Why Agencies Are Overworked and Still Billing Less, with Sean Harris –– Ep.234

About this Episode

In this episode of the Agency Profit Podcast, Carson Pierce is joined by Sean Harris, Director of Customer Experience at Function Point, to explore the challenges and emerging trends shaping the agency industry, drawing on insights from the 2026 Creative Industry Trends Report. Together, they unpack why agencies are struggling with declining revenue, overservicing, inaccurate time tracking, and shrinking profit margins, even as technology makes teams more efficient. Sean shares key findings from the report, including why many agencies lack visibility into their own profitability, how small client requests quietly eat into margins, and why AI adoption isn’t always translating into better financial results. From the growing shift toward value-based pricing to the importance of reliable data, stronger processes, and more accurate forecasting, this episode offers practical insights to help agency owners improve profitability, make smarter decisions, and build more resilient businesses in an uncertain market.

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Points of Interest

• 00:01 – 02:38 – Introducing the 2026 Creative Industry Trends Report: Carson Pierce welcomes Sean Harris from Function Point to discuss industry research and the challenges facing creative agencies.
• 02:38 – 05:23 – Why 46% of Agencies Experienced Revenue Declines: Sean explains how economic uncertainty, reduced marketing budgets, and slower client acquisition contributed to declining agency revenue in 2025.
• 05:23 – 07:46 – The Ongoing Problem of Agency Overservicing: With 76% of agencies reporting overservicing, Carson and Sean discuss how untracked client work reduces profitability and why measuring delivery costs is essential.
• 07:46 – 09:14 – Why Agencies Struggle to Measure Profit Margins: Sean reveals that roughly one in five agencies lack visibility into their margins, often because they fail to account for employee costs and accurate project expenses.
• 09:14 – 12:24 – The Gap Between Time Tracking and Reliable Data: Although 71% of agencies track time, only 29% consider their data accurate, highlighting the need for consistent processes, team accountability, and better tracking habits.
• 12:24 – 14:46 – How Inaccurate Timesheets Distort Project Profitability: Carson and Sean explain how misallocated hours, delayed timesheet entries, and incomplete reporting prevent agencies from understanding the true cost of client work.
• 14:46 – 17:15 – Why 52% of Agencies Avoided Raising Prices: Economic pressure and fear of losing clients led many agencies to maintain existing prices despite rising costs, further squeezing their margins.
• 17:15 – 18:46 – How Small Client Requests Create Profit Leakage: With 54% of overservicing attributed to small requests, Carson highlights how seemingly minor changes and untracked project activities accumulate into significant delivery costs.
• 18:46 – 21:11 – The Productivity Paradox and AI’s Impact on Agencies: Despite 52% of team members feeling overworked, billability and utilization declined by 8%, raising questions about unpaid work, AI-driven efficiency, and traditional hourly billing models.
• 21:11 – 24:35 – The Shift Toward Value-Based Pricing: Carson and Sean explore why more agencies are adopting outcome-based pricing, how it reduces revenue leakage compared with time-and-materials billing, and why time tracking remains important.
• 24:35 – 30:37 – Hybrid Work and the Challenge of Revenue Forecasting: With 68% of agencies operating hybrid models and most having six months or less of revenue visibility, the conversation explores changing overhead structures and the role of reliable data and AI in forecasting.
• 30:37 – 37:15 – Building Better Financial Visibility Through Agency Management Tools: Sean explains how Function Fox, Function Point, and the upcoming Frankly platform aim to simplify time tracking, improve data accuracy, and help agency leaders make more informed operational and financial decisions.

Show Notes

• Sean Harris on LinkedIn
• Function Point on LinkedIn
• 2026 Creative Industry Trends Report