Basics Size-Agency-Revenue--and-Growth

Source: Productive.io

Business Development and Management Robustness

Buyers value well-established processes and documented workflows. It shows that your agency has structured operations. Having a business development strategy in place is also recommended, it helps buyers see how your agency will operate once it’s sold.

Most of the businesses reported that they had a business development strategy in place, but the founders were still involved to some extent. Around 80% of the respondents said that they have some level of management in place but their founders are still involved in management.

Business-Development-and-Management-Robustness-

Source: Productive.io

Another thing that contributes to the perceived stability of your agency is the willingness of management to be involved in the future work of the agency after it’s sold. The findings show that most agency owners plan on staying with the company for anywhere between 12 and 24 months.

One of the most interesting findings of the study is that on average, less than half of the agencies use an integrated platform that consolidates all of their business data.

Data-Consolidation-and-Business-Operation-Tools

Source: Productive.io

Effective agency management relies on the strategic consolidation of business data. Harnessing this data allows agencies to streamline operations, allocate resources efficiently, and make precise forecasts for future trends.

To enhance agency valuations and maximize opportunities for mergers and acquisitions, undertaking this pivotal step is imperative. Explore the comprehensive agency business management capabilities of Productive for a seamless end-to-end solution.

The Dos and Don’ts

To help you quickly assess whether you might be making some of the most common mistakes, take a look at the list of do’s and don’ts.

The-Dos-and-Donts

Source: Productive.io

Overview: What the Agencies With the Best Valuations Are Doing

You might be interested in seeing how you fare against the top agencies. Below you can find a performance sheet for the top 5% of agencies with the highest valuations for both revenue categories: revenue below $1M and revenue above $1M.

Overview-What-the-Agencies-With-the-Best-Valuations-Are-Doing

Source: Productive.io

Several evident distinctions exist between the leading agencies in the over $1M revenue category and those in the under $1M revenue category. While both groups demonstrate elevated profitability and swift growth, the top agencies with revenue below $1M rely more heavily on founders for business development, as many lack a formal sales strategy. Additionally, they tend to utilize a variety of disparate tools that do not consolidate their business data into a unified platform.

Overview What the Agencies With the Best Valuations Are Doing-

Source: Productive.io

Takeaway

In the dynamic landscape of agency valuations, a few key moves can significantly impact your agency’s worth. First off, prioritize steady growth by diversifying your client base and aiming for a consistent revenue increase, preferably over 30% annually. This not only improves day-to-day operations but significantly boosts your agency’s market value.

Next, consider risk management by maintaining a diversified client base—keeping client concentration below 25% is a good rule of thumb. Ensure that at least half of your agency’s revenue is recurring, offering a stable income stream that appeals to potential investors.

Operational efficiency is crucial. Develop well-documented processes and workflows, showcasing a structured operation that appeals to buyers. Embrace integrated platforms for data consolidation to streamline operations, allocate resources efficiently, and make precise forecasts.

Lastly, plan for the future. Even after a sale, your involvement matters. Most successful agencies have their founders staying with the company for 12 to 24 months post-sale, contributing to the perceived stability of the business.

In essence, the key is a strategic approach that combines consistent growth, risk mitigation, operational efficiency, and thoughtful planning for the future, all of which contribute significantly to elevating your agency’s market value.

Get an Estimate of Your Agency’s Value With the Agency Valuation Calculator

Whether you’re contemplating a sale or simply curious, understanding your agency’s value is crucial for building long-term benefits. Ensuring stable revenue streams, cultivating a diverse client base, establishing a strong management structure, and leveraging integrated data are essential elements. These factors not only improve day-to-day operations but also substantially increase the market value of an agency.

Try the Agency Valuation Calculator to learn what influences the total value of your agency, plus how you can increase it.



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The New Creative Hub: Dubai’s Agency Scene Evolves

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We bet that, recently, at least one of your friends visited Dubai for a reason. Why are we hearing so much about Dubai these days—not only for its tourist aspect but also for digital marketing initiatives? 

We will find out why Dubai is now a new digital marketing hotspot in this blog post – career opportunities and digital marketing agencies in Dubai. 

Keep reading. 


Key Takeaways

  • Dubai offers a sizable market to companies looking to increase their online presence.
  • Because businesses in Dubai are eager to take advantage of online platforms, digital marketing is one of the most in-demand skills in the job market.
  • Marketers predict that Dubai’s digital marketing ecosystem will continue to grow quickly in the coming years. 
  • For professionals, agency owners, and brands, Dubai offers a plethora of opportunities in the digital marketing space. 

What’s Inside?


An Overview of Dubai’s Digital Marketing Atmosphere

In recent years, Dubai has solidified its status as a hub for digital innovation, offering businesses a dynamic environment for marketing success. With widespread access to the latest tech and a business population that relies on the internet, the city presents unparalleled opportunities for brands to connect with their target audiences. 

Dubai is a digital-first city. It is equipped with affordable high-speed internet, and almost all of its population uses smartphones. This makes effective digital marketing services in Dubai a foremost concern for businesses.

According to research on why Dubai is an attractive area for international business, Dubai has radically changed over the last thirty years.

It has become a major business state with a sustainable and branched-out economy. Especially over the last ten years, Dubai has noticed enormous economic development as a result of urban development that converted the uninhabited desert of Dubai into a commercial, residential, economic, and tourist state.

Additionally, it is well known that Dubai boasts a massive international trade network that spans nearly 180 states worldwide, offering investors many options for international marketing channels to promote a diverse range of products and services. Hong Kong and Singapore are the two largest export and reexport hubs globally, with Dubai coming in third.

Of course, the city also gains from all kinds of marketing efforts & channels, including digital marketing, as new businesses, investors, and clients come on board. So much so that recent research has shown that a wide range of industries in the United Arab Emirates profit from digital marketing, and they use related tactics to influence business profitability by raising brand awareness, driving more traffic to websites, and generating leads. 

Given these factors, effective digital marketing has become a priority for companies looking to thrive in this fast-paced market. This has led to an evolution in Dubai’s agency scene, where creative strategies and cutting-edge solutions are reshaping how businesses approach their online presence.

Digital Marketing Agencies in the UAE Worth It?

Let us continue with one of the most common questions people ask on the internet about the digital marketing ecosystem of Dubai. The answer is a resounding yes. In a market as competitive and digitally driven as the UAE, partnering with a digital marketing agency can make a significant difference. 

According to our Exclusive Q&A with Sacha Christe, CEO of Emirates Graphic, digital marketing agencies in Dubai are especially worth working with. 

In the said Q&A, Christie states that Dubai’s multicultural audience is indeed a “unique challenge and opportunity” at the same time. To tailor digital marketing strategies effectively, digital agencies conduct thorough market research to understand cultural nuances, language preferences, and consumer behaviors. And finally, they create content and campaigns that resonate with various cultural groups while ensuring sensitivity and respect for diversity. He adds: 

Dubai’s business-friendly regulatory environment fosters innovation and attracts agencies and businesses to operate and expand in the region. It provides a stable and conducive platform for growth, which is advantageous for agencies like Emirates Graphic.

What’s more, it seems that in the next few years, marketers anticipate Dubai’s digital marketing ecosystem to continue evolving rapidly:

Brands should stay ahead by embracing emerging technologies, staying updated on local trends, and collaborating with innovative agencies. It’s crucial to remain flexible and adapt to changing consumer preferences.

Dubai for Working Professionals (Scope of Digital Marketing in Dubai)

As we mentioned earlier, Dubai has quickly become a magnet for working professionals, particularly in the digital marketing sector. With its thriving economy and constant push toward digital transformation, the city offers endless opportunities for those looking to build or expand their careers. Digital marketing is one of the most in-demand skills in the job market because businesses in Dubai are eager to take advantage of online platforms.

From social media management and content creation to SEO, professionals can find a diverse range of roles within digital marketing agencies and in-house corporate teams. With Dubai’s commitment to staying at the forefront of technological advancements and its large consumer base, there is always a need for innovative marketing strategies. For digital marketers, this city offers a dynamic work environment and the chance to work on projects that shape global perceptions.

DAN-member agencies like Crowd are playing a crucial role in promoting Dubai as a prime destination for business. As a creative agency, Crowd has actively worked on campaigns showcasing the city’s potential to global audiences, emphasizing its business-friendly environment and advanced digital infrastructure. This is just one example of how digital marketing professionals in Dubai can be part of projects that have a global impact, helping position the city as a leading business hub.

Let us wrap up that section with two thoughtful responses to the query, “Is it hard to find a job in digital marketing or SEO in Dubai?

dubai-marketing-companies
dubai-marketing-agencies

Dubai for Agency Owners

For agency owners in Dubai, several digital marketing domains present lucrative opportunities. With a significant portion of the population active on social media, social media advertising is a leading domain. 

best-digital-marketing-agencies

According to Statista, social media ad spending in the UAE is expected to reach approximately $388.40 million in 2024, indicating a high demand for agencies specializing in targeted campaigns on platforms like Instagram and TikTok.

SEO and content marketing are also crucial due to the competitive business environment. Brands seek agencies that can optimize their online presence, driving organic traffic and brand visibility.

Influencer marketing is another domain thriving in Dubai. The city’s diverse culture and global appeal make it a hotspot for influencers, and agencies that can connect brands with the right influencers are in high demand.

Paid advertising through PPC campaigns remains a key strategy. Digital ad spending in the UAE continues to grow, with businesses looking to agencies for data-driven strategies that maximize their ROI.

These popular domains offer agency owners a chance to diversify their services and cater to Dubai’s dynamic market, allowing them to position themselves as industry leaders. 

Here are some hints as to why Dubai’s digital marketing sector is expanding, in case you decide to establish your agency there:

digital-marketing-industry-in-dubai

Dubai for Brands & Businesses

With digital advertising in the UAE projected to reach $1.48 billion by 2028, Dubai presents a vast marketplace for brands seeking to expand their digital footprint. This environment provides brands with the tools they need to drive growth and build a strong online presence.

Additionally, as a part of Dubai’s marketing ecosystem, brands and companies have many opportunities to collaborate with excellent, locally focused digital marketing agencies, such as WGG Digital Marketing Agency, a DAN member. 

We live in Dubai; we work in Dubai; we know how to work with digital marketing to grow your business in this city.

WGG has established itself as one of the leading agencies in the UAE. For us, each campaign is not just numbers but also a representation of the vibrant life of Dubai and the UAE. With a team versed in the latest digital trends and tools, we offer a panoramic view of modern marketing. In the ever-changing digital marketing in the UAE, WGG is the most adaptive and evolving agency.”

According to the statement on their website, WGG begins each project “by diving deep into Dubai’s online market. It’s paramount for us to understand the digital platforms that have the most traction in the region.” Also, they are “committed to grasping the digital habits of both locals and the expatriate community, ensuring our campaigns cater to each distinct audience segment.”

Dubai’s digital marketing landscape is rich with opportunities for professionals, agency owners, and brands. With a tech-savvy population and a booming digital advertising market, the city offers a dynamic environment for growth. 





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Agile Development Methodologies

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Agile development methodologies have become essential for software product development. Agile frameworks help teams adapt quickly to changing requirements and deliver high-quality software efficiently. 

In this post, we’ll explore three key Agile methodologies—Scrum, Kanban, and Extreme Programming (XP)—and their applications in the world of software development, especially within digital agencies.

agile-development-techniques

Overview of Agile Development

Agile development is a set of principles that prioritizes iterative progress, customer collaboration, and flexibility. Unlike traditional methodologies that often follow a linear process, Agile embraces change and encourages continuous improvement. For digital agencies, Agile methodologies offer numerous benefits, including faster delivery times, improved responsiveness to client needs, and enhanced product quality. These benefits are particularly valuable for agencies providing software product development, as they enable more efficient and effective management of complex projects.

Scrum Methodology

Definition & Key Features

Scrum is an Agile framework that focuses on delivering incremental value through short, time-boxed iterations called sprints. The Scrum team consists of three key roles:

  • Scrum Master: Facilitates the Scrum process and removes impediments.
  • Product Owner: Represents the client’s interests and manages the product backlog.
  • Development Team: Self-organizes to deliver the product increment.

Core practices include:

  • Sprints: Typically 2-4 weeks long, where a specific set of features is developed.
  • Sprint Planning: The team plans the work to be done in the sprint.
  • Daily Stand-ups: Brief meetings to discuss progress and obstacles.
  • Sprint Review: A review of the completed work with stakeholders.
  • Sprint Retrospective: A reflection on the sprint to improve future performance.

Advantages of Scrum in Software Product Development

Scrum enhances teamwork and transparency, providing better predictability and allowing teams to adapt quickly to changes. It is particularly effective for projects with evolving requirements and multiple stakeholders.

Real-World Applications

Digital agencies often use Scrum to manage complex projects and client requests. For example, a marketing agency might use Scrum to handle various client campaigns, ensuring each campaign is delivered in increments and adjusted based on client feedback.

How Agencies Can Implement Scrum

To adopt Scrum, agencies should start by training their teams on Scrum principles and practices. Tools like Jira or Trello can facilitate Scrum processes, helping teams manage backlogs and track progress.

Kanban Methodology

Definition & Key Features

Kanban is a visual system that emphasizes continuous delivery and workflow efficiency. The core concepts include:

  • Kanban Board: Visual representation of work items with columns representing different stages of the process.
  • WIP Limits: Limits on the number of tasks in each stage to prevent bottlenecks.
  • Continuous Flow: Work items move through the process without fixed iterations.

Advantages of Kanban in Software Product Development

Kanban provides a clear view of workflow and progress, helps identify and address bottlenecks, and allows teams to respond to changing priorities without rigid sprints.

Real-World Applications

Kanban is ideal for agencies with dynamic project requirements. For instance, a web development agency might use Kanban to manage tasks across multiple projects, ensuring efficient resource allocation and quick response to new client needs.

How Agencies Can Implement Kanban

Agencies can start by setting up a Kanban board to visualize work items and establish WIP limits. Tools like Kanbanize and Monday.com can support Kanban implementation, making it easier to manage workflows and track progress.

Extreme Programming (XP)

Definition & Key Features

Extreme Programming (XP) is an Agile methodology focused on engineering practices and customer satisfaction. Key practices include:

  • Pair Programming: Two developers work together on the same code to improve quality and collaboration.
  • Test-Driven Development (TDD): Writing tests before coding to ensure functionality and reduce bugs.
  • Continuous Integration: Regularly integrating code changes to detect issues early.
  • Refactoring: Continuously improving code to enhance performance and maintainability.

Advantages of XP in Software Product Development

XP promotes high-quality code and rapid feedback, resulting in better software quality and faster development cycles. It is particularly beneficial for projects with complex requirements and high stakes.

Real-World Applications

Digital agencies focusing on high-quality software or custom solutions can benefit from XP. For example, a software development agency working on a new app might use XP practices to ensure the codebase is robust and adaptable to client feedback.

How Agencies Can Implement XP

Agencies can introduce XP practices by starting with pair programming and adopting TDD. Tools like Jenkins for continuous integration and various refactoring tools can support XP practices in daily development activities..

Conclusion

Agile methodologies—Scrum, Kanban, and Extreme Programming—offer unique benefits for software development and digital agencies. By understanding these frameworks and their applications, agencies can enhance their project management processes, improve collaboration, and deliver high-quality results.

Explore these methodologies to find the best fit for your agency’s needs and drive success in your software development projects.



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How Bot Traffic Is Impacting Digital Marketing?

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Online bot traffic is increasing every year. This is having a marked impact on digital marketing campaigns. In this article, we discuss how bot traffic is interfering with your digital marketing exercises. 

Gone are the days when you could feel happy about the growing numbers of visitors to a website. It is now estimated that almost 50% of internet traffic is dominated by software applications known as bots. They can be created to help you, but others can be created with ill intent. The bad news is that none of them will buy products or sign up for your services, meaning they can seriously hinder marketing campaigns. In the article below, we discuss how bot traffic is impacting digital marketing.  

It’s a Robots World With Increasing Bot Traffic Online

A recent report by cyber security company Thales discovered that online malicious traffic has risen for a fifth consecutive year. The applications used to carry out these attacks, known as bots, now make up around 32% of all internet traffic. However, they also found that 49.6% of internet traffic is no longer human, but derived from bot activity.  

A bot is an application used online. Generally, it is programmed to perform a repetitive task. Many of them come in very handy, helping crawl websites to see what they contain or even assisting in customer service chatbots. Yet many are malicious and are used to deploy malware attacks that can steal data and harm websites.  

In addition to this, as a digital marketer, some bots that exist in grey areas you should be aware of. These include ones that inflate social media statistics.  

Checking for Bot Traffic on Your Website 

If you are running a digital marketing campaign, hoping to direct quality traffic to a website, you need to know how much of this is bot traffic. Once you remove bot traffic from your statistics, you can get quality data about what is and is not working.  

You don’t need to pay for an advanced subscription program either. A free tool to check website traffic will suffice, providing you with information on traffic stats, any referring domains, and the top search ads. You can then upgrade if you need more functionality. By combining the results with the pointers below, you can help pinpoint bot traffic and remove it from your key performance indicators.  

Analyze Page Views 

One way to tell if you have bot traffic is to check your page views. An unexpected spike could mean you have been the target of bot traffic. However, it could also be a genuine interest in the page, so check where the traffic originates.  

Referral Traffic

Referral traffic is a good place to look for bot activity. Bots can create fake referrals to get people to visit their websites.

Time on Page 

This is a technique you can use by looking at your own on-site statistics. Start by checking your bounce rate. Bots won’t hang around looking at products, watching videos and reading news, so a high bounce rate can indicate traffic is coming and leaving fast, the key sign of bot activity. This can also be seen in pages with a low on-page time.  

Check Where the Traffic Originates From

Bot traffic usually comes direct. Very seldom will it come from a search engine. If you are getting traffic from strange locations, it may also be bot traffic. For example, if you have an English-language website and most of your traffic comes from China, it is probably bots.

bot-traffic-in-digital-marketing

Bot Traffic and Its Damage to Marketing Campaigns

The damage bots cause to digital marketing campaigns comes solely from how they skew your data. Bots will make things look great in one aspect. They can be pushing your social media campaign to thousands of views, or sending streams of traffic to a website. However, it is not real people behind it and that is where bots can make your campaign come undone.  

Without a human behind your traffic, you can not get a picture of your audience. Bots have no real location, income, gender, or anything else that can make up a user profile. Therefore, it makes it very hard to tailor landing pages for certain audiences using this data.  

They can seriously increase PPC costs. As they scour a page they will click on ads and even fill out forms. With no conversions, you are left paying for worthless ads. If you host the ads, then other people’s marketing will soon see a lack of conversions and go elsewhere.  

There are several ways to eliminate bot traffic, or at least cut down on it. Monitoring your traffic closely using a website traffic checker and on-page metrics is one of them. In a marketing campaign, try to switch to results-based payment, not one that tends to pay based on vanity metrics such as clicks or shares. Finally, make sure you vet anyone you work with in campaigns. This includes any affiliates, publishers, or websites you may be getting links from. By using this, you can cut down bot traffic and increase the efficiency of your marketing campaigns.  



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