If you run a marketing or creative agency, you’re probably dealing with one of two frustrating realities:
At some point, someone has likely told you:
“You need time tracking.”
And maybe you resisted it. Maybe you tried it, and it failed. Maybe your team hated it.
Let’s zoom out.
This isn’t really about time tracking.
It’s about gross margin.
If you run a professional services firm - especially a marketing agency - the single most important metric in your business is gross margin.
Gross margin is:
Revenue – Cost to service that revenue
Not overhead. Not software. Not rent.
Just:
How much money are you actually making on the core work you do?
If gross margin works, the agency works.
If gross margin breaks, everything else eventually breaks with it.
At Upsourced, we think about gross margin through what we call the Margin Triangle.
There are only two drivers:
That’s it.
If you have a margin problem, you have one (or both) of these problems.
This is when:
Common causes:
Revenue without margin is risk.
You can grow top-line revenue and still create a fragile business if your projects aren’t priced and delivered profitably.
This is when:
Your salary base is fixed.
Your revenue isn’t.
Utilization issues often show up as:
Slack is expensive. So is burnout.
Here’s the uncomfortable truth:
You cannot properly measure project margin or utilization without time data.
To understand project margin, you need to know:
To understand utilization, you need to know:
Without that information, you’re guessing.
And guessing at $2M–$10M in revenue gets expensive quickly.
There are fringe cases where agencies can approximate this data without formal time tracking.
Usually, those agencies:
But most agencies don’t operate that way.
Most agencies have:
And very few serious agencies scale to mid–7 figures and beyond without tracking time in some form.
It’s not impossible.
It’s just the exception - not the rule.
Time tracking doesn’t fail because of tools.
It fails because of leadership.
When teams resist time tracking, it’s usually because:
If you don’t clearly communicate the “why,” your team will invent their own.
And their version won’t be flattering.
If you’re going to implement or relaunch time tracking, start here:
This is not about:
It’s about:
Time tracking is a leadership tool - not a performance management tool.
One of the fastest ways to destroy buy-in is to set individual utilization targets and police them.
Most employees cannot control their own utilization. Leadership controls the pipeline.
If someone is underutilized, that’s usually a demand problem -not an effort problem.
Use utilization data at the team and company level.
Not as an individual scorecard.
The tool is secondary.
The process is primary.
Best practices:
Why 40 hours?
Because incomplete data creates confusion.
You can’t tell the difference between “no client work” and “didn’t log time.”
Clean inputs create clean decisions.
This is where most agencies drop the ball.
If your team logs time and never sees how it’s used, the initiative dies.
Instead:
If a project took twice as long as expected, the lesson isn’t:
“Why were you slow?”
It’s:
“Did we underprice this? Scope it incorrectly? Miss a complexity?”
Data should improve decisions - not punish people.
Poor time tracking produces poor decisions.
But that’s a communication and culture issue - not an indictment of time tracking itself.
When your team understands:
Compliance improves dramatically.
Over time, it becomes a habit.
When time tracking is done well, something powerful happens:
And once gross margin stabilizes, everything else becomes easier.
Profitability isn’t luck.
It’s visibility.
If you want a profitable, repeatable, sustainable agency, you need:
Time tracking isn’t glamorous.
But neither is guessing your way through growth.
If your agency is in the $1M–$10M range and margins feel thinner than they should, it may not be a revenue problem.
It may be a visibility problem.
And that’s fixable.
To dive into this conversation further, listen to our latest episode of Creative Outcomes, where Partner at Upsourced, Ryan Watson, covers this topic. Subscribe to our YouTube channel for more insights.