Agency leaders naturally spend a lot of resources looking externally for new profit sources – potential new clients, new projects from existing clients, or general market trends that can give the agency a competitive edge. Many of them also make significant investments to improve their operations so their profit margins are healthy. Too frequently, though, agencies miss out on a great opportunity to accelerate profitability by overlooking the substantial pile of intellectual capital they have developed – intellectual property that can be converted to revenue.
Agencies tend to undervalue, or sometimes plain ignore, their own inventory of intellectual property. This isn’t purposeful; they are either so laser focused on work that is immediately client-billable or on the ideation and creativity they expend for client needs, that assessing their own inventory of intellectual assets is just not a priority. But those agencies who do focus on it realize that intellectual property is an asset that can be converted to cash in the form of passive revenue like licensing fees or royalties, additional professional fees, or perhaps an enhanced purchase price if the time comes for the agency to be sold.
Here are a few of the best ways for agencies to capitalize on their intellectual property:
Unexecuted Client or Spec Work
Remember that highly creative spec project your agency worked on? For the prospect that didn’t close? You still love the concept and the assets. You could find a new home with another client or in a new market. What about the concepts your agency pitched to a client but didn’t make the final cut? Unless your agency agreed to restrictive covenants with a client or prospective client that tie your hands, these assets can be redeployed for another campaign, another pitch, or just for your agency’s portfolio as a business development tool. Some agencies even package model campaigns or marketing packages and deploy them to multiple clients in non-competing markets.
Proprietary “Agency Internal” Processes, Methods, or Training Curriculum
Many agencies are highly savvy about creating internal intellectual capital such as training modules, business development methodologies, financial and billing systems, or thought leadership content in a particular industry niche or marketing discipline. You could create revenue opportunities sharing your expertise with other agencies, in a way that won’t compete with your competitive position in the market, and for compensation. This might take the form of education courses, licensing of proprietary systems, or consulting programs for other marketing firms.
Original Technology Solutions
If your agency has a particular niche in a specific technology, such as mobile app development or software tool development, and uses its expertise to develop custom solutions for clients, then you have another stream of possible revenue. Do you also have proprietary code, platforms, plug-ins, or other original tools that could be licensed to multiple parties (for example: a mobile app that can be “reskinned” or “white labeled” by others)? This is a great example of the agency leveraging a particular intellectual asset in multiple ways to create recurring revenue opportunities from multiple sources.
The agencies that focus on leveraging their intellectual property assets are creating great opportunities to engage their talent in new and dynamic ways, They’re developing new business models that add the possibility of variable revenue streams without sacrificing the strategic or creative attention their clients require. Some of them even move away from their traditional agency models to focus on intellectual asset creation and capitalization.
Where are the opportunities for your agency?
Originally published Jul 21, 2014 3:00:00 AM, updated July 28 2017