Marketing Relationship Survey: Agency-Client Relationship in 2023

2023 is Setup’s fifth year conducting a Marketing Relationship Survey to track how Companies (Brands/Clients) and Marketing Agencies function and work together. We are in a unique position to identify the relationship between Clients and Agencies because we live in the space in between them. We are dedicated to helping Clients find amazing Agencies and helping Agencies become their best selves. Please read on to learn more about the status of the Agency-Client relationship in 2023.

For the third year in a row, we are seeing an increase in Brands likelihood to switch from their primary agency in the next six months. In 2021, 30% of Brands were likely to make that change. In 2022, that number moved up to 38%. And here in 2023, we’re hearing from Brands that 55% of them will likely switch from their primary agency in the next six months! That’s a huge jump - up 17% since last year.

In general, we’re seeing less satisfaction with the value an Agency brings, yet more satisfaction with Agencies’ strategic approach. In fact, dissatisfaction with value was the #1 reason Clients ended an Agency relationship in 2023, and dissatisfaction with strategic approach dropped from the #1 reason in 2022 down to #5 on the list in 2023. Agencies are bringing strong strategies to the table, but charging too much for it in the Clients’ eyes.

Let’s dig into the details!

We always have a good mix of Client-side and Agency-side respondents, and this year is no exception, with over 300 marketers responding.

On the Client side, 61% of respondents work for a company with 500-10,000+ employees, and 83% hold positions of Director-level or above. 44% work in B2B and B2C, 34% in B2B only, and 22% in B2C only. Client respondents include marketing leaders from Intuit Mailchimp, Sam’s Club, Central Garden & Pet, MGM Studios, Rolex, DC Shoes, Invesco, and Great Clips.

On the Agency side, 47% of respondents work for an agency with 100-5,000 employees. 42% work for full service integrated agencies (digital and traditional), while 32% work for agencies who focus on digital services only. Agency respondents include Publicis Groupe/Razorfish, Sagepath Reply, and Morrison Agency.

This area never disappoints in revealing a true “He said, she said” situation. Dissatisfaction with value went from 39% in 2022 to 53% in 2023, making value the most important element of the Agency-Client relationship to Clients this year. Client budget cuts have become one of the primary reasons they are leaving Agencies - meaning the C-suite is not seeing marketing’s value. Budget cuts went from being 24% of the reason to leave in 2022 to 33% in 2023. This yearClients are expecting better value from their Agencies for less money.

Dissatisfaction with strategic approach decreased drastically from 43% in 2022 to 30% in 2023 - going from the #1 reason Clients end the relationship in 2022 to #5 in 2023. Clients are putting a higher value on Strategy than in years past.

Agencies list their Delivery as the last reason why Clients end the relationship, but Clients list it as their #2 reason, showing a big disconnect. Clients expect more than what Agencies are currently delivering, while Agencies are largely unaware of how important this area is to their Clients.

Clients list dissatisfaction with both Value and Delivery as the top two reasons they end an Agency relationship. Agencies list Delivery as #9, showing another disconnect. Meanwhile, Agencies list their top four challenges as (1) Scaling for projects (2) Talent acquisition (3) Consistency in work output (4) Project scoping, so it seems that these challenges are in fact, being noticed by the Clients.

The biggest takeaway from the survey this year may be that 55% of Clients are likely to switch from their primary agency in the next 6 months. That’s a huge jump over previous years’ surveys - up 17% since just last year. If Agencies are wondering why their Client partners are shopping around or considering making a change, these survey points reveal insight into the reasons, giving Agencies a chance to focus on improving relationships!

Communication and Chemistry are key for Clients as they hire new Agency partners and aim to improve relationships with them. Clients rank Chemistry as #1 - the most important thing when they are selecting a new Agency partner. At Setup, we’ve watched over the years as the importance of Chemistry rises. Clients used to think capabilities and expertise were primary factors in choosing an Agency, but more and more, Clients understand how important Chemistry is to produce spectacular work. In 2023, Clients are ranking the Agency’s Understanding of their Industry/Business as fourth, behind Chemistry, Professionalism, and Creativity.

When asked how Agencies can become better partners, Clients say their #1 desire from Agencies is to Communicate Effectively. Clients want their partners to communicate needs, and not to sugar-coat any issues. Agencies need to tell Clients the truth, and collaborate on how to best tackle any issues together. Clients also want access to their own data, and to ensure that any strategic decisions are based on real data. They want their partners to Understand their Business and Goals deeply, and to be part of the team/a true strategic partner. They want their partners to help them - not sell to them.

Content Creation/Video is more of a focus for Clients this year, going from 43% in 2022 to 58% in 2023 - more than half of Clients are looking for help with content!

Branding/Identity needs reduced slightly from 54% in 2022 to 48% in 2023.

Direct Marketing/Email/CRM services increased by 8% this year.

If we compare the data from 2020 (first COVID year) to now, 2022 showed a dip in a lot of focuses like Social Media and Content, whereas our 2023 numbers align more closely with 2020 when it comes to Media Planning, Social Media, and Content Creation.

Word-of-mouth and Referrals consistently remain the most frequent methods Clients use to find new Agency Partners for five years of running Setup’s Marketing Relationship Survey. Our data once again validates that marketers typically consider and hire Agencies that are known to their friends and colleagues. While this makes sense since trust is a huge component of any partnership, it also reveals a more narrow option set. If Clients search beyond their own networks, they may find the perfect partner beyond a potentially small group of options. Procurement and Internet Search moved above Events in 2023 - this move begs the question, are people relying more on online connections now as we move past the COVID years? We’ll keep watching this space.

Word of mouth increased from 55% to 76% - ¾ of Marketers are finding their Agencies via Word of Mouth, and Inbound contact from an Agency has always been the least popular way to find a new Agency. So, no, Clients are absolutely not waiting to receive a cold email from an unknown Agency, who they will then go hire for millions of dollars of work.

Delivery has become a bigger problem for Marketing Agencies in 2023 - we see a 12% increase in issues scaling for projects, a 26% increase in issues around work output consistency over 2022, and talent acquisition remains a huge challenge.

Agencies are still finding Business Development the top struggle. Having the majority of Agency revenue coming from 1-2 accounts jumped up 12% in 2023 (29% to 37%), which is a dangerous position for Agencies. Positioning the Agency has also become more of a challenge, with a 10-point increase from 16% last year to 26% this year.

In conclusion, Agencies and Brands continue to approach the relationship differently, and they can start to see how the other side is thinking by reviewing and understanding the data from this survey and others like it. There is always a lot more to the story than the headlines show, but it is extremely telling to know that in 2023, more Brand marketers are considering switching their primary agency than ever before, Agencies are not fully comprehending what their Clients need out of the partnership, and Agencies need to consider how to bring more Value to partnerships where Marketing budgets may be reduced.

Ad Age featured the results from this same survey in their article “One Third of Brands are Considering Change of Agency in the Next Six Months: Study” in 2021 here. Ad Age also posted the results from our annual Marketing Relationship Survey in 2022, “Nearly 40% of Brands Likely to Ditch Their Agency Within Six Months” here. Want to get the latest Setup news sent straight to your inbox? Subscribe here!