What you need to know about the northern agency landscape
The Future of Media Manchester | Opinion
Agencies in the north are dynamic, specialist and thriving, but there’s an investment gap compared with their London counterparts. This presents a huge opportunity.
The UK’s marketing and media agency sector is a dynamic beast, constantly shifting and evolving. While London often enjoys the spotlight, a new analysis from Agency by Agency reveals a compelling story unfolding in the north of England.
Far from being a smaller reflection of the capital, the northern agency landscape is distinct, growing and brimming with specialist talent — yet faces a significant venture capital investment gap.
Agency by Agency’s dataset, encompassing over 25,500 UK agencies, paints a clear picture. While London houses a substantial 38% of all UK agencies, the north (including the north west, north east, Yorkshire and the Humber, Scotland and Northern Ireland) accounts for 25%.
However, this 25% generates just 14% of the total agency sector turnover and represents 16% of the workforce, indicating that northern agencies are generally smaller and more specialised.
A specialist legacy
Crucially, these specialisms are key to the north’s unique strengths. Areas like ecommerce, digital, conversion and performance marketing are particularly strong, punching well above their weight.
This isn’t just a coincidence; it’s a legacy. The north’s industrial past, with its textile mills and manufacturing base, fostered a culture of data-driven marketing through early catalogue retail — arguably the precursor to modern ecommerce.
Today, many of those former mills are home to leading performance, search, digital and social agencies.
This historical bedrock has led to a healthy growth rate. While the average UK agency sector growth sits at 8%, northern agencies are slightly ahead at 9%. This growth is directly linked to their specialisms, aligning perfectly with current adspend trends.
As Google’s vice-president of global ads, Dan Taylor, notes, ad budgets are following user time and marketer results increasingly towards channels like connected TV, retail media, influencer marketing, programmatic buys, social and search — all areas where northern agencies excel.
Investment gap
However, despite this impressive growth and specialisation in high-demand areas, the north faces a striking “investment gap”.
Agencies in the region receive only 8% of total investments made in the UK agency sector from venture capital and growth equity sources. This is a stark contrast to their 25% share of UK agencies and 16% of the workforce.
While the picture is better when it comes to northern agencies successfully competing for Innovate UK grants, where northern agencies receive 16% of the total, the overall investment disparity highlights an opportunity to connect innovative agencies in the north with capital.
The disconnect between the north’s strengths and its access to capital raises important questions. Is it an access gap, a knowledge gap or a communication gap?
Regardless, the data suggests a clear opportunity for media owners, adtech businesses, publishers and martech companies to invest more deeply in the northern agency and media ecosystem.
Evolving models
Finally, while the industry grapples with the transformative power of AI, there’s a fascinating disconnect.
Only 23% of all UK agencies currently mention AI on their websites, despite 75% reportedly using in-house generative-AI models. This suggests agencies may be using AI internally for efficiency but are hesitant to broadcast it to clients, possibly due to concerns about maintaining margins in a time-and-materials billing model.
For agencies, particularly those in the north, the challenge and opportunity lies in moving towards outcome-based models and leveraging AI to add genuine strategic value to clients, rather than simply offering quicker and cheaper services.
The north is a vibrant and growing hub of specialist agency talent, driven by a rich history and aligning with current media trends. Addressing the investment gap and strategically integrating AI will be crucial for unlocking the full potential of this dynamic region and fostering even greater innovation within the UK’s agency landscape.
A version was this feature was presented at The Future of Media Manchester this week.
Tom Salmon is co-founder at Agency by Agency