Independent agencies are showing an average annual growth rate of 7.8% — higher than the 7.3% average in the agency sector as a whole, according to new report from consultancy Agency by Agency.
However, the IndieNation: Uncovering the UK’s Independent Agency Landscape study also found that the rate of agency launches is slowing down from a peak in 2019.
The study analysed 25,320 independent shops in the marketing, advertising, creative and media segments. Sub-sectors ranged from brand strategy to experiential to search to social. It strips out agencies belonging to what Agency by Agency calls “the big seven”: Dentsu, Interpublic, Omnicom, Publicis Groupe, Stagwell, Vivendi and WPP — based on registrations at Companies House.
Accordingly, the report found indies account for 99% of all agencies in the UK. The sector employs 88% of all agency staff at 233,000 people.
They are responsible for gross value added of £17.8bn — Agency by Agency claims that this accounts for 87% of total agency gross value added (GVA) to the UK economy — and generate a turnover of £26.7bn.
The study shows that productivity and growth varies widely across sub-sectors, Agency by Agency co-founder Tom Salmon pointed out, adding that a number of regions are showing higher growth rates than London.
Analysing the report, Robert Craven, managing partner at digital consultancy GYDA, said: “While regional hubs like the north west and Scotland are thriving, London still hoards opportunity. Women founders are slightly over-represented compared to the sector as a whole, but leadership remains stubbornly male — a missed competitive advantage.
“The most telling story of the report is that niches like brand strategy prove that specialisation wins. The message of the IndieNation report is clear: beware the slowing of startups and mind the diversity gap and uneven investment.”
The full report is available to Agency by Agency subscribers.
Agency by Agency worked with The Data City in its analysis. Independents include “nano shops” comprising one to two employees up to large agencies with more than 250 staff.
Data for headcount is based on reporting to Companies House, with The Data City’s machine-learning platform making a “current” estimate, since there is often a lag in reporting.
For turnover, the data is also based on reporting to Companies House, with The Data City providing an estimated turnover for the current year using its modelling.
That said, Agency by Agency urged caution on turnover data since some agencies, such as media businesses, include media billings and other campaign costs in the figure they report to Companies House.
GVA data is estimated at company level using official Office for National Statistics-defined GVA and employment data.
