With the influx of freelancers symptomatic from the outflux in agency layoffs, there is a new agency business model emerging. One that won’t be beneficial to clients.

A hypothesis: A large client comes to an agency needing a campaign including TV, print, digital, and/or buzz. A couple years ago, the agency would have created a highly complex Excel spreadsheet denoting everyone’s hourly rate + approx. time on projects, percentage of overhead including rent, equipment and supplies, derived a profit percentage (sometime known by the client) and this became the budget.

What’s changed is that the on-staff producers were let go, the digital team now just consists of a web designer, and the star (and only) creative team is busy with their only client that is still holding strong through the economy. So, what to do?

Outsource.  While this is typically a cost effective solution - outsourcing has become a tangled mess of large teams without any unity or leadership, and many layers of inefficiency.  For instance, on the digital project, the traditional agency (because they had to go back to their roots) hires and marks-up a digital agency, who marks up and outsources the web design, build and SEO to another agency who marks up and outsources the CMS and SEO to other freelancers who had done some work in a completely irrelevant industry, but due to his/her eagerness to now have work, he/she faked knowledge.

The result  - a long game of “telephone” with consequences of expense in time, cost, and potentially quality. 

This expensive new agency model does provide opportunity for consultants who are able to directly manage the thinkers + doers creating a team of specialists (i.e. following the adage of cutting out the middle-man). Transparency is important in this process, but due to the cost efficiency, the rewards are significant. 

In a world wanting to mitigate risk, client beware on whether you are hiring an agency  - or a global staff of freelancers with an exponential cascade of mark-ups. Just ask them, see if they’ll confess.