Here’s how to get your agency ready for increased ad spend in 2024

To make sure they’re well positioned to take advantage of higher client spending and a bigger appetite for marketing activity, agencies might consider investing in their business. A few more staff, perhaps, or access to some cutting-edge AI tech, might help secure some of those contracts and service them once they’re won.

If they don’t do that and clients indeed turn the money faucet back on, agencies could miss out. But if predictions don’t turn out to be quite right, that cash might be wasted.

So, when should agencies begin investing again? We asked 11 industry execs for their advice on navigating opportunity cost. Here’s what they had to say...

Hedge your bets

Zoe Eagle, co-chief, Accenture Song: “First and foremost, positive news about marketing investment must be celebrated. However, many companies will be looking to ‘survive to 25’ so it is a time for cautionary optimism. We’re adopting a mid-horizon mindset and looking at growth in the broadest sense in 2024: growth in talent and growing the skills of our talent. Increased spending is always great but we know our creativity has the greatest commercial impact when it works smarter, not harder. It means we’ll continue to deploy sharp data strategies, bring the best of technology to bear but do so leveraging high-grade marketing and brand strategies that are built out of real-world commercial nous.”

Stephanie Spicer, president, Luquire: “Whether client budgets are increasing or decreasing, agencies’ first focus should be on becoming a true business partner – not just a vendor that does creative, media or PR. Being that sort of strategic resource means that when opportunities come up, clients know you can help address all kinds of client issues, from seasonality and struggling audience segments to geographic issues or competitive concerns. Getting there requires a data-driven approach to identifying new, outside-the-box opportunities, as well as a clear understanding of saturation curves. Doing so allows you to ensure optimal spend across channels and to be a better partner.”

Alex Young, managing director, We Are Futures: “The ongoing chats we’re having with clients suggest budgets will continue to be hugely scrutinized this year. ROI and effectiveness will be the key to getting any client to justify an activity, they won’t simply let go of their rigor. But evidencing impact isn’t just about sales. Our type of work is about proving things like the impact on young people’s lives, their communities and their social mobility, as well as brand affinity. Those impacts will be different for different agencies, of course, but I believe when done effectively, the budgets are definitely there to grab.”

Stick to the plan

Will Grundy, head of planning, Adam&EveDDB: “I’m a planner. I like plans. I like to have a clear sense of where our business is going, how it’s going to get there, why it’s on the journey and how we’ll know when we arrive. After all, you can’t navigate anything – or anywhere – unless you know where you’re going first.

“That means investment – whether in people, products or processes – needs to be a deliberate decision based on a plan that fuels business growth, not a tactical knee-jerk response to slightly and suddenly rosier circumstances. So, if you’re going to navigate a problem like opportunity cost, you need to know your plan, what it’s going to take to deliver, how and where investment fits and, crucially, where it doesn’t. That way, when (perhaps if) marketing’s magic money tree does suddenly bear the fruit the IPA Bellwether report suggests it might, you’ll be ready to invest accordingly.”

Ali McClintock, managing director, Dept UK: “We’ll always welcome an optimistic Bellwether report but it won’t ever impact our hiring. Without a crystal ball (has anyone found one of them yet?), we focus on always hiring for growth, with three key principles. First, be nimble enough to pivot: you’ll predict where growth might come from, but often, you’re wrong – you need processes and teams that can adapt and change. Second, try to balance longer-term retained teams with project work: this gives you a solid foundation but doesn’t limit growth. Lastly, don’t get distracted from the most important thing, which is delivering the best work for your existing clients: this will always be the best choice and it’s often easy to forget.”

Kris Tait, US managing director, Croud: “Firstly, let’s recognize that this is par for the course and no surprise. The reality remains that whether ad spend is increasing or decreasing, agencies must remain adaptive to their clients’ businesses and the partnerships they’ve built. Investment in specialized tools, innovative staffing models and automation can help, further priming agencies for either of those up or down scenarios. They must also remain focused on building their talent pipelines and not just try to expand once they’ve won a new piece of business, as that’s already too late. A well-structured business that focuses on well-structured operations teams in addition to revenue growth will be able to better handle these ebbs and flows.”

Darryl Sparey, managing director, Hard Numbers: “As a high growth agency business, we have felt the issue of staff cost versus pipeline acutely over the last three years. We’ve also felt the challenging trading environment in the last six months or so. However, at Hard Numbers, we have decided to continue our investment in the team so that we have the capacity to scale at the pace of our prospective clients in the first quarter of 2024. Ask me at the end of 2024 if that was the right decision or not...”

James Kirkham, chief executive officer and founder, Iconic: “There is growth of Q4 budgets giving optimism, and an area leading this charge is events. The figures show a 17.8 % increase in spend for 2024, and this feels intrinsically linked to some key factors. The year ahead will be seismic in sports, with football’s European Championships held in Germany (June) and the Olympics following directly after in Paris. As such, savvy brands will know they need to connect in a more emotive, memorable fashion to audiences when it comes to sponsorship of the respective events.

“As well as this, there is a growing realization that the biggest moments in advertising and marketing demand more than just on-screen activity, digital display or reliance on the scroll of socials. The sheer noise and clutter mean audiences now need to feel more and become more symbiotically woven into brand essence. This can only happen with IRL physical events, where brand and consumer are joined and the experience is the takeaway and the product becomes the merchandise. Expect more of the same in this most exhilarating of years ahead.”

Always be ready

Michael Treff, chief executive officer, Code and Theory: “Leaders should constantly evaluate the state of their business, pivot when necessary and be open to making changes to their offense – versus only changing when forced to. With that said, a disciplined focus on reality rather than what might happen has prevented magical thinking from putting our business in a vulnerable place. If you believe in your talented team, then you will be confident to react quickly as the demand picks up.”

Ben Essen, chief strategy officer, Iris: “I wouldn’t recommend making a big bet on a return to the good old days. The truth is, we don’t know where client spending is going, plus we don’t know what crisis is around the corner. One thing we do know is that when client budgets return, the expectations that come with them will be higher than ever. So, the one investment agencies should be making is building a much more flexible and efficient model. That means building the capability to activate creative communities in line with client demand – like our Inc model. It also means investing in AI and digital tools that make it easier to scale when that demand does hit.

“Ultimately, the safest way to avoid missing out on opportunity cost is not to speculate but to build a high energy culture that is ready and able to pivot at pace.”

Josh Clarricoats, co-founder, Insiders: “We don’t. Our model is built to scale up or down at speed. We build bespoke teams of talent to solve our clients’ problems. Agencies should embrace the uncertainty, be scrappy and hustle to service clients when they start spending again. Having an extensive black book of top talent is key to making sure you have talent ready to cast at the drop of a hat. But also, don’t be a dick; stringing talent along in the hope something might come off isn’t acceptable.”

Diana Ellis-Hill, co-founder, Be The Fox: “The cautiously optimistic Bellwether report has led to discussion about whether agencies should scale up their teams in anticipation of the bountiful times, taking on the risk of that promise not materializing. The more practicable approach we’ll be taking is to ensure our teams are built around having individuals with multiple skill sets so we can remain agile and respond to the changing needs of our clients. Optimistic outlooks or not, the marketing landscape is evolving at pace and agencies need to be prepared to find new ways of responding to clients’ needs quickly.”

Want to join in next week’s debate? Give me a shout: sam.bradley@thedrum.com