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2Q23 Agency Trends: Independents Grew 2% On Difficult Comparables. Largest HoldCos Still Appear On Track for ~4% Growth This Year
One of the key ways I monitor the state of the advertising agency industry is by looking closely at independent agency groups. As I have written previously, in recent years independents and smaller agencies have generally taken share from the largest holding companies, although the degree to which they outperformed in early 2022 has probably predisposed them to slightly underperform in the current quarter.
Based on my analysis of dozens of the world’s largest privately held independent agency groups (using employment figures aggregated via Linkedin data, which I think serves as a strong proxy for revenue growth, as these agencies generally only add to their employee bases when they add to revenue) we can see a few percentage points of deceleration in the second quarter of 2023, with the 30 largest rising by 2% year-over-year. Notable outperformers with double digit growth during the most recent quarter included VaynerMedia, Power Digital, Webfx, Barkley and the Mars Agency.
The second quarter’s results followed on 5% growth in the first quarter of 2023. Both figures faced difficult comparables, as the second quarter of 2022 saw approximately 14% growth and the first quarter of 2022 produced growth of 16%. Comparables ease as the year progresses, and so it wouldn’t be surprising to see slightly faster growth in the third and fourth quarters of this year, at least relative to the second quarter.
I expect broadly similar trends to play out for the largest agency holding companies this year, as the world’s six biggest players grew by just under 4% in the first quarter of 2023 after growing by more than 12% in the first quarter of 2022. The comparable from the second quarter of 2022 was not as difficult for the largest agency groups as it was for smaller ones – the six biggest grew by “only” 11% in 2Q22 – and so it wouldn’t be surprising if they outperformed smaller agencies slightly in the second quarter of 2023. Overall, the global agency sector remains on track to grow by around 4% organically this year, with US growth excluding political agency activity set to grow by a slightly faster pace.
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