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What about marketing agencies?
Not as great as last year, according to Ad Age's Agency Report 2024 (subscription required).
In 2023, the total revenue of the 30 largest agency companies in the world increased by 5.6%. And the forecast for this year? It is between 2% and 3%.
The “Too Big Five” (as Robert Rose of CMI calls them) – WPP, Publicis, Omnicom, Interpublic and Dentsu – have so far increased their revenues by a whopping 2.7%.
What's going on? Are agencies taking on fewer projects? Do brands need agencies just as urgently? Where is the agency world heading?
Since Robert is our Chief Strategy Advisor, we asked him these questions, but not without wishing him a happy birthday first. Watch this video or read on to hear what he had to say:
The revenue growth of large agencies is falling rapidly
Ad Age's 2024 Agency Report analyzes the performance of the largest agencies and provides insight into the marketing market.
This has been the case for 79 years, and only four agencies from the first report remain, at least in name. BBDO, McCann, FCB and Campbell Ewald are now all part of huge holding companies. It is notable that some of the largest agencies, such as Accenture and Accenture Song, appear on the list more than once.
The state of the giant agencies of this world is a big “meh”.
The top five traditional companies reported organic revenue growth of 1.3% in 2023, compared to 7.5% in 2022. That's a 6 percentage point decline in revenue growth in one year. That's really a loss. A nearly 83% decline in revenue growth in one year is astonishing.
The forecast for 2024? Somewhere between 2% and 2.8%.
Agency budgets are growing, but not much, especially considering that inflation was recently at 3.3%. The report also notes that agency headcount has increased by 1.6%, in line with revenue growth.
All metrics point to a stagnant or slight decline in agency value in the broader market.
Small agencies are not immune to difficulties
It's also been a difficult year for small, independent agencies, struggling to compete with larger agencies on projects that those larger organizations would never have taken on in better times.
The specialization of marketing at larger companies is also having an impact on the agency market. Demand generation, sales enablement, customer experience and even customer support programs are increasingly driving a greater need for niche specialists. Companies are more likely to work with these specialists on everything from data to technology, content creation to influencer marketing and measurement to media buying. It's not unlike the medical industry, where general practitioners have made way for specialists.
I see agencies ditching their agency title and reinventing themselves (subscription required) as creative solutions companies, content studios, growth incubators or accelerators.
What marketers should do in 2024 and beyond
What should you learn from all this?
The agency world is complicated. One reason it's slowing down is the absorption of all the changes that have been planned for companies over the past two years. Many of the larger companies decided to make a major shift in 2021 and 2022. In 2023, they said, “Well, we better stop strategizing and start implementing all these changes.” And in 2024, it's back to normal.
That too will change. In the meantime, no matter what specialized vertical challenge you face, finding agencies or consultancies that can help you accelerate the changes ahead should be a priority.
For me, that is the crucial turning point.
The next episode of “What's New?” returns on July 12, after a week-long break due to the US holiday weekend.
Want more content marketing tips, insights, and examples? Subscribe to CMI's weekday or weekly emails.
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Cover photo by Joseph Kalinowski/Content Marketing Institute
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