What’s the situation with marketing agencies?
According to reports, it is not as good as last year Advertising Age 2024 Agency Report (Subscription required).
In 2023, the total revenue of the world’s 30 largest agency companies increased by 5.6%. What are your predictions for this year? Between 2% and 3%.
The Big Five (as CMI’s Robert Rose calls them) – WPP, Publicis, Omnicom, Interpublic and Dentsu – have seen combined revenue growth of 2.7% year to date.
What gives? Has the organization done fewer projects? Do brands also need agents? Where is the agency world headed?
Since Robert is our Chief Strategist, we asked him these questions, but not before wishing him a happy birthday. Watch this video or keep reading what he had to say:
Revenue growth falls sharply for large institutions
Advertising Age’s 2024 Agency Report takes a look at the performance of the largest agencies to understand the temperature of the marketing market.
It has been doing this for 79 years, and only four institutions from the first report remain, at least in name only. BBDO, McCann, FCB and Campbell Ewald are now part of large holding companies. Notably, some of the largest institutions, such as Accenture and Accenture Song, appear on the list more than once.
The health of the world’s largest institutions is surprising.
Organic revenue for the five largest legacy companies grew 1.3% in 2023, down from 7.5% in 2022. Talk about buried lead. Revenue growth fell by nearly 83% in one year, which is shocking.
Prediction for 2024? Between 2% and 2.8%.
Agencies’ budgets have grown, but not by much, especially considering the recent inflation rate of 3.3%. The report also found that the number of agency employees increased slightly by 1.6%, in line with revenue growth.
These indicators all point to flat or slightly declining agency values in the broader market.
Even small organizations will inevitably encounter difficulties
It’s also been a challenging year for small independent agencies. They are trying to compete with larger institutions for programs that the larger organizations would never have approached in better times.
The professionalization of marketing by large companies will also have an impact on the agent market. Demand generation, sales enablement, customer experience, and even customer support programs increasingly lead to Greater demand for niche experts. Companies are more likely to work with these experts, from data to technology to content creation to influencer marketing, and the measurement of media buying. This is not unlike the medical industry, where general practitioners have given way to specialists.
I’ve seen institutions drop their institutional titles Rebrand yourself (Subscription required) Serve as a creative solutions company, content studio, growth incubator or accelerator.
What marketers should do in 2024 and beyond
What do you make of all this?
The world of agents is complex. One of the reasons for their slowdown is absorbing all the changes that have been enacted for the company over the past two years. Many large companies have decided to make major transformations in 2021 and 2022. And, in 2024, this will continue.
This will change too. At the same time, finding an agency or consultancy that can help you accelerate change should be key to addressing any professional vertical challenges you may encounter.
That was the real pivot for me.
What’s new in the next episode? It will return on July 12 after a one-week break over the US holiday weekend.
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Cover image by Joseph Kalinowski/Content Marketing Institute
