The communications landscape has been a struggle for ad agencies, as well as other comms businesses including PR firms, when it comes to attracting and landing new business, reveals new research from RSW/US, an outsourced business development firm for marketing agencies. The annual study reports unprecedented challenges, and sheds light on key statistics emphasizing the uphill battle agencies have faced so far in 2023.
This year, 58 percent of agencies reported that obtaining new business has become significantly harder, marking increases from 28 percent in 2021 and 43 percent in 2022, finds the firm’s newly released Agency New Business Report. In addition, 2023 has also presented challenges in the form of slowing referrals, decreased budgets, and longer sales cycles.
The survey also indicates a decline in satisfaction with internal new business programs, with only 44 percent expressing satisfaction, compared to 49 percent in 2022 and 52 percent in 2021. The challenges are particularly pronounced for small and mid-sized agencies, where hiring individuals to drive new business is a formidable task.
Why is it harder to obtain new business?
A few other key stats that exemplify the struggles around “new” new business:
Hiring for the new business director position is at its second-lowest level since 2010
Only 36 percent of agencies reported hiring someone for this position in the past three years. The average tenure of a new business director hire in 2023 is notably short, with 29 percent lasting less than a year and 23 percent lasting 1-2 years.
“Hiring internally for the business development position is an ongoing struggle for agency principals: 85 percent of Agency New Business Directors last less than 2 years,” Lee McKnight, Jr., Vice President of Sales at RSW/US, told Bulldog Reporter. “The struggle is certainly real. However, there are 4 key mistakes we often see agencies make in the hiring process and they need to avoid:
- Hiring based solely on the person’s network
- Hiring green and thinking they can train up
- Not digging deep enough into the individual’s planned process, and
- Not defining the new business position clearly up front.”
7 in 10 (69 percent) agencies still find referrals to be the most effective method for acquiring new business
However, there are reported decreases in reliability compared to previous years.
The average time from a first meeting to close in 2023 is reported to be 1-6 months for 75 percent of agencies
While this is an improvement from 2022, deeper analysis reveals challenges with shorter timeframes decreasing and longer timeframes increasing.
In light of these statistics, agencies are urged to reassess their business development strategies moving into Q4 and 2024, where trends and spending look to improve. The challenges are significant, but not insurmountable, especially as some anecdotal evidence shows the end of Q3 loosening up to an extent.