State of Digital Services 2024

Bending, Not Breaking

2023 was the most difficult year for agency growth since Promethean began tracking in 2015. Average revenue growth was just 4.5%, roughly a third of the 15% recorded in 2022.

96 agency leaders surveyed · Fielded June 2024 · 75% U.S. · 39 pages · Published July 2024

Top findings

• 2023 growth by size: Studio 2.5%, Small 3.3%, Medium 8.8%, Large 3.1%. Medium agencies were the only cohort growing at roughly 2x the overall average.
• Agencies that shifted their service mix grew 82% faster than average (8.2%). Those that significantly reduced services contracted 4.0%.
• 22% of agency leaders reported raising their hourly rates from 2023 to 2024. Those that raised rates grew more than 2x as fast as average; those that cut rates saw revenue decline 13.3%.
• Value-based pricing users grew 61% faster than average. Those using Retainers grew 17% slower than average.
• The average firm earned a 15% net margin in 2023, slightly above the 14% average from 2022. Agencies that specialized in a specific service mix earned 30% higher net margins than service-generalists.
• AI implementation accelerated sharply: "currently implementing" rose 31% year-over-year and "already implemented" rose 26%.
• Average total employee turnover came down to 19% in 2023 from 23% in 2022. Large agencies experienced the highest voluntary and involuntary turnover rates at 13% and 17%, respectively.

Inside the report

1. Executive Summary
2. Introduction
3. Growth Dynamics
4. Profitability & Efficiency
5. Reshaping The Agency Landscape
6. Methodology & Demographics

Format: 39-page PDF report, single-license use. Joint project with the Bureau of Digital. Brought to you by Parallax.

Methodology

96 responses from digital agency owners and managers, fielded June 2024. 75% U.S., 16% Canada, 6% Europe, plus Asia-Pacific and Middle East/Africa. Average agency size 31 FTE; median 18 FTE.

About Promethean Research

Promethean Research has tracked the digital agency industry since 2015. The State of Digital Services is our annual benchmark for agency leaders making decisions on growth, pricing, margins, staffing, and M&A.