Expanding a creative or advertising agency into new markets is always a huge undertaking, but it is at the agenda of all agencies with successful client relations.
The success of an entry into a new market is all about the execution. Simply shipping a team of your existing staff to a new location is a risky strategy - creative work is all about local culture, insider knowledge and gut feeling, and your team from New York won’t know anything about the social media scene in Kuala Lumpur.
Localized knowledge is the reason the large agency networks, when looking to break into a new market, usually snap up a local outfit and move them under their umbrella rather than start from scratch. It’s a quick and effective - if expensive - way to establish a presence in a growth market.
For networks with billions in the bank this strategy works, but for small and medium-sized agencies without deep pockets international growth has traditionally been incredibly difficult. Hiring local staff, finding office space, complying with local laws and running the entire operation remotely is time-consuming and, if you can’t start generating revenue fast, could threaten your entire business.
Ambitious agencies who want to expand overseas but don’t have the desire to acquire can still get a piece of the action though. A third way - the virtual agency - uses technology to connect you with the best local talent, supplemented with a remote international team.
This will typically generate 15% fixed costs as percentage of net sales as opposed to 65% in a more traditional setting.
Expanding in new markets without the fixed costs - The Virtual Agency
Let’s say your agency wants to get a larger expousure to the fast-growing BRIC (Brazil, Russia, India and China) economies, but your executives are understandably wary of the cost structure normally associated with overseas expansion. To get around this with a virtual agency approach, you need three elements.
The local management team
You can’t sign up local clients without a physical local presence and a team that knows the language and understands the market. These key hires will run your business, handle sales, operations and client relations, but remains small to keep fixed costs under control.
The international support, FTE's or freelancers
Lots of technical research, design and build work doesn’t need to be completed in-country. Your existing team - whether full-timers based at your main office or remote freelancers you already work with - can be called on to fulfill this work.
Utilizing your existing talent network is key to keeping fixed costs low during international expansion; you won’t need to hire more people, or spend time getting them up to speed with your agency’s standards. The lower you keep your expansion costs, the less risk.
The local freelance talent
Perhaps the most important part of the expansion puzzle is your local creative talent. These freelance creative will take care of some design and localization tasks to make sure your work speaks to the local market and gets the results your clients need.
Staffing your remote office with full-time designers, copywriters and developers will see your fixed costs balloon, but by using a network of domestic freelancers within a management system like Coworks you can get the very best local talent on a flexible basis.
This is already happening
Booming freelance populations around the world combined with new collaborative technologies are making these skills - previously locked in-house or hidden away in local markets - accessible to all. Agencies like UniversalEverything are using flexible networks of freelancers with the best local knowledge to make their work sing no matter what the target market. These early-adopters are effectively running international agencies, but with none of the fixed costs usually associated with operating in multiple markets. Check out their amazing conversion of the Sydney Opera House below (credit: UniveralEverything)
Key to making international expansion work is embracing the latest technology, getting access to vetted international freelancers, and a lot of ambition. The most agile outfits are making use of a virtual agency setup to attack new markets with minimal fixed costs, and are reaping the first-mover advantage.
Coworks can help you get that edge - if you have an appetite for growth without the traditional costs, don't hesitate.