New Agency Business Expected to Rise in 2024
RSW/US study of agencies and marketers shows an anticipated uptick in spend and use of AI
Last September, a study by RSW/US, an outsourced business development firm that works solely with ad agencies and PR firms, found that small agencies were finding it difficult to land new business.
Just a few months later, the outlook is a bit sunnier, as RSW has released its 2024 RSW/US New Year Outlook Report with a view that over half of marketers are anticipating improved business performance in 2024 compared with 2023.
RSW surveyed advertising agencies and marketers in November 2023 on what marketers are planning and expecting, and what agencies are considering and preparing for in 2024. The agency sample came from the RSW/US database of more than 7,000 marketing services, advertising and PR firms in the U.S. and Canada, and the marketer sample came from the RSW/AgencySearch database of 30,000 marketing decision maker contacts.
Now in its 12th year, this year’s study found that there was hope for a better year, with 79% of agencies, and more than half of marketers, anticipating significantly improved business performance in 2024. While 2023 found nearly half of agencies and 40% of marketers reporting a decline in 2023 over 2022, the outlook was more upbeat for this year.
“2023 was a roller coaster for a lot of firms. They were seeing sales cycles go longer, they were seeing budgets shrink, and it was just harder to break through overall,” Lee McKnight Jr., vice president of sales at RSW/US, told Adweek.
McKnight pointed to notes of optimism for 2024, including 59% of marketers anticipating a moderate to major rise in marketing spend and 45% of agencies predicting a similar increase in client marketing spend.
But why such optimism when just months earlier the outlook was decidedly bleak? McKnight looked at the end of the year, when budgets were being locked into place, that spending and hiring were starting to rise and both agencies and marketers looked to a slight improvement in the economy and a forecast for a more economically stable year.
Agencies under more scrutiny
While the outlook may be slightly rosier than last year, agencies are having to prove themselves to clients more than ever. When marketers were asked why they decided to review new agencies to work with, 45% cited lack of proactivity by their current agencies, up from 30% the previous year. Over a third (40%) said it was due to them not being happy with their agency’s strategy or thinking, while 35% said they were not happy with the creative.
McKnight sees strategy and creative as subjective, but the proactivity aspect means marketers are looking to their agencies to come to them with ideas and solutions before they ask for it. Marketers are looking to their agencies to be experts and leaders of their strategies, not just order takers.
As such, the study showed a rise in project work and a drop in RFPs from both the client side and agencies participating in pitches and RFPs. Half of marketers reported releasing fewer RFPs in 2023 compared to the previous year, while 37% of agencies reported answering fewer RFPs.
AI and tech are on the rise
Unsurprisingly, AI is on the minds of everyone in the industry, with 77% of agencies planning to incorporate AI into their business strategy in 2024, and 60% of marketers feeling their agencies are ahead of the trends in tech.
But it’s still the Wild West when it comes to AI, and many firms have not worked out how they will use the technology.
“There’s still so much we don’t know about how it’s going to apply to our businesses. However, making sure that you are staying on top of what’s happening now and informing your clients, that’s going to be key,” said McKnight, adding that those afraid of adopting any form of AI are ultimately going to lose out on new business.
Proactive outreach is needed
Agencies need to have an active outreach arm to get themselves in front of new potential clients. Sitting back and waiting for work doesn’t move the needle for most agencies. New business depends on outreach. Marketers are reporting that they found new agencies not by past agency relationships nor networking through friends and coworkers, which have all dropped. The notable increase was in direct agency outreach, which increased by six points, up to 50%.
Agencies need some form of direct outreach, said McKnight, and it can’t just be through email.
“People are still picking up the phone. You have to alternate your touches over phone, over social, over email. We still use physical mail. It’s a little old school, but it’s interesting how consistently our salespeople will hear from these prospects,” said McKnight.
He added that agencies have to show prospective clients at the top of the funnel what the agency does, who they do it for, and what results they get. The positioning should be plain spoken and focused to help win new business.
While there are still plenty of challenges facing agencies and marketers in the new year, a greater understanding of the outlook on both sides could lead to greater prosperity in 2024 compared to last year.
To obtain a copy of the full study, visit the RSW/US site here.
Published on January 18
Source: Adweek
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