Large agencies’ new business spend bounces back; small agencies’ success rates fall

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Every year, new business consultancy JFDI partners with pollsters Opinium to create their New Business Barometer report. Following the release of this year’s report, we delve into its key findings and what they say about how agencies bounced back in 2021.

This year’s New Business Barometer report has been released, bringing together data on the spend, successes, and struggles of new business professionals in the UK. Produced by new business specialists JFDI in partnership with strategic insights agency Opinium, it draws on a recent questionnaire completed by 116 new business professionals.

Comparing this year’s data with five previous yearly iterations, the report tells a story of how the new business role has changed over that period in response to macro and market factors, as well as in-industry (and in-agency) developments.

The pandemic bounce-back

This year, Covid-19 continues to loom large. It was listed as a top consideration impacting new business professionals alongside Brexit – although, encouragingly, both were cited less often than in last year’s report.

The report divides respondents according to size: small (less than 50 workers); medium (50-150) and large (more than 150). The previous report, which focused on 2020, showed that large agencies had massively reduced their average new business revenue targets, while small and medium agencies’ targets stayed relatively constant. This year, those large agencies’ new business revenue targets rebounded substantially – a 116% growth to £6.39m, exceeding 2019’s average. Medium-sized agencies stayed roughly constant on this metric, while small agencies’ targets fell for the second year in a row (by 22% compared with 2020).

Spends and successes

Metrics on allocated marketing spend tell a similar story: for large agencies, it’s bigger than it’s been in the report’s history, up 55% compared with last year. Medium agencies seem to have held back slightly, with a slight reduction in spend; but small agencies have continued an upward trend (up 25%).

This long-term upward trend for small agencies has resulted in them spending a much higher portion of their new business revenue targets on marketing efforts – 13% compared with 9% for medium and 6% for large agencies. Smaller agencies are also pursuing more opportunities, while large and medium agencies have decreased activity here compared with 2020 (where activity spiked). Only small agencies have increased the number of opportunities they’re going for, with a slight (2%) hike.

Conversion rates are highest for large agencies, converting 43% of opportunities to pitches and 50% of those pitches into wins. Success rates were lowest for small agencies.

Strategies and priorities

When asked about their prospecting strategies, marketing as sales engagement; management network connections; and forming alliances and partnerships all ranked as important across the groups – with partnerships particularly important for smaller agencies. Referrals, intermediaries and lead generation agencies have continued to decrease in importance.

As for the priorities of their new business activities, filling the pipeline was salient for all groups – but less important for smaller companies, for whom growing existing clients has become more important.

Challenges and opportunities

The most frequently-cited reason for unsuccessful pitches was said to be the withdrawal of budgets – although equally many said that they rarely received feedback on failed pitches. In-agency challenges clustered around resourcing and pitch difficulties.

As for improving performance, larger agencies reported that they’re focusing on growing the clients they have, finding better-quality prospects, and fostering a new business mentality across their organizations. Small and medium agencies reported focusing more on their prospecting strategies, improving pitches, and agency marketing.

What does it all mean?

JFDI’s managing director Camilla Honey says that the message is that smart new business work increasingly requires a sensitivity of approach. “Those who are responsible for new business in agencies are having to become much smarter about how they approach it,” she says, adding that there’s an increased focus on “developing differentiated prospecting strategies and more creative marketing initiatives.”

Opinium’s Josh Glendenning adds that understanding the landscape is key. “As an agency ourselves, we know it’s vital to continually refine, optimize, and evolve our offering,” he says. “We and other agencies have had to do this like never before over the past two years. This year’s Barometer has given us the opportunity to measure and track these changes.”

In a recent session with members of The Drum Network, our panel of new business managers agreed. Said Sara Lilley of 2Heads: “data creates advantage and as agencies deliberate marketing spend and sales strategy for FY23, having access to a report such as the JFDI Opinium Business Barometer can make all the difference. For us, their insight into top prospecting strategies and the shifting variance of approach is invaluable for our business development teams.”

You can read more about the report over at JFDI.