There are multiple problems which need to be taken care of while running a digital agency business, and as per Shradha Agarwal, CEO and Co-Founder of Grapes, the first and foremost issue in today’s day and age is that loyalty has reduced in clients and also the talent.
“Loyalty has reduced in both clients and people (talent). Clients are happily floating around with multiple agencies on board. Also, the Gen Z talent wants a lot more work-life balance but they are not putting the right amount of effort into working hours,” Agarwal said.
She added that while business will run as long as one is able to deliver, challenges arise when one is looking at scaling the business.
“There is a lot more demand than supply of talent, and the entry barrier to this business is really low. You can start a digital agency with four laptops and a digital marketing course. Once you have an agency you have five-six friends in the market who will give you business. However, when it comes to going beyond those five clients is when you need talent,” Agarwal said.
“Gen Z want a lot more work-life balance. Europe and America taught us that we should not work beyond 5 pm but they don’t understand that in America and Europe people don’t waste time in between. When they work from 8-5, they actually work. We gather around during tea breaks, lunch breaks, smoke breaks etc. So, people in India are picking up very selective trends that they want to pick for themselves. So, for us, a higher salary and then the effort I get from the same talent is very less. As a result, my cost per hour becomes very high. Loyalty from both clients and talent is a challenge,” explained Agarwal.
Growth in 2022
This year, the agency’s revenue has grown by 25% and they expect a 25-30% growth in 2023. They have done decently well both in terms of revenue, as well as the growth of the organisation in terms of people and clients, said Agarwal. As per Agarwal what has helped them is identifying the most revenue-generating clients and focusing on generating a better base for the agency.
“We have identified key clients which are performing well for us. We have been able to identify the 20% of clients that get us 80% of the revenue. As we have evolved in our business we have also been able to gather data for the last three years for ourselves which has helped us in understanding what kind of clients give you what kind of revenue. We are focusing our energies on driving clients which can give us a better bottom line.”
“We have realised that clients who have better media budgets are the ones who are high spenders. When you have a high media budget, what will happen is that you will end up making more content and doing more stuff. When you have a client who doesn’t have a high media budget, even if it’s an MNC, they’ll just end up paying you a good retainer but will not come to you to spend more. The ticket size per client becomes very low,” she explained.
The agency is positioning itself as an integrated one-stop solution for brands at a time when many specialised players have grown in the market.
“I would describe Grapes as an integrated agency that is very good with communications and driving sales on marketplaces. We are like a one-stop strategic solution to take care of your positioning online and overall communication. Because there have been so many specialised agencies in the past two years, especially after offline agencies were not able to pivot towards digital, what happened is, this created room for a lot of specialised agencies, like agencies for content, media, data etc. Clients got bogged down by working with multiple partners.”
“What we are trying to do is we are trying to pivot ourselves more towards becoming a one-stop solution towards your business/brand problem. 60% of this is executed in-house and the rest is executed through partnerships with other specialised agencies,” stated Agarwal.
On working with international clients
Upon being asked if the agency will also focus on expanding internationally as many Indian digital agencies are today, she said they already have clients in Australia, Dubai and Germany. She added that working with international clients helps Indian agencies with revenue.
“It makes a lot of sense for Indian agencies to work for international clients because you get paid in dollars. International clients always help you in terms of your bottom revenue.”
Agarwal added that compared to Indian clients, international clients are very professional to work with. “They know the timelines and the kind of effort put in whereas Indian clients are a lot more unprofessional. They don’t care about the efforts vs the remuneration that you have been paying for. They are also very disorganised when it comes to execution.”
Digital advertising trends in 2023
According to Agarwal, AI and ML (Artificial Intelligence and Machine Learning) should pick up this year. “Last year, it was all about NFTs and Metaverse but this year people have realised that that's not going to translate into any business. This year, people are looking forward to using AI and ML to automate a lot of stuff. For example, I am executing 5,000 blogs for them every month which isn’t easy. So, we are using AI for that. After that, we can basically just use manual intervention to 50% and then optimise it.”
She also sees brands picking up smarter content opportunities this year. “Earlier people used to do 14-15 campaigns a year. However, it requires that kind of capital, resources etc. Instead, people are now focusing on executing five good quality campaigns.”
Agarwal further stated that performance-marketing campaigns will continue to stay relevant in 2023. She said people will continue spending on performance marketing in 2023, as they understand the kind of ROI that they can get through this. The brands are also collecting huge amounts of data with performance marketing, she said, which is a win for them.