In 2016, agencies may have felt that it was more difficult to win new business, especially as more business shifted from retainer to project-based assignments, but the industry seems optimistic about its future growth.
The annual Agency New Business Survey from RSW/US examines agency trends year to year and was distributed to over 5,000 agencies and over 10,000 marketers in the United States and Canada for 2016. Roughly 52 percent of respondents were from full-service agencies, followed by 13 percent from digital agencies.
When it comes to obtaining new business, 43 percent of agencies said it was harder or a lot harder to secure new clients from the previous year, which according to RSW/US is the highest percentage since 2010 when the U.S. exited the recession.
Agencies indicated that winning new business was harder in 2016 for a variety of reasons. Sixty-three percent felt it was harder to "break through to prospects" in the current environment. Other difficulties mentioned included more project work, greater competition and the addition of more in-house marketing staff.
However, the survey also found that only 39 percent felt the number of new business opportunities remained the same from the past year, while 30 percent felt the number of opportunities decreased. Compared to past years, agencies have actually indicated that there were more opportunities for new business in 2016. Looking ahead to 2017, 60 percent felt the opportunities would increase, while only 8 percent felt they would decrease.
"Agencies see it as more difficult in obtaining new business with a growing reason being that more work is awarded as project-based assignments now. Yet, they report seeing 'more opportunity' and expect that to grow in 2017," the study said.
Forty-one percent of agencies reported that in 2016 at least half of their work is now project based versus agency of record relationships. Agencies responded that 61 percent of new business won during the last few years requires agency to work with an in-house creative team.
Outside of looking solely at new business opportunities in the industry, the RSW/US survey asked marketers and advertisers whether they felt the industry has adapted well to the modern world. While the majority of marketers, 67.3 percent, said yes, 54.2 percent of agencies said no.
One agency noted: "I don't think this is a put-down of the ad industry, but I think it is floundering trying to figure out what the exact role is in today's world. Attitudes about advertising are changing and this is driven in party by technology. The industry hasn't figured it out yet."
In terms of finding an agency partner that helps the client, marketers said the benefits that come from a good agency include creative experience, innovative ideas and good strategy. Agencies ranked strategy as a more important offering than marketers, 88 percent versus 79 percent, but both ranked strategy in the top three benefits. Some of the lowest ranked benefits by both agencies and marketers included cost control and cultural disruption.