The 2023 indie agency outlook: talent, pitching, and ‘the digital recession’

‘Lingering uncertainty’ and ‘the world’s first digital recession’

Recession looms (albeit, in some markets, with slightly less calamitous odds than feared) and few of those macro problems (war; supply chain crisis) have seen improvement. So even where there’s optimism among our indie agencies, it’s with an edge of uncertainty.

As Aaron Dicks, co-founder of digital agency Impression, puts it, “the worst of the coronavirus was short and sharp. The impact for us was mostly felt within 90 days – and then obviously it felt weird for two years after that. Now, this feels different; it’s a lingering uncertainty.”

Dicks goes on: “for an agency, the consumer is our end client. If they’re going to be feeling a bit of a pinch this year, or perhaps a bit of uncertainty, then obviously that’s going to impact us as well.”

“It’s undoubtedly a tough time,” says Luke Smith, founder of Croud. “We’re in the first-ever digital recession; you only have to look at the layoffs in big tech to know this is a very different world. But there are some shoots of recovery. Pitches are coming back; we’ve got a pretty robust pipeline... It does feel like we may have gotten through the worst of it. Although maybe I’m speaking too soon.”

The great wave: marketing talent in 2023

The last couple of years has seen a great wave of shifts in marketing’s talent market with the so-called ‘great resignation’, ‘quiet quitting’ and a fight for people that drove up costs and left many under-resourced. The headline among our indie leaders: in 2023, they’re finally seeing things settle.

“Last year was the worst year for hiring,” says Nick Jekyll, co-founder of London indie shop Paradise. “Awful, dreadful; really, really bad. We lost clients because we couldn’t find the right account managers… we spent a lot of money on freelancers because we couldn’t find long-term solutions”.

Those same worries struck even the biggest indies. Here’s Croud’s Smith: “12 months ago, we were in panic mode as to how we would staff up accounts.”

The early outlook for the year ahead is already better, says Jekyll: “at the end of last year, it really opened up: the level of candidates has gone up; and their commitment to the roles has gone up”.

To insure against any further surprises, our indie leaders are almost unanimous that if talent retention wasn’t a priority already, it must be now. “The ‘great resignation’ made us look at ourselves and our value proposition for employees,” says Dicks of Impression. “We’ve been able to invest more in our people; we’ve changed our benefits packages and the support available to staff; we’ve revisited salary bandings”.

Some are feeling positively excited about talent prospects for the year ahead. Ross Martin, co-founder of integrated agency Known, says that for 150 recent job postings, the shop has seen 35,000 applicants. “Talent that didn’t work in the industry is flooding in,” says Ross – from data science, engineering, mathematics and technology.

Parks Blackwell of digital agency PMG says that indies might be best placed to give workers what they want amid shifts in the employee-employer relationship: “one of the best things an independent agency can bring to the table is clarity and transparency to their people. That’s very different than the holding company world.”

The budget and pitch sitch

The moment recessionary fears appear, marketing budgets are often first on the chopping block. Most of our indies reported a similar recent history: a bullish start to 2022 followed by a pulling-back in H2, with the promise of a resumption in 2023. Some sectors (say, technology and FMCG) are of course more squeezed than others (say healthcare, often cited as ‘recession-proof’).

Our indies are cautiously optimistic that this resumption will play out in 2023. “There are interesting briefs on the table,” says Jessica Hargreaves, co-chief exec of creative comms house PrettyGreen, “there’s a bit more ambition out there”.

Jon Butler, chief exec at Manchester-based shop TrunkBBI, agrees: “we’re being aggressive from a new business perspective. There’s work about; there are definitely people on the lookout for agencies. The number of people putting their hat in the ring is increasing”.

Some of our indie bosses report greater scrutiny on their pitch responses. Butler says that clients are expecting “more of a breakdown on a granular level of what’s being spent”. Elsewhere, some say that clients are leaning more heavily on pitch consultants and intermediaries; that decision-making is becoming more drawn-out; and that some are expanding pitch lists, especially at the early stages.

Competition and collaboration

More agencies on pitch lists and greater scrutiny bespeaks a more competitive agency landscape, and most of our agencies agree that competition is rife. Equally, our indies are almost unanimous that they’re seeing greater collaboration between indies to win work (and take the fight to the networks). As Impression’s Dicks puts it, “with all the economic uncertainty, a partnership model works really well.” Impression’s heritage lies in the performance space; in the last 12 months, it has seen major growth from pitching alongside a creative agency. “If creative is one of the bigger levers we have,” he says, “we need to start being in more control of that”.

Similarly with collaboration between agencies and clients’ own teams; “different client opportunities require you to be a different size and shape, depending on the opportunity; we’ve found a lot of success in collaborating with internal client teams… becoming an extension of their team,” says Martin of Known, which likewise has increased collaboration with another agency, creative shop Mythology.

Building for tomorrow

Trends in M&A are hard to predict and acutely dependent on macroeconomic shifts but, as Croud’s Smith puts it, “there are opportunities for acquisitive agencies to add firepower to the roster” in 2023 – his agency will be among those on the indie side of things looking out for sensible acquisitions. Mostly, though, he says that smart agencies will be “spending a lot of time and effort getting things right when things bounce back… it’s been a tough few months, but we find these times as much an opportunity as a threat”.

Known’s Martin goes even further, saying that rocky recent years should be “a wake-up call that marketing could be so much better.” He goes on: “75% of the agencies that are in business today were built 20 or 30 years ago. There’s a new generation of CMOs and industry leaders who recognize the opportunity to make our industry so much better. And they’re not waiting any longer. They’ve taken control and are rapidly advancing the state of the art. You can see them rising up in agencies and in brands because now’s their time.”

For more takes on the year ahead, by and about marketing agencies, check out our Agencies Predictions hub.