The 2025 Agency Profitability Playbook: Fixing Hidden Leaks in Operations

TL;DR: Fixing Profitability Leaks in Your Agency

Profitability in agencies rarely disappears overnight. It slips away quietly through misaligned teams, uncontrolled scope, and the kind of rework that becomes business-as-usual. Most of the time, these operational leaks aren’t tracked, flagged, or discussed. They’re just absorbed until margins tighten and burnout sets in.

To unpack where agencies are losing profit in 2025 and how to fix it, we sat down with two leaders who’ve seen both sides of the problem: Manish Kapur, a global creative operations consultant, and Candida Henning, Group Operations Director at VML South Africa.

Between them, they’ve helped scale creative and digital teams, refine delivery structures, and address the everyday decisions that impact profitability. Their experience brings real-world insight into how agencies can build more resilient, margin-aware operations without adding more layers or burning out their teams.

During the session, several recurring themes emerged - patterns that point to why even well-run agencies quietly lose margin over time. Rather than recap the event, we’ve distilled the insights into this playbook: a breakdown of the operational blind spots, behavioural shifts, and structural changes that matter most if you want to scale profitably in 2025.

Lets get into it, shall we?

The Nature of Operational Leaks

Profit isn’t always about pricing. It’s about precision.

A common misconception in agency management is that profitability is directly tied to pricing. While pricing strategy is important, it's only part of the equation. More often, margin loss comes from how the work is delivered, not how much is charged for it.

Here’s where most agencies lose margin:

• Work delivered outside of scope (without compensation)
• Excessive rework and revisions (often accepted as ‘normal’)
• Poor project planning and resource allocation
• Time spent on non-billable internal admin
• Disjointed communication and duplicated tasks

What makes these so dangerous is how normalised they become. When waste is embedded into everyday workflows, it becomes invisible.

Overlapping Roles = Duplicated Effort

Why internal ambiguity quietly kills efficiency

One of the first leaks that many agencies overlook is the blurred line between account management and project delivery. When roles aren’t clearly defined, you get duplication: AMs chasing updates, PMs stepping into client management, and no one owning true delivery outcomes.

This creates:

• Bottlenecks in communication
• Poor accountability
• A reactive culture instead of a planned one

The solution isn’t to add more people, it’s to get clearer on the function of each role. High-performing agencies separate the client service function from delivery leadership. They build defined responsibilities around scope, timelines, QA, and client management. This doesn’t mean more silos, it means more focus.

Scope Creep Is a Symptom, Not the Root Cause

The feedback loop that fuels margin erosion

Scope creep is often viewed as a client issue “they keep asking for more.” But in reality, it’s usually a symptom of internal issues: unclear deliverables, misaligned expectations, or vague scoping documents.

Most agencies don’t track:

• The number of revision rounds per project
• Where revisions originate (client vs internal error)
• How long feedback cycles take
• What work gets done that was never scoped

Without this data, scope creep becomes anecdotal, something felt but not proven. And when you can’t prove it, you can’t push back on it.

High-maturity firms implement feedback caps, clearer sign-off processes, and post-mortems that track deviations. They also coach teams to differentiate between legitimate change requests and internal quality issues. This builds a culture of accountability and protects the margin.

Track the Source of Rework, Not Just the Hours

Why agencies need to stop treating all time equally

It’s one thing to know how many hours were spent on a project. It’s another to know why those hours were spent.

Too often, agencies log time without separating out rework that could’ve been avoided. Is that revision round because the client changed their mind—or because the internal team missed the mark?

When all time is treated the same, teams are penalised for mistakes they didn’t make. This creates frustration, under-reporting, and resentment. Worse, it hides where process improvements are really needed.

To fix this, progressive firms are adopting more granular time tracking. Instead of obsessing over every billable minute, they focus on:

• Identifying time lost to preventable rework
• Capturing source data for each change
• Using insights to train teams and improve briefings

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The Resource Puzzle - Solving for Utilisation and Morale

Why scheduling tools alone won’t fix burnout

Resource management remains one of the hardest balancing acts for agencies. Everyone wants higher utilisation, but not at the expense of burnout, quality, or client satisfaction.

The root problem? Most resourcing models are built on inaccurate assumptions:

• “We’ll just slot in whoever is free”
• “We can squeeze this in without pushing deadlines”
• “They’ve done it before, they can do it again”

These reactive models create over-reliance on top performers, uneven workloads, and poor visibility. Instead, firms need to move from tactical scheduling to strategic resource planning.

This means:

• Forecasting capacity vs pipeline
• Balancing skillsets with project needs
• Protecting time for deep work (not just availability)

The best agencies in 2025 are moving to flatter, role-flexible teams with built-in clarity on responsibilities and tools that show workload at both individual and team levels.

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Internal Time Tracking Fatigue

When reporting becomes a burden, not a benefit

We’ve all seen it: time tracking that takes longer than the task itself. When internal processes become performative or punitive, teams disengage.

One firm we spoke to removed mandatory tracking for internal tasks and saw a rise in productivity and morale. Why? Because they redefined what data was actually useful.

Agencies should ask:

• What data do we actually use in decision-making?
• What’s being tracked just to be tracked?
• Is reporting helping or hindering?

Firms that streamline internal reporting and automate wherever possible free up their teams to focus on delivery not admin.

Technology Isn’t a Silver Bullet, But It’s a Critical Lever

The role of systems in fixing profitability leaks

No tech tool will fix a broken process. But the right system can illuminate where it’s broken and how to fix it. Agencies that rely on spreadsheets and disconnected tools end up with fragmented data and slow decision-making.

What high-performing agencies are doing differently:

• Bringing project, resource, and financial data into one place
• Tracking in real time instead of retroactively
• Enabling better decisions by making critical information accessible across teams

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The point isn’t just automation, it’s alignment. When everyone from account managers to finance teams is working off the same source of truth, operations become faster, leaner, and more scalable.

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Culture is the Unspoken Variable

Profitability isn’t just structural it’s behavioural

Fixing hidden leaks requires more than new tools or processes. It requires cultural change:

• From reactive to proactive
• From heroic efforts to scalable systems
• From “busy” to “effective”

Agencies that perform best in 2025 are those that embed margin thinking into the culture - from the way briefs are written to how meetings are run.

This doesn’t happen overnight. But it starts with awareness, education, and consistent reinforcement at every level.

Building Your Own Profitability Playbook

Every agency is different. But the principles behind operational efficiency are remarkably consistent. If you're building your own playbook, start here:

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Final Thoughts: Profitability is a Leadership Responsibility

In uncertain markets, many agency leaders look outward to pricing models, client retention, new business development. But some of the biggest wins sit internally, in the operational machine that delivers your work.

Fixing leaks isn’t about working harder, it’s about working cleaner. And when you do, margin doesn’t just stabilise, it grows.

If your agency is facing hidden profitability challenges, now’s the time to address them, not when the quarter ends and the margin is gone.

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🎥 Watch the Full Recording

Want to dive deeper into the strategies discussed in this article? Watch the full session from The 2025 Agency Profitability Playbook: Fixing Hidden Leaks in Operations, featuring expert insights from Manish Kapur and Candida Henning.

👉 Click here to view the recording

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