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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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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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A Complete Guide to Using Original Research to Elevate B2B Content Marketing – TopRank® Marketing

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Let me know if this sounds familiar: You’re drafting a masterful thought leadership piece and want to back up your thesis with a strong data point. After a bit of searching, you find the perfect one! But when you click through to the source, it takes you to one of those “Billionty Best Statistics For Marketers” lists.

Okay, so you find the stat again, click through, and it takes you to… an older stat round-up list.

Many (many…) frustrating clicks later, you find you’re back in 2012. Maroon 5 is topping the charts, London’s hosting the summer Olympics, and the stat you’ve been chasing is no longer relevant. 

If you’ve ever found yourself at the bottom of the dreaded stat source rabbit hole wishing you just had reliable data – do I have a solution for you!

Original research. At TopRank Marketing, we’ve partnered with several big brands on ambitious original research reports that have driven amazing results for lead gen and brand awareness. We’ve got tips to share from our experience.

Your guide to B2B original research

Publishing your own marketing research reports, on the surface, may appear daunting — they take budget, time, and certain skills to do well. That’s why we’ve broken down the benefits and best practices of conducting B2B original research.

B2B original research influences your bottom line

Here are a few high-quality data points that drive home the value of publishing your own marketing research: 

  • 84% of deals are already won or lost before vendors even know they’re on the radar.
  • Research reports are a sought-after form of content. 55% of B2B buyers regularly consume research reports, and rate them as the most valuable type of content when evaluating purchasing decisions.
  • High-quality research and data are the top factors that motivate B2B buyers to express interest in a sales conversation.

In short: Your buyers are looking for your company to be the voice of authority and to offer insights that make their jobs easier, ahead of ever contacting your sales team. 

“Early-stage positioning can reduce the number of vendors that buyers consider before they arrive at the 70% Constant… and affect which vendors are top-of-mind when it’s time to engage sellers.” – The 2023 B2B Buyer Experience Report, 6sense 

Brand benefits of B2B original research

From strengthening thought leadership to giving your customers information they’re hungry for, publishing your own research data has a number of benefits: 

Becoming the  primary source

Being the source of a data point or unique research positions your brand as the authoritative origin of valuable information. Your company owns the insights and findings, allowing you to control the narrative and provide exclusive content to your audience.

Positioning your brand as an industry leader

The most powerful way to build your brand’s reputation is to publish data-backed thought leadership that aligns with your company’s vision and meets the needs of your customers and stakeholders. B2B original research helps your company present fresh, data-driven insights, and establishes your business as a go-to authority on new trends and issues within your sector. 

Cementing trust and credibility

By publishing the most sought-after data-backed insights under your logo, you gain the twin advantages of differentiation and credibility. Data-backed content builds trust with your audience by providing factual, relevant information that helps readers determine their own path forward. B2B buyers are often decision-makers looking for reliable information to guide their business strategies and purchases, and research-based content offers the credibility they seek.

Amplifying your brand 

When you publish high-quality information, other B2B thought leaders and media outlets take notice. As the primary source of original research, your company becomes a go-to expert. Any publication that cites your work, every podcast that discusses your findings, and each webinar that invites your brand thought leaders on to share their insights amplifies your brand that much further. 

Types of original research

The type of research you publish depends largely on your end-game: do you want the research to generate leads? Are you after greater brand awareness? Is this a marketing research report you want to publish on a regular cadence?

These are a few types of reports to consider adding to your marketing strategy:

Yearly benchmarks

These are annual studies that track key metrics or industry trends over time. They are useful for showing how specific areas evolve year after year. 

Example: LinkedIn 2024 B2B Marketing Benchmark

One-off research

Research focused on a single topic, often related to emerging trends, industry disruptions, or niche subjects. These are useful for addressing specific questions or timely issues.

Example: Sprinklr and LinkedIn: Proving the Power of Brand*

Customer Insights and preferences

Studies that survey your customers or broader market to understand buyer behaviors, needs, or preferences. This data helps craft solutions that better address customer pain points.

Example: Global B2B Buyer Report, BigCommerce 

Trend reports

Regular publications that analyze and predict key market trends in the B2B space. This helps your audience stay ahead of the curve with industry developments.

Example: TopRank 2023 B2B Influencer Marketing Report: Elevate & Ignite*

Reporting on disruptive trends

Research that measures how companies are reacting to major industry shifts, economic changes, or technological advances like AI positions your brand as responsive and in tune with industry needs.

Example: HubSpot: The Intersection of Marketing, Data and AI*

* TopRank Marketing partnered on or led these original research projects.

Repurposing marketing research reports: The content gift that keeps on giving

The dollars you invest in original research can be stretched far and wide as that research is repurposed into blog posts, infographics, white papers, webinars, video series, and so on … all unlocking different ways to reach and provide value for your audience.

Blog posts: In what we like to refer to as a “turkey slice,” you can break down key findings into a series of blog posts, each focusing on a different aspect of the research

Infographics: Visualize data and insights from the report into easily digestible infographics.

Social media posts: Share individual stats, charts, or quotes across LinkedIn, X/Twitter, or other social media platforms, driving engagement.

Whitepapers: Combine the research with related content to create a detailed whitepaper or guide for your audience.

Ebooks: Expand on the research findings by providing additional context or case studies, turning the data into an in-depth ebook.

Webinars: Host a webinar discussing the report’s insights, with key speakers diving deep into the findings.

Case studies: Use the data to support a case study highlighting how a company benefited from the trends or insights revealed in your research.

Podcasts: Create a podcast episode discussing the findings, either with internal experts or guest industry professionals.

Presentations: Develop a presentation or slide deck to share at industry conferences or with prospects.

Video series: Create short videos discussing the top takeaways, explaining how the insights apply to your audience’s challenges.

Newsletters: Feature snippets from the marketing research report in a company newsletter or as part of an email marketing campaign.

Best practices for B2B original research

Our team has a great deal of collective experience putting together high-quality reports based on original research. Here are the best practices we’ve developed along the way.

#1. Establish your research goals: Understand what insights you want to uncover, how they align with your company’s strategic goals, and how they serve your audience’s needs.

#2. Target the right audience: Ensure your research is aimed at your core audience, whether it’s clients, prospects, or key industry players.

#3. Ask neutral, focused questions: Design survey or interview questions that are free of bias. If the results of your surveys and interviews don’t support your original hypothesis, remember: that data still holds insights, and may be even more newsworthy!

#4. Don’t be afraid to outsource the research: For your data to be high-quality and accurate, you may want to work with a third-party research organization. They have the connections and expertise to ensure the quality of your questions, rapidly deploy your survey, and help you make sense of the responses.

#5. Validate and cross-check data: I once stumbled upon a data point that had been published far and wide, long after the original publisher pulled their report due to inaccuracy. Cross-checking data strengthens its credibility and prevents misleading conclusions.

#6. Use a blend of quantitative and qualitative data: While quantitative (hard numbers) data can provide a broad overview, qualitative (observable but not measurable) data offers deeper insights. Use both forms of data to give your report more dimension and support a compelling narrative.

Source: 2024 B2B Marketing Benchmark

#7. Get other industry experts involved: Data from a single voice is interesting, but a consensus of thought leaders backing up that data? That’s compelling! Partnerships can be accomplished through co-branded research, or by including quotes and feedback from experts.

Source: 2023 B2B Influencer Marketing Report: Elevate & Ignite

#8. Give your audience actionable takeaways: Data is great, but useful insights are what drive impact and motivate organic sharing. Highlight key findings and suggest practical applications that can help your audience use the insights to inform their strategies.

Source: The Intersection of Marketing, Data and AI

#9. Prioritize the report design: Design can make or break your report’s readability. Make your research accessible and easy to digest by using a combination of visuals (infographics, charts) and detailed insights to present your findings.

Source: Proving the Power of Brand

#10. Promote, promote, promote: Publishing a research report should never be a one-and-done campaign. Make sure you continue to leverage your research findings by promoting the report across various channels and through different content formats to reach a broader audience and maximize the impact of your research.

Source

Our friends at Content Marketing Institute have also drafted an excellent self-assessment for marketers who are considering diving into original research: Don’t Start an Original Research Project Before Answering These 8 Questions.

Learn to stop worrying and love B2B original research

Publishing a marketing research report is an excellent way for your company to share the next Big Idea with your industry. At TopRank, we’ve helped companies bring their research to life, as well as published our own proprietary insights.

Some highlights from this last year of report drafting include:

Interested in learning more about how we can help you develop a marketing report based on original research? Contact us



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