2021 Agency Outlook: Through the Pandemic and Beyond
2020 was a difficult year. While we all adapted as best we could to the pandemic, now though, as things are opening up again many marketers are asking “what’s next?” As the world shifts to a “new normal” how are agencies supposed to stay on the cutting edge, attract new clients, and maintain happy ones?
When the pandemic lockdowns started in early 2020, we partnered with agency consultant Karl Sakas to survey firms worldwide on how they were dealing and what they predicted was going to happen.
A year later, we’re still reeling from many of the impacts the coronavirus had on the business landscape, but with very different outlooks on the future. In early 2021, we surveyed the same group of firms again and ended up with 349 responses from agency leaders worldwide for both years.
Based on our 2021 Agency Outlook survey, Karl Sakas had recommendations for agencies to grow this year and beyond.
Survey results pointed to some common struggles across agencies, especially at the start of the pandemic. One year later, we found common themes across agencies but this time with a decidedly more positive spin.
The last year’s uncertainty gave way to some pessimism in the industry. But now, looking forward, our survey results showed that:
- Optimism in agencies is up 51% (from 57% to 86%)
- The #1 business priority in 2020 and 2021 was finding higher-value clients
- Agencies shifted from survival mode to growth mode
- Productivity went up during the pandemic: per-capita billables increased by 22%
- Net profit margins dropped: from 20% in 2019 to 16% in 2020
- 323% increase in prioritizing recruiting and retention
Optimism seems to be a trend taking hold strongly among agencies in 2021. Survey participants said, “We can survive and even thrive in difficult times” and “If we can survive the loss of 65% of our business revenue due to a global pandemic, we can survive anything.”
Riding this wave of optimism, agencies are ready to move towards growth again!
Key Agency Recommendations
1. [KPIs] Track your agency’s own sales metrics
Even though growth was the number one priority for most agencies, less than half reported that they were tracking their own sales metrics. KPIs like Leads per Month, Proposal Win Rate, and Proposals Sent Per Month are performance indicators for the effectiveness of the sales process. Without tracking these, agencies can’t have a baseline to improve on.
Karl makes the point here that regardless of where your agency is right now, you need to know what the current performance rate is so that you can start making meaningful improvements. He says, “You need to understand the implications of where you are and where you want to go so you can start to work backwards to make that happen.”
Step one for growth is identifying what you need to track and making sure you have the structure in place to provide the tracking.
2. [Productivity] Don’t ignore efficiency as you work remotely
More agencies reported delivering work smoothly and profitably as their biggest challenge in 2021 versus 2020. Working with remote teams can make this an even bigger challenge, but one that cannot be ignored.
Productivity helps you do more without always having to hire more people, which in turn helps to make you more profitable. Taking some time for business strategy to ensure that appropriate tools are in place for efficiency can pay off in the long run since wasted time is wasted money too. Often an investment in planning tools and management systems will lead to cost savings over time.
Project management systems, agency management systems, and marketing automation tools like SharpSpring are all great ways to improve efficiency.
3. [Human Capital] Prioritize recruiting and retention
In 2020, prioritizing recruiting and retention was only 3% of the responses. In 2021, that grew to 11% — a more than 300% increase! And it’s no wonder why. When top priority is growing your agency, growing the team has to go hand-in-hand with it.
In our webinar Karl said, “I’ve been hearing from agencies I work with all over the US and beyond, it’s harder to find good people and they’re expensive. If you’re encountering that, you’re not alone.”
With the increase in remote work, companies are competing on a much larger scale for top talent and people expect to be paid accordingly. Remote work does offer a much bigger talent pool, but also more competition meaning that companies will need to get more aggressive with benefits and salary options to not only gain interest, but also to keep the team.
When hiring, keep in mind not only current services but also future options so that you can look for people with the skills to grow with the company.
4. [Service] Consider offering sales enablement as a service
The three most popular current services for the agencies surveyed were marketing strategy, web design + development, and content marketing. We wanted to know which services firms were planning for in the future and we found some mixed results — some agencies were looking to scale back services, some were looking to add, and some were looking for that perfect balance between current and new.
The right answer to this will depend on your business and where it stands. However, we did find an opportunity for agencies looking to grow with new services.
Only 34% of all the agencies surveyed offer Sales Enablement currently, but 23% said they would like to in the future. For agencies looking to add a high-value service with low competition, this would be a great place to start.
As Karl said, “Your clients need help, right? Maybe you’re helping them grow their leads, but they’re struggling to close those deals…the better they are at their own sales, the more likely they are to expand their relationship with your agency for marketing-related services.”
While there is still a lot of uncertainty surrounding marketing moving forward, most agencies are looking to the future with optimism.
Firms with a focus on growth can start with one or more of these recommendations to fuel their business strategies for the rest of this year and beyond. Challenge yourself to apply one of these recommendations this week and start progressing towards your goals.
Don’t miss the rest of the conversation! Watch the webinar with agency expert Karl Sakas where he answers questions from business just like yours or download the 2021 Agency Outlook report as a quick reference for you and your team.