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2021 outlook for digital marketing agencies: the future is bright

No one was quite prepared for what 2020 had in store — including digital marketing agencies. When business shutdowns occurred in the spring, 66% of marketing agencies said they experienced a decrease in overall revenue. CallRail’s call data report showed a similar trend, with call volume in the advertising and marketing industry falling by 29% from pre-COVID levels.

While 2021 still holds some economic uncertainty, digital marketing leaders indicate that their agencies have been remarkably resilient, according to CallRail’s fall survey of 167 global marketing leaders who use its services. The findings show that most agencies will finish 2020 with higher annual revenues than in 2019.

Overall, agency leaders reported satisfaction across many different business areas, such as their talent and expertise, customer service and positioning. When asked about their ability to attain key growth metrics — like generating new client leads and closing new business — the majority of agencies also exhibited strong confidence that they can.

While CallRail’s 2021 Outlook Report takes a much deeper dive into agency business practices, this article will highlight some of the most interesting aspects of the research. It also includes agency partners’ perspective on just why and how 2021 is shaping up to be a strong year for digital marketing agencies.

Agencies 2021 financial outlook is strong

In CallRail’s survey, 88% of agencies indicated they are satisfied to extremely satisfied with their agency’s financial health. Only 3% were extremely unsatisfied. In line with these findings, most agencies also anticipate exceeding their 2019 revenue by the end of 2020.

Due to the shift to digital channels during the pandemic, Kyle Shurtz, vice president of performance at Avalaunch Media, reported an increase in business. “Because we focus strictly on online advertising, we had more business come through as people shifted from offline to online. We anticipate 2021 to be much more of the same. Our goal is to grow by about 20% year-over-year.”

Even for those agencies who saw a decline in revenue in the spring or whose business models are more mixed between online and offline advertising, there’s still been a silver lining to 2020. Molly Randolph, vice president of client services at The Barbauld Agency, said the pandemic forced them to look at their business and make decisions they wouldn’t have made otherwise.

“We became more profitable because our overhead shrunk so much. But, we would never have gotten rid of our offices or our subscriptions. We would have let them linger without COVID,” said Randolph.

Dale Powell, managing director of Atomic Marketing, concurs. “We had a lot of time to think about the direction of our business and the types of clients we wanted to work with,” says Powell. “So we made some educated decisions to move pricing up and take a more firm hold to say ‘this is our price,’ which has eliminated the time wasters.” Powell also predicts that his agency’s revenue will exceed last year’s.

Agencies are delivering strategic value to clients

Being seen as a strategic partner is one of the primary ways agencies can increase their value to clients — and, in this department, most agencies thought they were doing quite well. According to 67% of agencies, the primary reason that clients choose their agency is because they’ve established themselves as strong strategic partners.

The longevity most agencies have with clients is another indicator that clients believed agencies are delivering enough value to continue to use their services. Long-term relationships of two years or more were common for 69% of agencies. Only 4% said the client relationship lasted less than one year.

In talking with some agency partners, a key reason agencies felt they were delivering value to their clients and seen as strategic partners was their ability to show real results.

“We earn our new business by providing results. We do a lot of competitive research and look for ways to break the molds,” said Powell, whose agency uses call tracking and form tracking as one way to track and report results to clients.

“Without call tracking, we really wouldn’t have the business we have,” says Powell. “Our model is built upon full transparency, and call tracking lets us measure how many phone calls came from a landing page. Ultimately, this is what our clients want to know – how many leads are we generating for them, and we can show them.”

Survey results show other agencies agree. Almost all (95%) agency leaders reported that call tracking and lead form tracking were very important to their business. Call recording analysis was also very important to 85% of agencies.

“Having tracking tools like call tracking and call analysis is the way we keep our clients happy,” says Shurtz. “We show that we’re not an expense, but an investment. Call tracking shows who’s called and what keyword came from where. Call analysis we use often with big law firms to create hotspot keywords, such as ‘appointment’ or ‘claim,’ to qualify leads.”

Challenges remain, but agencies are confident

Despite well-established client relationships and a strong financial foundation, challenges remain for agencies. The top two agencies listed were finding new clients (48%) and generating more revenue from existing clients (42%).

While agencies say it’s gotten harder to find new clients (53%), retain current clients (52%), and grow revenue with existing clients (62%), they are also confident they can overcome these challenges.

A strong majority of agencies (74%) said they are confident they can generate new leads, 75% are confident they can close new clients and 59% are confident they can grow revenue with existing clients.

What’s driving these high levels of confidence despite challenges? It seems to be a mix of employing strategies that help grow the agency’s business and, at the same time, showing clients that they are getting value from the services the agency provides.

For instance, Avalaunch Media felt it could continue to grow its business because it has a robust referral program in place. “We’re definitely confident that we can grow and sustain our business. We have a really strong partnership referral program that gives us good business,” said Shurtz. “We also have a strong employee referral program where they get a lifetime commission on any referrals, so we get a lot of deals from internal employees.”

The Barbauld Agency also talked about how it has helped clients turn their businesses around. For example, it helped clients make strategic advertising decisions that have resulted in some of them going from experiencing some of the worst months of their business to having some of the best months ever.

“Our July client meetings were very difficult and pessimistic, and we were doing all kinds of brainstorming about how to pivot clients’ businesses without the wheels coming off. But by September or October, our clients were saying, ‘Wow, we can’t believe how well it’s going,’ ” said Randolph.

Looking ahead

As agencies look ahead to 2021, there’s every reason to believe they will continue to realize business growth, increased revenue, and overall strong financial health. Generating new clients and growing revenue with existing clients will have to remain a priority to achieve these goals, as will continuing to focus on delivering results. Consequently, call tracking, form tracking, and other reporting and analytic software will remain essential tools.

Uncertainty for 2021 remains due to COVID-19, but the grass truly is looking greener on the other side of 2020. And there seems to be agreement among agencies that even if more lockdowns occur, it likely won’t be a repeat of spring.

“My outlook, overall, is much more positive for 2021 than even four months ago,” says Randolph. “I’m cautiously optimistic.”

For more insights, download CallRail’s 2021 Outlook Report.

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