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99Designs pivots to agencies and returns to its Melbourne roots

Controversial crowdsourcing site 99Designs is moving away from design competitions to ‘one on one’ engagements, as the company rethinks its business model ahead of a potential stock market listing.

“At a high level, what we’ve discovered over the last few years is 99Designs has traditionally been at the high end of small business and entrepreneurs,” CEO Patrick Llewellyn told Mumbrella this week.

“Digital agencies are in the sweet spot:” 99Designs CEO, Patrick Llewellyn

As Llewellyn prepares to relocate the company’s head office back to Melbourne after three years in San Francisco, he told Mumbrella how digital agencies are an increasingly important part of the business.

“What we discovered is one of fastest growing segments was digital agencies and our biggest customers tend to be digital agencies or businesses that onsold designs so they are either a creative based business that needs lots of designs to fill their creative catalog or they are an agency that’s packaging creative for a third party customer.

“With that discovery we’ve also seen good growth in marketing departments in larger organisation, for us the digital agencies are in the sweet spot.”

To answer the criticism that 99 Designs devalues designers’ services, Llewellyn said the company’s markets are changing as clients develop new relationships with creatives.

“I think the criticism is starting to dissipate as the product continues to evolve. We have a product called one to one projects, where you connect directly with a designer and that accounts for over twenty percent of volume on our site. So it’s becoming an important told for the community to connect.

“We’re also finding customers are finding designers outside of the contest paradigm. We built projects originally because we knew that contests were a great way to introduce designers to customers and helping them match, so we wanted to help them maintain a relationship.

“As we’re doing a better job of highlighting designers, enhancing their profiles, showing their reviews and showing the sort of services they want to offer, increasingly customers are going directly to individual designers and working them.”

Llewellyn also flagged the company is looking at this market shift to drive its 1-to-1 Projects product as the 99Designs considers publicly listing on the ASX. Currently the privately held company claims to be profitable on the back of $60 million in annual revenues.

“It’s growing faster than our contest businesses and it’s becoming a more important part of our business. We’re going to continue to invest in it and invest aggressively in that direct product over the next 12 to 18 months,” Llewellyn said.

“Our current pro offer is all about access to ongoing account management if they need it,” he continued. “It’s also about providing access to all our foundational tools that we’ve built into our platform like our presentations tool, advanced security, NDA’s, all of our upgrades and fast tracking, which a lot of our agency clients use.

“At it’s core, we always thought competitions were great for group creativity – it’s kind of like brain storming on steroids. You get a multiple of ideas from a broad range of people. It’s great at the ideation stage where you don’t know what you’re looking for.

“If you already know what you’re looking for, you have a design style or specific design genre and you’ve already created a brief, the best thing we can do is match you with a designer who we know has the skill sets to fulfil that.”

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