Every industry has its annual patterns, and the agency world is no exception. Luckily, trends from the second quarter of 2022 look promising. There are some challenges to be aware of, but many marketing agencies are sorting through a wealth of opportunities.
First, let’s explore why the agency landscape is the way it is right now. In 2020 and 2021, marketing agencies were buoyed and fueled by government initiatives, such as the Paycheck Protection Program. The extra money they received helped them meet payroll, buy equipment, and recover amid an unprecedented crisis.
However, 2022 initially looked bleak from a sales pipeline perspective. As every agency owner knows, clients go into holiday hibernation from November through January. So, marketing agencies felt the pinch. They struggled to find new clients as they lost pandemic-related funding streams. Then, they were hit with a new concern: staffing issues. Even today, many owners are sitting on piles of requests for proposals. Why? They don’t have the dedicated staff to tackle new business.
So, does this mean what’s left of 2022 is likely to be a bust? Hardly. There are several reasons why the third and fourth quarters of the year will be golden despite the aforementioned hiccups.
Business Opportunities Through the Rest of 2022
To start hiring is getting easier. There are more qualified applicants asking for reasonable salaries and benefits, which naturally eases recruitment worries. Second, clients have become almost entirely location agnostic. They are prioritizing specialization and depth of expertise over geography. Today’s clients want to work with agencies with a deep knowledge of their markets. If they have to connect with those agencies via Zoom instead of in person, that’s OK.
How about all those requests for proposals? They’re making the next few months a bit sweeter, too. Here’s why: Sooner or later, all that work will go to the marketing agencies that find the bandwidth to accommodate clients’ needs. Chief Marketing Officers can’t wait forever, after all. They are under tremendous pressure to perform quickly. They’re not in a position to wait, which makes them eager to seal the deal with the perfect agency fit. Marketing agencies that can stand out are going to win contracts that help them recover momentum.
To be sure, clients aren’t excited to pay pre-pandemic rates. However, the vast majority know they have to pay premium prices to get premium services. As long as they’re getting exceptional work, they might haggle and grumble but will eventually accept that the COVID-19 discounts they received will expire sooner rather than later — if they haven’t expired already.
Of course, agencies will still have ups and downs throughout the rest of this year. For instance, many are working on challenging internal initiatives, such as improving billable percentages and utilization rates. But the path forward seems bright and rosy for marketing agencies willing to lean into trending realities with innovative approaches and open minds.
The author, Drew McLellan is the CEO of Agency Management Institute, serving more than 250 agencies to help the owners build profitable agencies that evolve and scale.