BenchPress 2025: The latest insights from the State of the Agency Nation

The wait is over – find out what’s happening with agency growth rates, profitability, confidence and more in the first of our BenchPress reports for 2025.

The State of the Agency Nation report provides an essential snapshot of agency life and performance benchmarks for the year ahead. You’ll gain insights that can have a direct impact on how you run your agency, helping you to build a more profitable and commercially sustainable business.

Thanks to the large number of agencies that take part in BenchPress, we’re able to release two different versions of each report: one for agencies with a turnover of over £1m and another for agencies under £1m. We’ve focused on £1m+ agencies below, but you can download both reports here.

Here’s a roundup of some of the biggest headlines – and surprises – from this year’s State of the Agency Nation.

An unforgiving year for agencies

It’s been another tough year for agencies. There’s a key tell-tale statistic that helps us to analyse how the year played out: the number of agencies that grew fee income.

Normally, we’d expect this figure to be somewhere between 75% and 80%, which was a typical year before numbers were affected by the pandemic and post-pandemic bounce. However, just 57% of agencies grew fee income last year, a marginal increase from 54% in 2023.

Other metrics also point to an unforgiving year:

• Tiered hourly rates dropped for the first time ever. Rates for mid-levels, seniors and directors dropped by 4%, while blended hourly rates increased by less than 1%.
• Gross Profit fell to below 40% for the first time ever. Target Gross Profit for agencies is around 50%, but less than a quarter (24%) are hitting that benchmark.
• Agencies have less cash in the bank. Just 23% of agencies have over six months of overheads as cash, down from 29% in 2022.
• More agencies are making redundancies. One in three agencies (33%) made redundancies last year, up from 26% in 2023.
• Agency owners are looking for the exit. 58% of agency owners say that selling their business is their number one priority, up from 44% two years ago.

Confidence matters more than you think

There are plenty of external circumstances that impact profit and performance, but we also unearthed a surprising factor this year: mindset.

In every BenchPress survey, we ask agency owners to score their confidence levels for the year ahead. This year, we divided respondents into two groups: those who were feeling good about the year (confidence score of 70+) and those who feared the worst (confidence score of less than 50).

Those who went into the year with a positive, confident mindset ended up with a stronger business performance. In the high confidence group, 70% of agencies grew, with an average Operating Profit of 14%. In the low confidence group, just 8% of agencies grew, with an Operating Profit of 9%. 

As Wow co-founder Peter Czapp put it at our recent BenchPress Live event: whether you thought last year was going to be good or bad, you were absolutely correct.

Winning new business is harder than ever

In a difficult economic environment, pressure to win new business is intensifying. It’s now the number one challenge for 46% of agency owners – the highest percentage since we started benchmarking agencies in 2012.

The top five challenges for agencies in the last year:

1. Winning new business (46%)
2. Profitability (19%)
3. Too busy working IN the business instead of ON it (12%)
4. Cash flow (10%)
5. Recruitment (5%)

For agencies with a clear niche, the outlook is much brighter. In 2023, only 17% of agencies described themselves as ‘very different’, but were twice as likely to achieve fast growth (a 26%+ increase in fee income) and high profitability (Gross Profit of 61%+).

This year, 24% of agencies described themselves as ‘very different’, and these agencies continued to significantly outperform others on growth and profitability. If you’re thinking about developing your own specialist niche, it’s a great time to start.

London agencies feel the squeeze

London agencies typically charge more for their services, but the gap between what they’re charging and what it costs them to deliver is shrinking. 

On average, a £1m+ agency in London charges a 7% premium for a mid-level employee but pays an extra 12% in salary costs. For a senior employee, there’s a 14% premium charged but an extra 20% in salary costs.

In every tier of chargeable employees, London agencies are paying more to their staff than they’re charging them out at. This salary burden for billable staff is weighing heavily on profit, with London agencies making 5% less Gross Profit (and Operating Profit) than agencies elsewhere.

AI goes mainstream

It’s been a big year for AI, with 95% of agencies using it and 60% reporting that it’s already had a positive impact on their business. 

Here’s where agencies are using it the most:

• Client work (76%)
• Operations (61%)
• In their own marketing (53%)
• Sales (31%)
• Elsewhere in the business (10%)

Despite this uptake, it’s clear that most agencies are still winging it with AI. Only 50% have run training sessions, while less than half (40%) have written an internal AI policy, and less than a third (26%) have an AI strategy. 

Seizing new opportunities this year

Finally, BenchPress isn’t just about checking in on the current state of affairs – it’s also a catalyst that helps agency owners take positive action in their businesses. Amid the challenges, there are four big opportunities that agencies can take advantage of in 2025.

Watch Wow’s Peter Czapp discuss the key opportunities for agencies this year, from acquiring brilliant businesses to increasing profitability.

1. The acquisition opportunity

If you’ve got cash in the bank and you’re ready to acquire other businesses, there should be some exciting opportunities available this year. There’s a good chance you’ll be able to make acquisitions that wouldn’t have been possible a few years ago, and at a fraction of the cost.

If you’re ready to sell, which we know is a top priority for 58% of agency owners, it’s also an opportune time. Make sure you get advice early, so you know how to drive value in your business and structure the deal in the most tax-efficient way. Speak to a Wow expert here.

If you’re in neither category, there’s still a big opportunity for you. Imagine you’re planning to acquire your own business and assessing it as part of your due diligence. Ask yourself: what are the good parts and bad parts? What would you change about your team, clients and processes? What would you seek to improve first?

2. The profit opportunity 

The second opportunity is to focus on Gross Profit. There are lots of agency owners who are looking in the wrong place to increase profitability – for example, there’s very little to be gained from trying to trim down your overheads.

This year, make sure you:

• Calculate Gross Profit in a meaningful way, including chargeable wages as a cost of sale.
• Measure Gross Profit by project and clients, so you can make informed decisions about what’s most profitable and what’s least profitable.
• Set targets, so that every quarter you’re making an incremental change to increase your profitability.

3. The AI opportunity

Despite the mass uptake in AI, the majority of agencies don’t have a clear AI strategy. Our next tip is to start using it with intent. 

We’ve heard from agencies that using AI leads to faster delivery, reduced cost of delivery, and improved value to clients. That’s an incredible opportunity, particularly after a year of squeezed profitability. 

Put someone in charge of AI, who can create a strategy, manage the risks, and maximise opportunities to give your agency a competitive edge. 

Think about what it means for your services too, both in the short term and long term. Right now, how can you use AI to provide more value to clients and raise your prices accordingly? Looking to the future, what will clients still value and buy in three years time?

4. The mindset opportunity

As this year’s BenchPress shows, a confident mindset can have a positive impact on how your agency performs – but confidence doesn’t develop overnight. 

Here are three tips to start building your confidence this year:

• Focus on what’s going to make the biggest difference. If it’s new business, pour your concentration into that.
• Set weekly activity goals to create momentum. Weekly targets will energise your team more than distant, long-term goals.
• Look for the wins and celebrate them. Surround yourself with cheerleaders and celebrate good news to foster positivity.