12 Essential Marketing Agency Industry Insights for 2024

Over the past year, AgencyAnalytics gathered insights that shed light on the current state of marketing agencies, their challenges, and the opportunities ahead. Our 2023 Benchmarks Report brought forward some compelling findings every agency leader should know as they gear up for a busy 2024. 

From the continuous quest for new clients to the pivotal role of referrals and the significant impact of time management, agency life is complex. And despite the shadow of economic uncertainty, agency owners have a shared sense of optimism about the future, with many predicting an uptick in revenue.

Today, we’re sharing 12 essential findings that provide a pulse of the marketing agency industry, to help agency leaders adapt and pivot no matter what 2024 throws their way. 

1. The Top Challenge For Marketing Agencies Is Client Acquisition

More than a third of agencies pointed out their main hurdle is finding new clients. This challenge stands out more than managing time or maintaining cash flow. This was especially true for agencies with a team of 6-10 members and those serving 21-30 clients, indicating that the struggle with client acquisition varies with the agency's size and client roster.

Implied within this finding is the fact that many agencies are intently focused on client acquisition as a key strategy for business growth. Though most agencies do rely heavily on acquisition as a scaling factor, this statistic might also reflect a business approach within respondents that relies on shorter client engagements. 

Take an SEO agency, for example. They might provide intensive support during a website's initial launch, leading to multiple short-term projects, and then close the contract once a website is established within the market. This means they need a steady influx of new clients to keep their business thriving.

Client retention is the single most important goal of our agency. Without client retention, our agency would not be able to grow.

Dr. Richard Girling, CEO, Red Castle Services

2. Referrals and Word of Mouth Are the Best Ways for Agencies to Acquire New Clients

Nearly half of marketing agency leaders say referrals and word of mouth are the best ways for agencies to land new clients. When agencies focus on referrals, they find a dependable way to attract new customers. 

These referrals are a decisive vote of confidence in the agency's skills, leading to new, high-quality leads. Agencies must invest in their current client relationships, deliver outstanding service, and encourage happy clients in order for those clients to refer others.

The biggest contributor to our growth so far has been client referrals. We have an incredibly low churn rate for an agency that’s been in business as long as we have. The first clients we started out with are still with us, and we continue to help them grow and adapt to market conditions.

Matthew Regenie, CEO, Prospect Future

3. Time Management Is the Main Concern for Marketing Agency Leaders

Time management was cited by 40% of agencies as the top internal challenge as they navigate allocating resources across various projects. This is a common scenario, given that agencies are juggling multiple clients and projects at any given time. (Perhaps not surprisingly, the second biggest challenge is employee burnout.) 

Regardless of size, agencies acknowledge the importance of managing time and expenses efficiently. As an agency grows, the complexity of logging hours and keeping an eye on project costs increases.

This finding highlights the urgent need for better project management strategies and tools. These resources are essential for boosting productivity, ensuring clear communication, and maintaining accurate records of billable hours and expenses.

Scaling a business requires time. When half of your business is losing time performing mundane tasks instead of working in productive ways, we effectively cap our expansion by slowing down how quickly things get done.

Ruben Roel, President & Founder, Investigator Marketing

4. Transparency Is the Key to Client Retention

Having clear and honest communication channels and being transparent in dealings with clients is crucial for keeping clients happy and building trust.

Interestingly, the ability to effectively communicate often outweighs a campaign’s success. For agencies, success is just as much about what you achieve as it is about how you share those achievements.

Regular updates, consistent reports, and open dialogue about victories and hurdles are vital practices that strengthen bonds and ensure agencies retain clients.

Transparency is crucial for building long-term relationships between businesses and their digital marketing partners. Client reporting is a vital part of any digital marketing strategy and should not be overlooked by businesses or agencies.

Guy Hudson, Founder, Bespoke Marketing Plans 

5. Agencies Typically Retain Clients for More Than Two Years

An impressive 70% of agencies who use AgencyAnalytics said they boast a client retention span exceeding two years. This points to how they forge enduring relationships with their clients, consistently meet their objectives, and showcase their impact through detailed and regular reporting.

Agencies with shorter retention times specialize in services like PPC, SEO, social media, and local marketing. This suggests that these fields generally work on shorter contracts, or that it's more challenging to demonstrate success and keep clients satisfied in these areas continuously.

On the other hand, agencies that provide a more diverse array of services have an edge in building longer-lasting client relationships.

Retaining existing customers is often less expensive than acquiring new ones. By focusing on personalized communication, upselling, and cross-selling, we have been able to increase the lifetime value of each customer and reduce our overall CAC.

Adam Binder, Founder & CEO, Creative Click Media

6. Most Agencies Already Use AI Tools

Among the surveyed agencies, 78% already use AI in content creation. This trend spans agencies of all sizes, regardless of the number of clients or employees. 

This widespread adoption of AI tools globally signals a strong recognition of their value in the industry. The drive towards embracing AI is fueled by its ability to automate mundane tasks, utilize AI-enhanced analytics, and boost efficiency and productivity.

AI tools will certainly help with the speed and, ultimately, the quality of work that we do every month. 

Olu Ajanwachuku, CEO, GVATE

7. Marketing Agencies Don’t Outsource Much of Their Work

A large portion of agencies, 81% to be precise, outsource part of their work. However, it usually constitutes a minor segment of their overall tasks—less than 10% of their workload. This indicates that while outsourcing is common, it's typically reserved for selective purposes or specific needs.

Agencies prefer handling most of their tasks internally, which likely stems from a desire for direct oversight and control over projects. Outsourcing is mainly seen as a helpful approach for handling increased work volumes, tapping into specialized expertise, and fulfilling client requirements. 

Video editing, Lottie animations, content, and copywriting—these tasks don't warrant an in-house specialist for us, so short-term freelancers fill that gap perfectly. The biggest challenge is finding freelancers who are 100% reliable—who show up and work at the level we're looking for from our whole team.

Alex Faiers, Founding Director, Addictivity

8. Agency Owners Are Optimistic About the Future

In light of industry changes and consumer behavior shifts witnessed in recent years, the optimistic forecast for the coming two years is more than just hopeful thinking; it reflects the marketing industry's ability to adapt and innovate. 

Many agency owners are beginning to reap the rewards of their perseverance and hard work, and 78% of them said they are “quite” or “very” optimistic about the future. This widespread enthusiasm among respondents signals they anticipate their businesses will continue to grow.

We've always known that success comes from a combination of strong relationships, exceptional services, and data-driven decision-making. These are the key factors that have propelled us to where we are today, and we continue to rely on them as we look toward the future.

Adam Binder, Founder & CEO, Creative Click Media

9. Economic Uncertainty Remains the Top Concern for Agencies

In our survey, 34% of participants expressed concern over how economic instability might affect the digital marketing sector.

Global events—the ongoing conflicts in Ukraine and the Middle East, climbing interest rates, and inflation—all feed into this climate of uncertainty. In times like these, companies often face budgetary pressures, leading to a more cautious approach toward marketing expenditures.

In business, “your current customer is your cheapest customer.” When faced with economic uncertainty, our focus shifts to client retention. It’s an all-hands-on-deck approach to avoid disruption to existing client relationships.

Dan Delmain, Founder, :Delmain

10. A Large Majority of Agencies Predict Their Revenue Will Increase by 2025

A majority of agencies are preparing for notable growth or at least a positive upward trend by next year. Although some are proceeding with caution, the prevailing mood is one of hopeful expectations.

With digital advancements on the rise and consumer habits evolving, agencies ready to embrace and adapt to growth are set to spearhead progress. 

Having the right software for the right job definitely helps as we grow. If we had not committed to some big software purchases at the beginning of the company, I'm not sure how we would be able to service all our agency clients. AgencyAnalytics is definitely one of the most important software purchases we have. It's how we prove our worth to our clients.

Linda Rooney, Founder & CEO, DandeLions Digital

11. Reporting Monthly Is the Sweet Spot for Agencies

Monthly reporting strikes the perfect balance for 58% of agencies, offering a rhythm that keeps clients engaged and well-informed without bombarding them with excessive communication. 

Regular reporting ensures clients stay in tune with the progress of their campaigns, fitting seamlessly into their often hectic schedules.

Sending monthly reports not only helps provide clients with an overview of what was achieved and the progress made within a month but also gives campaigns time to set up and normalize. Although it is nice to check in on a campaign weekly, sometimes it is better to get a macro perspective of how the campaign went in order to determine its success.

Ariene Dionela, Digital Media Account Director, Connections Marketing

12. Most AgencyAnalytics Customers Spend Less Than an Hour Creating a Report

A whopping 78% of AgencyAnalytics customers dedicate 45 minutes or less to creating each client report. 52% create reports in under a half hour. Before adoption, manually compiling a single report could take 2.5 to 5 hours.

The change goes beyond efficiency; it represents a transformative shift in how agencies operate.

Pulling various data points into a coherent report is essential to illustrate the impact of marketing initiatives for clients. Leading agencies also enhance their reporting by using templates and data visualization features provided by AgencyAnalytics, making the reporting process quicker and more insightful.

AgencyAnalytics benefits us in several ways, including more professional communication with clients, integration of a complete suite of tools, and seamless monthly reporting.

Brad Russell, Founder, Digital Hitmen

Shape Your Agency’s Future With Resilience and Innovation

From the importance of client acquisition and referrals to the critical need for effective time management and transparency, agencies continue to refine their strategies to succeed in 2024 and beyond. 

The widespread adoption of AI for content creation across agencies of all sizes underscores a collective move toward innovation and efficiency. At the same time, the cautious approach to outsourcing highlights a preference for maintaining control over core operations.

While economic uncertainty looms, agencies are resilient and adaptable creatures, with many poised for growth despite the challenges. Automated tools like AgencyAnalytics are invaluable for data reporting and client communication, allowing agencies to invest more time in strategic thinking and less in time-sucking manual tasks.