The Agency Checkup: How Healthy Is Your PR Firm?

Emily Page (00:01): Sometimes the hardest truth to face is the one we already know. In today's story, a brilliant composer ignored the early signs that something vital was slipping away until silence forced him to listen. It's a reminder that ignoring the warning signs, whether in ourselves or our organizations, only makes the silence louder.

Doug Downs (00:25): Ludwig van Beethoven was a genius who heard the world differently. His music thundered with feeling, structure and defiance. When he was in his early thirties, he began to notice something personally terrifying. The world around him was growing quiet. At first, he told no one. He thought it would pass. For years, he hid his deafness. He stopped attending social events, avoided conversation and refused to see doctors. In letters, he begged God for a cure. He could feel his hearing slipping away and with it his identity. Yet still, he composed, conducting orchestras. He could no longer hear the performances. Looked triumphant from the seats. No one saw the fear behind the baton. He convinced himself that he could manage it, that sheer willpower would outrun the inevitable, but denial became its own kind of silence. By the time he finally faced the truth, the world's most brilliant musician was completely deaf.

(01:32): Only then did he adapt, sketching, counting vibrations and trusting his internal sense of rhythm. And what followed was a second act that few thought possible. Out of silence came his greatest work, the Late Quartet and his infamous Ninth Symphony, written by a man who could not hear a single note. His genius didn't return because he ignored his condition. It returned because he finally learned to face it. Every PR agency has its own kind of hearing loss. The signals are there burnout, low margins, shifting culture. But leaders convince themselves they can still hear the music. They keep performing, hoping no one notices what's missing. Today on Stories and Strategies, as Beethoven might remind us, it's not the notes you play that matter most. It's whether you can still hear them. My name is Doug Downs.

Farzana Baduel (02:49): And my name is Farzana Baduel. Our guest this week is Andy West, joining us today from Oxfordshire. Hi Andy.

Andy West (02:57): Hello Farzana. Hello Doug. Lovely to be with you.

Farzana Baduel (03:00): And how are things where you are?

Andy West (03:03): Well, dreary, mild and damp. Typical November UK day. But other than that, everything is absolutely peachy.

Farzana Baduel (03:13): Now, Andy, you are a strategic architect whose career spans global communications networks, agency evolution and client side audits. At scale, you've guided agencies through growth, reviewed underperforming retainer relationships, and built the kind of diagnostic frameworks that can shine a spotlight on hidden bottlenecks. In short, you're kind of an agency doctor.

Doug Downs (03:37): Hey, what's up doc? Okay, first the check-up. Andy, when you first sit down with a new client, what are the vital signs that you're looking for right away? What tells you whether an agency is genuinely healthy or just surviving or kind of getting by on adrenaline, that kind of thing?

Andy West (03:56): I love that. Getting by on adrenaline.

(03:59): I mean, that's a great question. I think I always start any engagement with the question, and the first question is to really establish why the agency is seeking help. Why does someone go to a doctor in the first place? Because they have a problem. Something is wrong. They don't know what it necessarily is, but they know they need expert help. So the first engagement with any new agency or any conversation I have with any leader is to find out why they believe they're seeking help. And my objective in that initial conversation is to try and uncover that, get to the bottom of where their concerns lie, but also to talk about what their goals are, because I think it's always really important to frame the problem against what they want to be like. So if I'm going to a doctor and I need treatment, I want to know that at the end of that I can go running again or I can go cycling again or I can walk again or whatever it might be. It's the same with an agency. What is the problem? Where do you want to be? And it's typically broken down into short, medium and long term goals.

Farzana Baduel (05:05): And so when you have the diagnosis and you uncover what the real underlying issues are, and you've taken that initial pulse, what are the common symptoms that you find? And also how self-aware are your clients? Does it come as a complete surprise to them or do they think, yeah, actually, yeah, you're absolutely right?

Andy West (05:25): They wouldn't be coming to someone like me if it was a complete surprise. They've got a problem and they think they know what the problem is, and they've been smart enough to seek help. And obviously with any problem in any situation, the first thing that anyone can do that's going to help them is to come and ask for help and come and ask for expert help. So what I look for initially, I mean, the very first thing I do is I look under the bonnet and I look at the engine, which is really the numbers. Every business is driven by numbers, and we could spend an entire podcast talking about which numbers we should look at and what they should look like, etcetera, etcetera. So I will concentrate just on four. The first one obviously is revenue, not turnover. And that's often a surprise.

(06:16): Some agency leaders tend to lean into turnover, not revenue. The difference being turnover is revenue plus pass through costs, which can give you an overinflated sense of your own achievements. So strip out all the pass through costs. Let's look at revenue and let's look at the historical data around your revenue. The second and possibly most important financial metric that I will look at is staff cost. That is obviously the largest cost in a PR firm, any professional services firm. What is that staff cost as a percentage of revenue? Because that gives us the gross margin in my term. There are different ways that people define gross margin, but mine is as a percentage of revenue. What does that look like? Because that's an indicator of actually, are we staffed appropriately? And then obviously we look at operating costs. Are we spending too much? Are we spending too little?

(07:08): What is the percentage of operating costs against revenue? And having looked at all of that, then obviously we're looking at the bottom line profit. So some of the indices which I like to work with agencies on are in an ideal world, we are looking for a ratio of around about 50% staff to revenue, 25% operating cost to revenue, leaving you ideally with about a 25% bottom line margin. And most agencies should be able to achieve 25% or better bottom line margin in today's environment. Very few agencies are actually doing that. And if they are, they're performing very well. So I look at that over the course of maybe the last three years. I talk to them about where they want to get to. And that often then starts to point to some of the symptoms, some of the causative factors that are holding them back in either growth or profitability or whatever else problem they might have.

Doug Downs (08:11): Do you find we're at a discontinuance in time right now, especially with artificial intelligence? What I mean by that is like that line, we should be growing at this rate and these are our forecasts, and that's what you're checking up on. It's just with AI, AI is able to do a lot of the things that would otherwise cost me money. If I'm still paying for staff costs or operational costs that I can now offload to AI, I shouldn't maybe be paying for those. Sorry to sound like Dracula here as the CEO. We're at this weird moment in time, and this is before we get to the prescription part. Are we not at this weird moment in time where today is unlike other times in our history?

Andy West (08:57): I would agree with you. I'd agree with you, Doug. I mean, I've been in the agency game, it'll be 40 years next year. So I saw the internet revolution. In fact, I saw the email revolution when I first started as a graduate in 86.

(09:11): We were one of the first agencies in the country to have a UNIX based email system. Can you believe that? Not many people who listen to this will know what UNIX is, but I don't. For those geeks amongst you, it was a computer operating system and we were one of the first to actually use it. So I've seen these technology revolutions come and AI is definitely the most impactful that I've seen and potentially the most dangerous that I've seen. But equally, I think it comes with the biggest benefits and advantages to our industry. So part of that diagnostic is helping agencies to understand what role AI is going to play in your business. How are you using it today? How should you be using it? How could you use it? Part of it is helping them prepare for those conversations with clients who are pushing back and saying, well, hold on a minute. Do I really need to pay that? You're doing that through AI, helping the clients, helping the agencies to understand what value they bring, the humanistic elements that no AI yet can actually deliver on behalf of clients. So I think there is a discussion to be had, help to be sought from every agency looking to lean into AI, both from a threat perspective and also how they're going to absolutely use it as a growth engine and as an opportunity for their future.

Farzana Baduel (10:38): Andy, they often say that prevention is the best possible cure. Now, with agencies, what sort of healthy habits do they often have? The ones that do well, and what are the unhealthy habits that you see agencies, whether it's their leadership, processes, culture, pricing, that then end up lending themselves to having to pick up the phone and call an agency doctor like yourself?

Andy West (11:09): Yeah. The way I will answer that is just by looking at some more of those vital signs and symptoms, if I may, Farzana. So the role of the agency adviser is to systematically go through all of the drivers of agency profitability, success and growth. So typically, I will start with people. They are our most important resource. So what does the organisational structure of the agency look like? Is it structured correctly? What level of productivity is the agency actually getting from its team? And I'll come onto the question of recovery shortly. Are the right people in the right seats? Does the team overall have the right skill sets? And the agencies that do well today, and there's been much written about this, are those agencies that have specific specialisations because all the data suggests that clients buy experts. And I think that data is out now, but that's something which I've been talking about for decades, particularly as I come from a technology specialist agency background. We always talked a lot about you need to be a specialist in B2B tech.

(12:25): It doesn't necessarily need to be sector specialist today. It can be service specialism. Are you a corporate comms specialist? Are you a crisis management specialist? Are you a media strategist? But you need to have a specialist. So that's one of the things that I will look at and really try and uncover. Then I'll look at clients. What does the current client portfolio look like? Is it a stable client base? What is the longevity of the relationships? What is the contractual nature of the relationships? What is the average size of the client that you are working on? How many clients are each one of your people working with? If individuals are working with more than six clients at any one time in an agency, that's probably a recipe for some problems, frankly. So let's look at our client base and then we can look at also what does your ideal client profile look like?

(13:15): And that leads me onto pipeline. So the successful agencies lean into what I call the holy trinity of growth, which is marketing, business development and sales. How far are they leaning into that holy trinity? What is the health of that pipeline? And one of the measures on that which I use is to say, okay, what is your sales gap in your forward looking forecast? Does your pipeline currently, in an unweighted number, equal three times your sales gap? So that three times on the basis that you will win one in three pitches. So I encourage my agencies to really lean into that holy trinity, to build a pipeline that covers three times their sales gap. Then they can have a reasonable level of confidence they're going to achieve their numbers. Standout agencies understand that and constantly, constantly undertake new business activities. And one of my friends, I think one

We exceed probably output. But continue… Standout agencies understand that and constantly, constantly undertake new business activities. And one of my friends, I think one of your friends, Farzana, Darryl Sperry, who I always give a shout out to, and I don't know why, frankly, he works for me at Hotwire. His famous quote, which I always use, is sales never sleeps. And that's so true. And I could, again, have a whole other podcast on just sales and growth.

And then the fourth element of all of this is looking at the operations. Let's look at your cost base. Let's look at your tech stack. Let's look at how efficient you are. And I think the best agencies really understand the operational side of things. They invest in the right tech stack. And we'll talk a bit maybe later about systemising sales and systemising agency procedures. The best agencies invest in that, which enables and frees up time for the senior team to do what they need to do best, which is go out there, win business and do incredible work for clients. So that's what I look for, and I'm always benchmarking the successful agencies to see what they're doing, what we can learn from that, and what real life experience we can bring to the agencies I'm advising.

Farzana Baduel (15:37): And Andy, can I ask, do you have a view on culture in terms of working five days a week in the office versus fully remote versus hybrid? Because that's what a lot of teams are grappling with and thinking about post COVID.

Andy West (15:56): That's a tricky question for Farzana because obviously all of us come from a pre COVID world where we were in the office five days a week.

(16:04): And to work at home was a luxury. I would say, and I think this is a good example of why hybrid working does work, is that when I was at Hotwire, we had a work from anywhere policy pre COVID. Work wasn't a place, it was what you did. And that was led by the then CEO, Barbara Bates, and it was, I think, a groundbreaking strategy which enabled people not to have to worry about nine to five or where they did it as long as they did it and did a great job. And they were there when they needed to be there, we didn't worry. And actually what that did was set us up brilliantly for COVID.

So in answer to your question, I think it's important that the team gets together at least two days a week, preferably three. There has to be flexibility to meet the needs of different generations of our industry.

(17:00): That's a hint towards my question at the end. I think it's super important we have flexibility, particularly for working mothers and also working fathers who are sharing childcare loads. So I think hybrid working is necessary. I believe in it. I don't believe in completely remote. I think that that doesn't work, because I also think that everybody learns way more by physical social interaction. I know that I benefited from that throughout my career. Every day is a school day, particularly when you're working with people who are 30 years younger than you. They're teaching you something you don't know. The most senior learn from the most junior and vice versa. So I think hybrid working has a place.

Doug Downs (17:52): Andy, when it comes to my health, my aha moment was about five years ago when I found myself in palliative care. That's a big aha. In about one minute, tell me a brief story about an agency you've worked with that had their own aha moment that you helped them come to terms with and what they did about it, including denial, because I think that's a thing too.

Andy West (18:15): So I will anonymise this, but I worked with an agency that was very heavily reliant on project activity, which meant they had no stability in terms of forward looking cashflow or forecasting, which made it impossible to scale. It also meant every member of the organisation was constantly moving toward having to find new business. So there was a huge amount of new business effort going in, but there were no systems or processes around that, which meant they were inefficient.

The aha moment came when we worked together as a team to put in place systems, in this case a CRM that linked to the forecasting, which they were already pretty good at, so that we could have confidence looking three to five months out that we would hit the numbers in our budget to pay salaries and make decisions about hiring. That was an aha moment when we put systems in place to give them visibility into the performance of the organisation.

Doug Downs (19:23): That must have felt so good for all of them, not just the CEO but for everyone in the org.

Andy West (19:29): Yeah, very satisfying. For me personally, very satisfying to have made a difference. And yes, I finished working with them about a year ago. Still being used. I'm still in touch with them, and yes, it is at the heart of their business engine. So yes, very satisfying.

Doug Downs (19:50): Andy, thanks for your time today. Appreciate it. Much enjoyed. Thank you so much.

Farzana Baduel (19:55): Before we let you go, in our last episode, our guest who you may know, Lionel Zetter, left a question for you.

Lionel Zetter (20:03): What was the biggest mistake you made in your professional career and what did you learn from it?

Andy West (20:14): That's a terrible question to ask somebody. Yes. So the one that stands out for me was fortunately a very long time ago. I think I was an account manager running a database software company's PR, and I had a very good relationship with the UK MD. We'd just finished a really successful media lunch, I think with a national journalist, and just as I was leaving, he said, Andy, give me a call. I'd like to have a chat with you.

In my arrogance of youth, I thought he was going to offer me a job, and I didn't call him. What he was doing was giving me a heads up that he was unhappy, and he ended up firing the agency. So my learning from that was the arrogance of youth has to be put back in a box, and you've got to read the room a lot better, Andy. I've kept that mistake with me throughout my entire career. And I quote from Andy Grove's book, Only the Paranoid Survive, and it's paranoia, certainly around people relationships, client relationships, that I think has helped me get to where I am today.

Doug Downs (21:34): Yeah, if you're young and in the industry, just hang on to your stories beyond the reply all mistakes. Every single one of us has done the reply alls, but the big stuff, remember it, and when you're comfortable, tell the story. Your turn. What question do you want to leave behind for the next guest?

Andy West (21:51): Yeah, I'd like to ask the next guest. There's been a recent CIPR, for listeners outside the UK, the Chartered Institute of Public Relations, report into ageism, which highlighted systemic bias against older practitioners in the industry. What three things would you implement to tackle ageism in the PR industry?

Doug Downs (22:14): That's a doozy.

Farzana Baduel (22:15): Yes, absolutely. We did have the wonderful opportunity to have a conversation with Jenny Manchester on her latest report.

Lionel Zetter (22:23): Author said report.

Farzana Baduel (22:24): Yes. So we're hopefully bringing her in as a guest. But that's a great answer because everyone discusses and acknowledges there's an issue, but the solutions seem to be thin on the ground.

Doug Downs (22:37): It's a huge issue. Casey Stengel, New York Mets manager back in the sixties, was applying to be renewed for his contract, but he was 67 years old at the time. The Mets turned him down because of his age. His public statement was he would never make that mistake again of turning 67. That was his step to solve it. Thanks so much, Andy.

Andy West (23:02): Thanks guys.

Farzana Baduel (23:05): So Doug, here are the top three things that we learned from our conversation with Andy West, the agency doctor. Number one, clear purpose before prescription. Every healthy agency check-up starts with knowing why help is needed and what success looks like. Number two, the numbers do not lie. Andy's 50, 25, 25 model proves that true agency health shows up in revenue, costs and profit, not hype. Number three, systems prevent relapse. What does that mean? A strong structure, smart specialisation and balanced culture keep agencies thriving long after diagnosis. If you think, Doug.

Doug Downs (24:06): I took the check-up idea and applied it to our YouTube channel. One of the diagnoses is we've hit a quarter million views on our YouTube channel through the life of it for the Stories and Strategies podcast.

Farzana Baduel (24:19): Wow. That is incredible. I think there's another missing beat for success, and that's celebration, celebrating wins.

Doug Downs (24:27): Amen. Amen.

Farzana Baduel (24:29): So let's figure out.

Doug Downs (24:30): Check out our YouTube channel. We're at just over 300 subscribers. We could use more, and you can watch episodes instead of just listening. If you'd like to send a message to our guest, Andy West, we've got his contact information in the show notes. Stories and Strategies, co-production of Curzon Public Relations and Stories and Strategies podcast. If you like this episode, please leave a rating, possibly a review. Thank you to our producers, Emily Page and David Olajide. They truly are the heartbeat of the podcast, knock on wood. Lastly, do us a favour and forward this episode to one friend. Thanks for listening.