The Business Development Dilemma

The Business Development Dilemma

2025 is fast approaching, and agencies are finding themselves at a critical inflection point. The industry is rapidly evolving in three dimensions simultaneously, presenting exciting opportunities and tough challenges with agency business development strategies for 2025. The first is technology. The second is talent, and the third is Trump… JK! The third is competition. Of course, these three are integrally related and seemingly have little to do with the agency’s new business, except they actually have everything to do with new biz. I’ll explain that in a later post.

The advertising landscape continues to evolve faster every year. For agency owners, this rapid change presents both challenges and opportunities. The key to thriving in this environment is your ability to adapt, innovate, and, most importantly, grow your client base. But let’s face it: business development can be daunting, especially when juggling your agency’s day-to-day operations and all the other things you do.

Agency business development strategies for 2025 will have to navigate many factors. Things will be more expensive: people, production, pitching, media, tech, travel, subscriptions, and so on. You must increase your efficiencies to help ease the cost burdens and justify head count. That’s no easy task, considering you’ve been doing that religiously since the pandemic.

Headcount will tighten as margins shrink and costs go up. Utilization will be a hot topic. Business development support is often a struggle, even in regular times. With increasing costs across the agency, a spare body or a few hours of support will be even less available. You’ve already asked your BD team to do more. Next year, you may ask your BD team minus one to do even more.

Tech will be a friend and foe. A friend because it is the easiest way to replace human hours with tasks that can be done as well or better with AI, ML, and other emerging tech. A foe because of a significant learning curve, professional training, workflow and process changes, and potential staffing impacts. The good news is that there are many how-tos and expert recommendations, and many platforms come with everything you need to use them properly out of the box.

These same issues will also impact marketers, so we should expect cost-cutting, headcount shaving and greater tech adoption to replace agency functions. Making the agency indispensable to your clients will be even more critical. Let’s face it: Most agencies are unremarkable. Your agency has to double down on being an extraordinary partner with flawless execution and invaluable leadership. No one is perfect, but you’ll end up somewhere closer if you aim for the stars.

The Business Development Dilemma Part 1

According to surveys I’ve done, about 40% of agency leaders are responsible for business development. They find themselves in a familiar predicament. You’re excellent at what you do – creating compelling campaigns, developing innovative strategies, delivering exceptional results, and nurturing strong relationships with your clients. However, when it comes to new business, many know they don’t have time, or if they do, the results fall short. Most would rather do anything else but new business. This is where a new business consultant can be a game-changer to agency business development strategies for 2025.

31% of agencies have a new business executive or team, a dangerous role. According to RSW/US, 33% of new business executives were gone in their second year and 43% in their first year. That means 76% were gone in two years or less in 2023. That’s a terrible statistic for people, processes, and success in new businesses.

17% divide it among account management folks, and 10% share the responsibility across various leaders: strategy, production, account, and finance. These people have regular job responsibilities that often increase during certain times or events and struggle to find time for whatever new business activity they share. This arrangement is frequently problematic for many reasons, including burnout and unhappy existing clients.

About 2% use outside help like me.

And then there is this: less than 20% have any professional training or credentials in BD. I’m not suggesting that these scenarios can’t be successful. I am pointing out the challenges and impacts of each.

The Business Development Dilemma Part 2

New business has gotten more sophisticated and specialized in recent years. Generic approaches don’t cut it anymore. Clients seek agencies that understand their specific needs, demonstrate a track record of success in their industry, have knowledge and experience in the latest tactics and channels, and are data and tech-savvy. Outreach, relationship building, nurturing, and closing new clients require many more skills and expertise today. Today’s business development executive has to:

Uncover Industry-Specific Insights: The BD role must provide valuable insights into current trends, client expectations, and emerging opportunities to sharpen focus and guide and fine-tune efforts.

Leverage Strategic Positioning: The BD role must refine your agency’s unique value proposition and position you as the go-to solution for your specific prospect audiences and their most pressing needs to stand out.

Utilize Efficient Resource Allocation: The BD role must focus on the most promising opportunities to maximize return on investment and avoid wasting time and resources on unqualified leads.

Execute Targeted Prospecting: Today, casting a wide net and hoping for the best does work. The BD role has to identify and pursue the clients that best fit your agency’s strengths and expertise.

The Business Development Dilemma Part 3

You might wonder, “Why can’t I just handle business development in-house?” You absolutely can. About 90+% of agencies do it in-house in one form or another. More than half of those shouldn’t be for various reasons, but that’s for another post, too. If you have the people and expertise, you can be very successful. If it’s not working out as you planned, there are several compelling reasons to consider bringing in a consultant or service:

1. Objectivity: An outside perspective can help you identify blind spots and opportunities you might have overlooked.

2. Specialized Skills: As mentioned, business development requires a unique skill set that may not align with your core team’s expertise.

3. Focus: By outsourcing business development, you and your team can concentrate on what you do best – delivering exceptional work for your clients.

4. Scalability: A fractional business development leader can provide the level of support you need when you need it without the overhead of a full-time hire.

The Outlook for 2025 is Positive

Increased Ad Spending and Growth

• Global ad spending is projected to grow 7.8% in 2024 to $989.8 billion, and 2025 is expected to be the first year to break $1 trillion in ad spending.
• The US market is forecast to see 5.8% growth in 2024 and 4.9% in 2025.
• Digital advertising spend is projected to reach $235.7 billion in 2025, though growth may decelerate slightly to 8.9%.

Economic Optimism

• Expectations of a strong US economy.
• Increased agency merger and acquisition activity.
• A resurgence in brand spending.
• Growth in the independent agency market.

Media Concentration Among Large Players

• While overall ad spending is increasing, much of the growth is concentrated among the largest publishers and platforms.
• The top 25 advertising sellers account for over 72% of ad revenue.
• The top 5 sellers (Google, Meta, ByteDance, Amazon, Alibaba) have seen 23% compound annual growth, while the rest grew just 2.1%.

Shifts in Agency Models and Services

• Agencies are unwinding legacy systems and redefining roles to address marketers’ need to do more with less.
• There’s a trend towards full-funnel capabilities, integrating performance and brand media assignments.
• Data management agencies are evolving into customer experience (CX) agencies to provide more comprehensive services.

Technology Investment and Automation

• AI-powered advertising is becoming crucial for efficiency and performance.
• Ensuring brand messages are effectively conveyed through AI-generated search responses.
• Cloud-based systems and ePayments are being adopted to manage increased transaction volumes and improve efficiency.
• Automation technology is expected to have a significant financial impact, with 75% of finance departments believing it will positively affect their operations.
• These technological investments require upfront costs but could lead to long-term economic benefits for agencies.

The Business Development Solution

As you plan your agency business development strategies for 2025, a better yet more challenging new year, the question isn’t whether you can afford to invest in specialized business development services – it’s whether you can afford not to. No matter how you do it, in-house, hybrid, or outsourced, in an industry where relationships and reputation are everything, having a dedicated expert in your corner can be a real difference-maker.

However you approach it, I recommend that everyone include these in your 2025 planning process:

1. A fresh competitive analysis to identify your agency’s unique strengths and opportunities. Things change fast in this business.
2. Revisit your agency differentiation and positioning to be confident it is helping you stand out in an increasingly crowded market.
3. Rethink your prospecting strategy and outreach. Tactical performance, media, channels, events, and thought leadership are shifting.
4. List hygiene to ensure you reach out to the right decision-makers and influencers as buying roles evolve and staff turnover.
5. Reevaluate marketing automation’s role in your tech stack and outreach efforts
6. Include team training in your budget to empower your staff with practical business development skills. New business is a team sport!

In the agency business, standing still is moving backward. The agencies that will win are those that take proactive steps now to grow and evolve. An outside resource can offer you the expertise, strategy, and support you need to thrive.

Happy 2025!

Are you stalled on your agency business development strategies for 2025? Schedule a call today, and let’s discuss how I can help propel your agency into the new year and set you up to keep the momentum going for years. Find a time on my calendar, and let’s solve your business development dilemma. If you like this post, give it a thumbs up, forward it to a friend, and leave a comment. Don’t forget to sign up for my New Business Newsletter. While you are at it, let’s connect on LinkedIn.

#LetsGrow!