Budget Management 101 for Agency Professionals

May 15, 2023

Budget management is a critical piece of the day-to-day management of any agency, no matter the services they deliver or how their projects are scoped. 

However, before we dive into this topic, it’s important to take a step back and discuss exactly how agencies earn their revenue and maintain a profit.

Every agency is in the business of client service. In the simplest terms, an agency drives revenue by bringing on clients who pay for services. The agency prices that service based on the scope of work they have agreed to perform. The decision to accept that work is based on the understanding that the agency team has the time and resources available to deliver.  

This may seem like the most basic lesson in agency math, but among the many teams we support with agency operations and consulting, it’s a common challenge faced. 

A misconception we see on agency teams is a belief that the “person in charge” is the only one responsible for setting, managing and tracking budgets. Depending on an agency’s size, this could be the owner, account manager, project manager or a department VP. However, this mindset couldn’t be further from the truth. Since the whole team is performing the work, the entire team plays a role in managing client budgets by ensuring the agency is providing a high-value service, not overserving, and executing efficiently and effectively. 

Now, let’s dig into a few ways that agencies can protect their client budgets and the company’s revenue through daily best practices.


Revenue efficiency 

A common roadblock to profitability for agencies is struggling to earn efficiently. What does this mean? Essentially, even though top-line revenue and sales pipelines are healthy, margins on the delivery of work are slim, which equates to low profit margins.

While many of the agencies we work with turn to our team for support in building out technology and process improvements to supercharge time efficiencies and improve delivery margins, there is a simpler place to start. Take a step back and evaluate workflows. If it feels like a task or project is taking too long or experiencing more friction than it needs to, consider the following questions:

  • Is the right person executing the right task?
  • Where’s the bottleneck?
  • Is this task really necessary?

These are simple questions, but if teams are committed to regularly evaluating workflows through this lens, the time saved and efficiencies will add up. 


Revenue retention and growth 

Many agencies focus on client acquisition on their path to scaling. However, sustainable growth comes from retaining and continuously adding value to current clients.

The most profitable and stable agencies drive new revenue by bringing new value to existing clients. When done well, this doesn’t feel like selling new services to a client, but rather solving problems for them. 

Here are three common ways to look for opportunities to provide added value to a client. 

  • The client asks for something not included in the agency’s original scope. This is the most obvious scenario as the client is directly asking for the agency to provide added value. The key here is to not just say yes without requesting an additional budget. We’ll cover that more below. 
  • Gather the larger team for a brainstorm once a year or quarter to come up with fresh ideas for clients. Clients are often deep in the weeds of the day-to-day of their company. Part of the value an agency partner can provide is presenting an outside perspective with opportunities for growth and pathways to meet their goals. 
  • Identify a client's biggest stress point and offer a way to support them. These don’t have to be conventional services. For example, if the client has recently lost an employee and their team is struggling to handle the workload, this is a great opportunity for the agency to offer support. 


Asking for an additional budget can feel uncomfortable, but it doesn’t have to be. A process to make it streamlined and efficient for everyone involved – agency and client – is the key to success.

 Create a process for client requests that are outside of scope, including how the agency responds in the moment, who approves or denies the request, who has the authority to determine additional budget and cost (both on the agency and client side), and who ensures that the additional workload, once approved, is properly integrated into the team’s existing workflow and processes. 


Revenue leaks – managing against scope creep

A key factor in retaining clients and making sure they remain profitable is keeping scope creep in check. Scope creep is when projects and tasks outside of the original scope of work are performed without additional budget.  

Keeping scope creep in check requires that every team member is aware of what this means and is able to identify when it’s happening. The entire team needs to clearly understand what is in the agreed upon scope, so they know what is outside of it. 

Here is a checklist for keeping campaigns in scope

  • Ensure the entire team knows what falls within the scope of work. Everyone working on an account should be crystal clear on what falls within the scope of work. This is important for two reasons. Everyone on the team should be aware of what should be done, so it’s delivered to the client, and what shouldn’t be done, so the team’s bandwidth and capacity aren’t being spent on unpaid work.
  • Set and maintain expectations with the client. Scope creep often happens when a client assumes the agency will handle something because expectations weren’t probably managed from the beginning of the partnership. For more on this, we cover setting and maintaining client expectations here
  • Agree to a timeline. Lack of clear timelines often leads to scope creep because agency teams end up playing catch up to keep the client happy. Both the client and the agency team should be on the same page about expected timelines. If deadlines or milestones are missed due to client delays, timelines should shift as a whole.
  • Establish a process for approving requests outside of scope. If the client has a request that falls outside of scope, everyone on the team should know what to do, how to respond, and who has the final approval on requests.
  • Create a plan to track the team’s progress against the scope of work. This will help the agency team ensure that the work is getting completed and nothing is falling outside of the scope. 


Effective budget management requires everyone to understand their role and impact on overall revenue. 

If you’d like to learn more from the Advocation team on best practices for PR & marketing agency teams, follow us on social media–Instagram, LinkedIn and YouTube.