Agencies with 51-150 employees are at a competitive disadvantage when it comes to new business opportunities, found the second annual New Business Barometer by JFDI in partnership with Opinium Research.
Responses from agencies across 16 core disciplines from tech and experiential to design and branding confirm that medium-sized companies are feeling the squeeze when competing with larger or smaller firms for new business.
Bigger is better than ever
The New Business Barometer found that larger agencies of over 150 people hold a series of competitive advantages, with twice as many employees dedicated to new business than medium companies, and four times as many as smaller agencies.
Using this additional manpower and business resource – including double the marketing budget of a medium-sized agency – large firms can pursue higher value opportunities and enjoy a higher pitch conversion of 47%, compared to 40% for medium businesses and 38% for small agencies.
Small is beautiful but hard work
In comparison, smaller companies retain a strong competitive angle through an ability to specialise, with a leverageable position as experts in their field. With less than 50 employees, these smaller agencies are agile enough to adapt to new opportunities at speed.
Whilst they work disproportionately harder to source and convert new business opportunities, they are successful at winning higher value business which falls within the ‘sweet spot’ of medium agencies.
Medium is feeling the squeeze
Placed between these two strong competitors, medium companies are under pressure, often having to decide whether to play the role of a large or small agency depending on the specific new business opportunity.
Agencies in this bracket are often undergoing a growth period which makes strenuous demands on management resources, from budgetary requirements as the company invests in dedicated new business personnel and marketing strategies, to building the company reputation to compete with larger, more established brands.
The New Business Barometer found that 68% of medium agencies have a dedicated New Business Director driving opportunities, compared to only 32% of small companies. Within agencies of less than 50 employees, 45% of CEOs and MDs consider new business to be their responsibility.
The nature of competition is changing
Whilst Brexit remains a long-term concern as one of the leading sensitivity points to new business, competition was highlighted as the number one challenge to new business for agencies across all sectors.
Mark Clark, Managing Director, JFDI, says: “The nature of competition is changing as the lines between sectors become increasingly blurred. Added to this, we see the rise of management consultants, and perhaps most importantly, the mighty tech companies exercising considerable influence over the routes to market.
“In this highly competitive environment, we would encourage creative agencies of all sizes to consider smarter ways to approach new business, developing strategies based on performance data to gain a significant competitive advantage.
“There is a deficiency of reliable data within the new business field and agencies often have to rely on word of mouth or assumption when making these major business decisions. Our annual New Business Barometer has been designed to act as a tool to support a more strategic approach to new business, leading to tangible gains for agencies of all sizes.”