Published 2024
How Digital Agencies Grow
The revgen strategies and tactics agencies use and an exploration of their effectiveness. Discover actionable tactics to supercharge your agency’s growth!
Executive Summary
Relationships Drive
Agency Growth
As we explore early on in this study, specialization plays an enormous role in relationship building.
It’s easier for specialists to create relationships because they understand both the unique challenges and vocabulary necessary to communicate with their target market.
It’s easier for them to nurture these relationships as their focus (and thus content) is more commonly relevant to the everyday life of their target client.
Finally, it’s easier for them to grow their relationships as they can incorporate learnings across multiple companies within an industry and create new tailored solutions for their unique challenges.
These factors play a major role in why specialists were able to grow so much faster than average during a rough 2023.
Service mixes are shifting, and it’s clear that AI is having an impact. The average number of services agencies offer is staying relatively flat, so the new focus on AI dev and implementation is coming at the cost of other services. Interestingly, AI dev / implementation services aren’t offered by many agencies.
We’re introducing a new way to measure sales complexity in this report. It’s helping shed light on the drastic increase in effort required to close enterprise accounts vs. smaller accounts. We found that specializing by industry was correlated with lower sales complexity scores.
Almost every shop’s revenue consists of a mix of retainers and projects. The most common retainer size was less than $5k per month, and the most common project size was $100-249k. Larger agencies typically complete a similar number of projects as smaller ones, but their projects are often substantially larger. Finally, there was a correlation between the typical retainer size and the size of the agency’s typical client. This wasn’t relegated to large companies, though; in contrast to projects, it was common for agencies of any size to offer retainers of any size.
2023 was widely known as a rough year.
Now we know just how rough. It was the worst since 2015 when we began tracking agency growth rates. There were plenty of things to learn about how agencies grow during this down year. Fast-growing agencies tended to use slightly more contractors than Average or Slow agencies. While Fast agencies used a similar number of revgen tactics as everyone else, leaders reported fewer, more effective tactics. This leads us to believe that the Fast agencies focus on developing expertise in a few highly-effective revgen tactics rather than spreading their efforts across a broader range of less-effective tactics. Agencies can grow faster by decreasing their sales complexity and selling into smaller accounts.
A key part of relationship building is how agencies facilitate communications with their target clients. There are entire books on where each of these revgen tactics fits along the prospect-client-evangelist lifecycle, but for the scope of this research, we’re evaluating them on their overall contribution to revenue.
Account management-related tactics were by far the most popular, taking four of the top five spots. They were also the only ones that were at least moderately effective overall at growing revenue.
Tactic efficacy changed along with typical client size. Some revgen tactics had clear advantages for agencies that served a specific client size. A few went from being moderately effective to not effective at all.
Finally, sales complexity also had a significant impact on tactic effectiveness. Client referrals and Growing current accounts were the only two consistently effective tactics across all levels of sales complexity.
Many factors contribute to the growth of a digital agency, but some factors are more impactful than others. Although 2023 was a challenging time for many, reflecting on the successful tactics, refining them, and focusing our efforts accordingly will allow us to grow more reliably in the future.
Learn which revgen tactics actually drive agency revenue
We surveyed 91 digital agency leaders to find out which revenue generation tactics they use and which actually work.
Key findings:
Fast-growing digital agencies focus their efforts on fewer, higher-impact revgen tactics.
Revgen tactic effectiveness changes depending on your target client size.
Sales complexity plays a huge role in growth rates and revgen tactic effectiveness.
Agency leaders
Revgen tactics
![Alex Field](https://prometheanresearch.com/wp-content/uploads/2023/07/Alex-Field-300x300.png)
“Thanks again for the helpful report. I’m a nerd for this stuff and your analysis is by far the best. I am now on my third stint growing digital agencies and always turn to your work.”
Alex Field
Senior Managing Director, Teal Media
Answer the core questions around how digital agencies grow:
Does agency specialization matter?
What services are digital agencies focusing on?
How does sales complexity impact growth?
![Report Example](https://prometheanresearch.com/wp-content/uploads/2024/05/Report-Example-1024x640.png)
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