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What should agencies do in a year of stagnant growth?

How are things going for marketing agencies?

Not as good as last year, according to Ad Age Agency Report 2024 (subscription required).

In 2023, the total revenue of the 30 largest global agencies increased by 5.6%. The forecast for this year? Between 2% and 3%.

The Too Big Five (as CMI’s Robert Rose calls them) — WPP, Publicis, Omnicom, Interpublic and Dentsu — have collectively increased their revenues by 2.7% year to date.

What about it? Are agencies doing fewer projects? Do brands need agencies as much? Where is the agency world heading?

Robert being our Chief Strategic Advisor, we asked him these questions, but not before wishing him a happy birthday. Watch this video or read what he had to say:

Revenue growth plummets for large agencies

Ad Age’s 2024 Agency Report takes the temperature of the marketing market by examining the performance of the largest agencies.

This situation has been going on for 79 years, and only four agencies from the first report remain, at least in name. BBDO, McCann, FCB and Campbell Ewald are now part of giant holding companies. It is worth noting that some of the largest agencies, such as Accenture and Accenture Song, appear more than once on the list.

The health of giant agencies around the world is a big “meh.”

The five largest traditional companies saw organic revenue growth of 1.3% in 2023, compared to 7.5% in 2022. That’s a 6 percentage point decline in revenue growth year-over-year. That’s like burying the advance. A decline of nearly 83% in revenue growth year-over-year is incredible.

The forecast for 2024? Between 2 and 2.8%.

Agency budgets are growing, but only barely, especially considering that inflation recently hit 3.3%. The report also found that the number of agency employees increased by 1.6%, which is in line with revenue growth.

The indicators all point to a stable or slight decline in the agency’s value in the broader market.

Small agencies are not without challenges

This year has also been tough for smaller independent agencies, struggling to compete with larger agencies on projects that the latter would never have been able to do in better times.

The specialization of marketing in large companies is also having an impact on the agency market. Demand generation, sales enablement, customer experience and even customer activation programs are increasingly leading to a increased need for niche specialistsBusinesses are more likely to engage with these specialists, from data to technology, from content creation to influencer marketingand from measurement to media buying. This is not without recalling the medical sector, where general practitioners have given way to specialists.

I see agencies dropping their agency title and to recreate an image (subscription required) as creative solutions companies, content studios, growth incubators or accelerators.

Marketers should do this in 2024 and beyond

What should you think about all this?

The agency world is complicated. One of the reasons it’s slowing down is absorbing all the changes that have been planned for businesses over the last couple of years. Many large companies decided to change course dramatically in 2021 and 2022. In 2023, they said, “Okay, let’s stop strategizing and start executing in the face of all these changes.” And in 2024, it’s continuing.

This too will change. In the meantime, seeking out agencies or consultancies that can help you accelerate the changes you need to undertake should be essential, no matter what specialized vertical challenge you face.

This is the pivot that is real for me.

The next episode of What’s New? returns on July 12, after a week-long break for the U.S. holiday weekend.

Want more content marketing tips, ideas, and examples? Subscribe to the daily or weekly CMI emails.

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Cover image by Joseph Kalinowski/Content Marketing Institute

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