By Julia Tabisz • January 19, 2024 • 5 min read •
Ivy Liu
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Agencies see 2024 as a year in which their businesses will find themselves on the upswing after a tough 2023. But they’re still wary of the economy after such a tough year.
At least, that’s what Digiday+ Research found in our late-fourth quarter survey of agency professionals.
Digiday’s survey found that agencies expect ad spending to bounce back this year after a tough 2023. Heading into last year, almost the same percentages of agency pros told Digiday that they agreed and disagreed that they thought advertisers would spend more in 2023: 39% said they agreed that advertisers would up their spending last year, and 38% said they disagreed. This year, however, 61% of agency pros told Digiday they agree advertisers will spend more, while only 22% disagree.
This shift signifies a rebound to agencies’ past attitudes regarding ad spend. At the end of 2021, 76% of agency pros told Digiday they agreed advertisers would spend more in 2022, and 71% said at the end of 2020 they agreed advertisers would spend more in 2021. So while it’s not a total rebound, it’s certainly a significant move in that direction.
Digiday’s survey found that nearly half of agency pros (44%) said their 2023 revenues were up compared with their revenues for 2022. This seems like a healthy percentage, until we consider that the year prior, 78% of agency pros said their 2022 revenues were up over 2021, and the year before that 80% said their 2021 revenues were up over 2020.
Meanwhile, 30% of agency pros told Digiday at the end of 2023 that their revenues were down from 2022, compared with 16% who said the same at the end of 2022 and 11% who said so at the end of 2021.
But this drop in revenues this year wasn’t necessarily unexpected. In Q4 2022, just over two-thirds of agency pros (68%) said they expected their companies’ 2023 revenues to be up over their 2022 revenues. Again, that sounds like a lot until we compare it to the year prior, when 81% of agencies said they expected their 2022 revenues to be higher than in 2021. And looking forward to this year, Digiday’s survey found that agency pros see a real rebound ahead. Eighty-seven percent of agencies said at the end of 2023 that they expect their revenues this year to be higher than last year.
Digiday’s survey found that agencies’ ad spending on behalf of clients saw a drop last year — and that client ad spending has been on a downward trend. Just under a third of agency pros (32%) said their clients’ ad spending increased in 2023, down from just over a half (55%) in 2022 and 70% in 2021. At the same time, the percentage of agency pros who said their clients’ ad spending decreased has been trending upward, from 14% in 2021, to 26% in 2022, to 32% by the end of 2023.
However, more than two-thirds of agency pros (67%) said they expect their companies’ ad spending on behalf of clients to increase this year compared with last year. Sixty percent said they expected clients’ ad spend to increase in 2023, and 81% said the same in 2022.
More highlights from our survey:
Interestingly, agencies felt they actually had a successful year last year. Nearly two-thirds of agency pros (65%) agreed their companies had a successful 2023, with only slightly more than a quarter (26%) disagreeing. However, that 65% is a steep drop from the 84% who agreed their companies had a successful year in 2022 and the 85% who agreed they had a successful 2021.
The data looks quite different for the agency business as a whole, though. Barely more than one-third of agency pros (35%) agreed the agency business had a successful year in 2023, after 73% agreed the agency business had a successful 2022 and 71% agreed it had a successful 2021. On the other hand, nearly half of agencies (48%) disagreed that the agency business was successful last year, up from 14% in 2022 and 10% in 2021.
Digiday’s survey found that optimism is high for individual agencies in 2024 compared with performance in 2023. Nearly three-quarters of agency pros (74%) said they agreed that they’re optimistic about their companies’ prospects for the year. However, that is a drop from the 82% who said they were optimistic about 2023 and the 93% who said they were optimistic about 2022.
Again, though, when it comes to the agency business as a whole, that optimism doesn’t quite hold. Just over half of agency pros (52%) said they agreed that they’re optimistic about the prospects for the agency business in 2024, down from 70% last year and 82% the year before.
Nearly two-thirds of agency pros (65%) said they agreed that economic trends hurt their companies’ performance in 2023, which is almost unchanged from the 63% who said the same of 2022. Just 17% of respondents said they disagreed that the economy hurt their companies last year.
The economy continues to be a big concern for agencies this year. More than half of agency pros (52%) said they agreed that economic trends will hurt their companies’ performance this year — only a slight drop from the 56% who said the same last year. At the same time, more than two-thirds of agencies (67%) said economic trends were the biggest challenge the industry faced last year, and 52% said the economy will be the biggest challenge the industry faces this year.
Digiday’s survey found most agencies grew their services last year, which makes sense during a tough year. More than two-thirds of agency pros (68%) said the number of services their agencies offered increased in 2023 — up slightly from the 60% who said the same in 2022 and the 62% who said the same in 2021. Meanwhile, about a quarter of agency pros (23%) said the amount of services they offered stayed the same last year.
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