What is an agency anyway?

One of my favourite events I am involved with is Nano Day, a workshop day aimed at the smallest of agencies. Tiny agencies make up nearly 2/3 of the UK’s agency sector*, but get completely overlooked by most agency facing content. It’s no surprise that this causes a lot of imposter syndrome in small agencies.

One way this always shows at these events is in the question “Are we even an agency?”. – the unspoken part being “… if we only have X people?”.

_{* Agencies with 1-2 employees account for 62.7% of the sector – Agency by Agency Industry Report, Spring 2025}

The essence of agency

There’s a common assumption that “agency” is about headcount, or brand, or looking a certain way. I don’t think it is. It’s a delivery model and a commercial posture. There are one-person businesses that operate like agencies, and 50-person businesses with “agency” in the name that don’t. It’s not headcount and it is not status.

My take is that an agency is an external team-function that sells outcomes through a repeatable delivery system, manages capacity and delivery risk, and creates value through judgement as much as execution. That’s a bit abstract, but essentially boils down to three things:

• Judgement & strategy: you help decide what matters and what happens next
• Delivery & execution: you reliably ship work that moves things forward
• Leverage & capacity: the capability exists beyond a single individual – through a team, a bench, or a genuine delivery system

If you’ve got all three, you’re agency-shaped. If not, you’re something else (and that’s fine too).

The importance (and unimportance) of labels

Let me put that in perspective before anyone reaches for the LinkedIn comment box: Call yourself whatever you want. If you only tick one of the three boxes above and want to call yourself an agency, I have precisely 0% issue with that.

I’m all for people using whatever labels work for them. Many clients won’t have ever thought about the difference between agency and studio (for example) either, so use whatever is going to win you the work. However, that doesn’t change the value of us understanding the difference.

You can use the customer’s language all day long. But you still need to understand your delivery model and commercial posture because that’s what determines what you can promise, how you price, and where the business breaks as it grows.

Agency as a label is fuzzy, but the model isn’t.

A simple model

I was surprised how hard it was to find a clear, usable way to answer the question “Are we an agency?” So I built one.

This diagram is how I think about it: each circle is a capability you’re offering, and the overlaps are the common business models that fall out of that.

The labels in the diagram are intentionally rough. There are other valid names for most of these intersections, and the boundaries are fuzzy.
For example, “Expert operator” could just as easily be “solo consultant”, “fractional”, or “senior freelancer”. Same shape, different badge.

Here is each segment in plain English:

• Agency (strategy + delivery + leverage) – Team-shaped service with a method, not just a person doing work.
• Expert operator (strategy + delivery) – High judgement, hands-on execution, capacity is the constraint.
• Studio (delivery + leverage) – Strong production capability, lighter steering.
• Consultancy (strategy + leverage) – Direction and enablement, often not owning delivery end-to-end.
• Advisor (strategy) – Paid thinking, clarity, and decision support.
• Freelancer (delivery) – Ships what’s asked for, typically person-dependent.
• Collective (leverage) – Access to capability/people, without necessarily owning delivery.

Who cares?

I think those running these businesses should. Because this isn’t an exercise in identity, but an understanding of the model. When you’re clear on which shape you’re running, three things get easier:

1) It clarifies what you can credibly promise

Clients might find you through the label, but they buy expectations. Those expectations are mostly driven by whether you have leverage, not whether you have “agency” on your website.

If you’re an expert operator, you can promise depth, judgement and speed of decision, but your responsiveness and capacity will always have limits because it’s you. If you’re a studio, you can promise throughput and production quality, but you’ll struggle if the client expects you to constantly steer the “why” and “what next”. If you’re agency-shaped, you can promise continuity, breadth and a more stable service, but only if you’ve actually built the system and bench to back that up.

The model gives you a simple check: are you implicitly selling leverage you don’t have? Or are you under-selling leverage you do have?

2) It helps you price without resentment

A lot of small firms end up annoyed with clients when the real issue is pricing that doesn’t match the model.

Expert operators often price like delivery, then quietly do strategy in the gaps (and wonder why they feel overworked). Studios price for production, then absorb steering and scope churn because the client “just needs a bit of thinking too”. Agencies price like freelancers, then get crushed by the overheads and delivery risk they’ve taken on: coordination, QA, account handling, and the cost of variability.

Getting clear on the shape makes pricing more honest. You can choose to bundle strategy, choose to separate it, choose to cap it, but you stop accidentally giving away the thing you’re actually valued for.

3) It tells you what breaks first as you grow

When demand increases, different models fail in different ways:

• Expert operator: capacity becomes the bottleneck. You drown in context switching, admin, and “just one quick thing”.
• Studio: quality control and scope control become the bottleneck. Strategy creeps in through the side door.
• Consultancy: the gap between recommendation and reality becomes the bottleneck — adoption, execution, follow-through.
• Agency: coordination becomes the bottleneck. Consistency, utilisation, and delivery discipline matter more than talent.

Knowing which failure mode you’re wired for lets you respond deliberately: Through boundaries, packaging, hiring, partners, or process, rather than just working harder and calling it growth.

None of this is about being “a real agency”. Plenty of the best businesses I see are expert operators or studios. The point is simpler: call it whatever the customer calls it, but don’t let a fuzzy label blur the model you’re actually running.

I’ve shared the diagram on LinkedIn too (wish me luck!). If you have a view, let me know whether you agree or disagree with this take in the comments.