Thank You

This newsletter has grown 43% this year. Almost all of that growth has been in the last quarter, and I'm pretty sure the main reason is people like you sharing them with your friends. I love the interaction this newsletter gets, and I’m incredibly grateful for it. Hearing what you're working on, how these topics resonate, and your thoughts on the market keep this job interesting. I learn something new each time I send one.

The end of the year is the perfect time to review some of the main themes. I researched and wrote a lot about AI this year and got to dive deep into how digital agencies grow. This work came in handy with a number of agency clients as it gave me some great resources to point them to. It’s so much easier to have all of that written down and sharable.

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The Year of AI

2023 was obviously the year of AI. I first wrote about it in AI is Disrupting Digital Agencies where I looked at the rapid adoption rates, potential agency impacts, and some of the key risks. As it turns out, those key risks are still alive and well. Questions around commoditization, in-housing, data security, ownership, and the importance of human input remain.

My advice here was to get up to speed on what AI is capable of, zero in on your unique value proposition, and encourage responsible AI integration throughout your team.

After gathering a bunch of survey data, I followed that with A Path to 30%+ Agency Margins. Here, I looked into the productivity gains agencies were already seeing from AI.

Early indicators pointed to a 15-25% productivity boost for production-level employees. I ran some scenario analysis and found that could result in an 81% improvement in net income.

AI wasn’t going to be huge; it already was huge.

My research also indicated that there was still significant room for improvement. Agencies were still super early in implementing AI in revgen or support services.

This led to a dedicated AI survey where I dug deep into how agencies were using AI and the benefits they saw. In Keeping Your Agency Updated on AI (and Beyond), I ran through some highlights from the report.

Something that still surprises me is just how few shops have any kind of formal structure for keeping their teams updated on AI. Only 1-in-5 had something in place.

That survey, along with findings from other surveys, interviews with agency leaders, and input from AI practitioners, led to our most requested report of the year, Digital Agencies & AI. A complete report on the state of how digital shops are thinking about and using AI.

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Deep Work on Agency Growth

Saying that 2023 was a challenging year for sales is possibly the biggest understatement ever. So many shops ran headfirst into a market that downshifted seemingly out of nowhere, and very few were prepared. Layoffs were, unfortunately, common.

I looked into why this happened in How’s Your Agency’s Pipeline?

It boiled down to a combination of cratering expectations and interest rate hikes that changed what companies were buying (margins vs. growth). I got a bunch of great responses from the last section “It’s not you, it’s the market (probably).”

I began writing about repeatable revgen systems again in Agency Revgen is Broken. I looked at the rollercoaster of frustration in almost every agency and how the fix lies in building repeatable lead generation and sales systems into the shop’s DNA.

In Foundations of Agency Growth, I looked into why inconsistent growth makes running a shop harder for everyone. I love this piece because got to dive into an actual plan for fixing this. It’s nice to flag challenges, but it’s even better to come with solutions.

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Finally, this culminated in an entire rewrite of our Repeatable Revgen for Digital Agencies, a free 93-page report/guide on designing repeatable revgen systems for digital agencies.

The good news on this front is many shops started seeing improvements in mid-3Q and more into 4Q. Hopefully, we're turning the corner as we enter 2024.

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An Update to Our Digital Agency Industry Report

I took some time over the summer to update our Digital Agency Industry Report with all the new agency growth findings from our various surveys. Nothing like spending some time on the balcony of a beach condo writing about growth rates while waves crash against the shore.

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What’s Next?

• We’re accepting Digital Agency Salary Survey responses through 12/29. We’ve already received over 1k digital agency employee salaries, which will let us put together a great report for everyone who participates. Look for this report in early 1Q.
• I have an agency growth survey I’m working on that should launch early next year. I’m thinking of it as a follow-up piece to the Repeatable Revgen Guide but with more of an emphasis on tactics.
• Then, we’ll be out with our 2023 recap / 2024 outlook survey again in late 1Q.

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Onward To a Great 2024

As we wrap up 2023, I hope you have a restorative end to the year. Now's the perfect time to relax and reflect. I'll be doing that myself all next week. Finally, I want to thank you again for allowing The Promethean Perspective to have a spot in your busy inbox. Onward to a great 2024!

-Nick