Why Your Interactive Agency Isn’t Making Money

Adweek’s Interactive Quarterly has an interesting article that should be a must-read for smaller agencies that are starting to wonder why it’s so tough to show profitability in the online ad game.

Entitled “Inside a $0 Billion Business,” the piece by Greg Farrell talks about everything from billing models to personnel costs, and even discusses what one exec at Think New Ideas calls “scope creep,” in which projects gradually just get out of hand.

Software development and licensing costs are also discussed. The problem isn’t in gross revenues, it’s in net income, the article says. In their desire to expand rapidly and gain as much market share as possible, many players are succumbing to the lure of the next big project or Web site without figuring out exactly how much it’s costing them to do the work.

Check out the whole story here.

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