What you need to know:

• Former STW operations chief turned advisor Chris Savage has surveyed 60 indie creative agency leaders for their 2025 outlook following a "brutal" 2024.
• The response was remarkably positive – 66.7 per cent expect to see growth in the year ahead, and 36.7 per cent anticipate profit to lift by more than 15 per cent.
• Kudos for resilience and spirit, per Savage, but he's sceptical the sentiment is "bedrocked in reality". 
• More telling were agency projections for how competitors would fare – a third expected their peers to be worse off in 2025, while half said believed they'd flatline. Only 13.6 per cent anticipated growth for agencies other than their own.
• Savage also questioned bosses on the key pain points agencies count as barriers to growth. Per his research, marketers and procurement demanding 'more for less’ topped the list, followed by reduced client budgets and increased staff costs.
• Agency leaders cited issues with marketer capability, experience and operating models as fracturing forces on client-agency working relationships – and accelerating pitch cycles.
• Commercial fitness came out as a top agency priority for 2025, referenced in 80 per cent of responses, while 85 per cent referenced the need to improve sales pipelines.
• Asked whether they'd recommend a career in the ad industry to a young graduate 78 per cent said yes, but most caveated that it wouldn't be easy – or necessarily long-term. 
• The lack of junior talent pipeline – driven by a shift to more senior staff underpinned by automation –  is starting to become a problem for some.

Chris Savage lives by a mantra that ‘conditions are always perfect’. But even for an eternal optimist, the year ahead looks rough – and it’s off the back of a “brutal” 2024.

The former STW ops chief turned advisor has read the auguries: “There isn't one single piece of economic data and forward-looking projection around the economy, around consumer spending, around inflation, around trends that would suggest that it's going to be anything but another very tough year ahead”.

Bruising conditions have hurt multinational agencies and independents alike. Savage's latest sweep of the creative agency market suggests only a sixth of independents are thriving, two sixths are worse off and the remaining half are living hand to mouth monthly.

Yet his poll of 60 independent creative agency bosses earlier this month suggests many have a different commercial read on how 2025 will pan out.

That research, conducted earlier this month, surveyed 60 creative shop bosses on commercial outlook for the year ahead - and the overarching sentiment was positive. Asked to summarise their outlook in three words, 'optimistic’ was mentioned 22 times. Growth (15), excited (13), transformation/disruption (11), tough (10) and cautious (9) add colour to the picture.

Sixty seven per cent are optimistic they will see ‘solid growth in client spend’, versus 26.7 per cent expecting spend to remain flat.

Just 6.7 per cent are ‘pessimistic’ i.e. anticipating further budget cuts, with 93.3 per cent forecasting 2025 revenue growth. Three in ten (28.3 per cent) are expecting to book revenue gains of 15 per cent. 

In terms of profit, 91.6 per cent think they will be the same or better off in 2025, with 36.7 per cent expecting profit gains of 15 per cent upwards. 

After the "depleting, gruelling" year just gone, Savage commends indie agencies' "resilience and spirit". But he's not convinced their growth expectations are "bedrocked in reality.”

“I think that there is optimism bias at play, that if I'd done this research on the 10th of December, it wouldn't have been so optimistic as people crawled towards the finishing line… After a Christmas break, the beach and the cricket, they've come back optimistic.”

The undercurrent, he suggests, is that “it has to be a better year, because the last three have been so shit”.

With a nod to the neighbour effect – the phenomenon that saw US pollsters pick up pro-Trump sentiments based on how voters said their neighbours would vote – Savage reckons agency leaders' predictions for their competitors might provide a more accurate forecast.

Agency leaders saw bleaker prospects for their competitors: A third expect their peers will be worse off this year; Around one in ten (11.9 per cent) were optimistic that other agencies will perform well. The remaining half were neutral.

Only 10.2 per cent of those surveyed were optimistic across the board, while nearly 60 per cent feel they’ll grow while others plateau or decline. Another 13.6 per put themselves in the neutral bucket but were pessimistic about their competitors’ prospects.

“It’s a really interesting reflection on the concern that the market remains tough,” notes Savage. “They feel like they've got their act together, and they feel like they have pieces in place to have a better year. But there is pessimism around the industry generally that it's still going to be tough, and most competitors will do it tough.

"There was a sentiment that their competitors are not innovating fast enough, or not changing fast enough – yet they feel that they are.”

At the coal face

The Hallway boss Jules Hall was one of those surveyed. He's frank that the going has been tough, unsurprising given “we’re in a per capita recession”. He sees early indicators that 2024 was “the bottom of the dip”.

“We had a really good last quarter in terms of winning new business, getting some really interesting phone calls. I was unsure whether that was unique to us and we got a bit lucky, or if that was more widespread. But talking with a couple of other agency owners, I've heard similar.”

But he's making no assumption of the corner being turned until after the federal election.

Nick Hunter, CEO and ECD at Paper Moose, has the same view. After a string of wins to end 2024, his team has been “shooting basically everyday for the last three weeks” in what is usually a quiet time.

“Last year was just stop-start, things getting pushed out. Now I feel clients are pushing the pedal to the metal.”

Hence he reckons generative AI will be a key asset for agencies – dialling up efficiency and getting “great production values for lower budgets”. But that doesn't ease his main concern: maintaining a talent pipeline.

In recent years, a lot of agencies have structured around a predominately senior team, using automation to handle the grunt work. The upshot of the ladder being pulled up is that the opportunities for onboarding junior talent are scant.

“A lot of our senior people started as interns," says Hunter. "We have fewer opportunities to do that now, because we don't have as many junior roles.”

Project pipeline

Thinkerbell boss Margie Reid's outlook is in line with Savage's poll. She says that most of her peers are feeling good about 2025, but reckons those with flexible models are better placed.

While short-termism has kept budgets at bay – and limited visibility for many – she says Thinkerbell weathered 2024  with a “really good blend of project and retained clients”.

“There is a trend to a lot of project work, whether that's because you’re awarded work through an agency village model, or because clients approach you to work on a particular task … For us, it can take so many different shapes that one [type of work] doesn’t necessarily define [us], which is probably the alchemy of our model.”

Reid claims the agency, with its bespoke – and prolific – production model, has managed to maximise client’s budgets without cannibalising renumeration, which is easier said than done.

Pain points

Despite the optimism, Savage’s research indicates indie creative agencies are acutely aware of incoming pressure.

Clients wanting ‘more for less’ came out as the top perceived barrier to growth, followed by reduced client budgets and increased staff costs. 

Separately, the survey sought to unpack the specific frustrations within the working relationship between clients and agencies. Several key themes came up.

“The headline, and these are my words and not the words of the respondents, was that many client organisations and client executives simply don't have the right capability level to deal with the imperatives of the modern marketing team,” says Savage.

“Things have changed so quickly that the capability, the experience, the expertise, and even the way clients are structured, is not in line with the way that modern, ‘at the edge’ marketing works now.”

Hence some consultants spending an increasing amount of time refining client operating models before even thinking about pitching business to agencies.

Underlying factors highlighted by respondents include high levels of turnover within marketing teams, juniorisation, declines in clients’ influence within their organisations, and poor briefing processes (despite the Better Briefs Project banging that drum for years.) 

“Many of the client executives simply are not experienced enough – they don't know how to have tough conversations and give feedback in a positive, forward looking way,” per Savage. “The client marketing teams are now under massive pressure, they're going through massive change, and that is being reflected in the feedback we've had from agency leaders.”

“Of course there are exceptions, there are brilliant marketers out there and brilliant marketing teams, but not enough, and that's one of the issues that all agencies are dealing with.”

Short term-ism was raised by survey respondents as another taint on the agency-client relationship, with concerns that clients were pitching more and more frequently in search of the lowest rate cards.

2025 checklist

In terms of how agencies plan to achieve growth forecasts, Savage says the narrative was largely “efficiencies” and “commercial factors”. Four in five mentioned factors relating to commercial fitness in their top three priorities for the year ahead and generative AI may be at least partially underpinning those assumptions.

“They are really trying to build a more commercial model around efficiency, and within that, productivity is a key issue,” Savage explains. “It's around using technology platforms to make their business more efficient.”

Tapping into AI was mentioned specifically by around one in three of Savage’s agency cohort. Improving sales pipelines and securing new revenues were cited by 85 per cent.  

“It's all about revenue, growing existing client relationships, being sharper sales instruments, winning more of the work that they pitch for and getting more on the front foot in the way they're going about new business,” per Savage.

Around one in three agencies aim to expand their services and provide more integrated offerings. Savage though reckons the most profitable agencies are the highly focused specialists.

“Nothing depresses me more than seeing an agency describe itself as full service," he says. "If you're full service, it means you're commoditised, you're doing a lot of things in an average way.”

Join us, but brace yourself

The closing sentiments of Savage’s survey might be the most telling.

Asked whether they would recommend an advertising career to a young university graduate, the majority response was a resounding ‘yes, but...’ – and 22 per cent gave an outright ‘no’.

The caveat for most was that young talent must be prepared to “work damn hard on your game to stay current and at the edge and valuable”, per Savage.

With AI-powered efficiency ramping fast, that's never been truer – and not just for juniors.