Obtaining New Business Is More Difficult for Agencies, Report Finds
Steve’s breakdown: We call BS on this report. Destination account reviews alone make up for all the clients the stuck their heads in the sand.
EVERYWHERE, USA: Landing new business has become more difficult for agencies in 2022, a survey of more than 150 agency executives nationwide has found. The RSW/US 2022 Agency New Business Report found that ad agencies, marketing services firms and PR companies are growing slower while new business is tougher to land.
The study, which invites 3,000 executives to participate annually, has been conducted by RSW/US—an outsourced lead generation business development company for marketing firms—since 2010. While 2021 was a high point for many agencies landing new business, especially as the pandemic altered how business is done and many companies sought new representation, 2022 is proving more difficult all around.
- In 2021, only 28% of agencies said it was more difficult to obtain new business than the previous year.
- In 2022, that number has jumped to 43%.
What accounts for this rise in difficulty? For one, following the lockdown, budget freezes and overall uncertainty of 2020, agencies needed a respite in 2021, and they got it. As business came back again, it was easier to land new clients as brands and companies looked to start fresh.
This year, it has become more difficult again. Reasons agencies in the study gave for that difficulty are:
- It has been harder to break through to prospects than last year.
- There are fewer opportunities out there.
- Agencies can’t find the right person to drive the new business program.
According to the 2021 Agency New Business Report, “the current influx of new business is not coming from actual business development on the part of agencies.” That looks to have played out for many agencies, who understand there needs to be a balance that includes some manageable form of outbound prospecting for new business, according to the study’s author.
“The growth so many firms had in 2021 should be celebrated, but change is a constant in our industry, and existing growth looks to be slowing. It’s critical heading into 2023 that agencies have a manageable framework for ‘new’ new business,” Mark Sneider, owner and president of RSW/US, said.
Other telling statistics from the study include:
- 63% of agencies say new business dollar volume is the same as 2021, or has decreased so far in 2022.
- Organic growth fell by 11% in 2022 as an effective way to generate new business.
- In 2021, hiring for the new business director position at an agency fell to its lowest level since 2010, with just 32% of agencies hiring a new business director in the past three years. In 2022, the number is, once again, at 32%.
- Agencies reporting their last new business hire was very to somewhat successful dropped from 60% in 2021 to 41% in 2022.
- A notable increase in competitive pitches: 49% of agencies reported pitching once a quarter in 2022 vs. 39% in 2021.
Responses to the 2022 study found agency owners saying:
- It is difficult to find prospects with significant budgets.
- For pitches, clients are still hiding behind video conferencing.
- Agencies are uncertain they are targeting “right fit” prospects and/or it’s harder than ever to break through to those that are the right fit.
- Hard to hire people necessary to build bandwidth to take on new clients.
- We’re more sharply focused on ideal client prospects and that’s taking more time to break through.
- Too much turnover and inexperience on the client side.
- Economic uncertainty/headwinds.
While it may be more difficult in 2022 to obtain new business, it is not a new trend, according to Sneider—it’s simply been a bit easier the last two years. The good news is that with focused and strategic messaging to the right prospects, coupled with multiple forms of outreach, agencies can break through to their prospects. A full copy of the report can be obtained here.