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The Bureau and Promethean Research Unveil the State of Digital Services 2025 Industry Report


News provided by

The Bureau

Mar 13, 2025, 11:00 ET

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New Report Reveals How Digital Agencies and Shops Can Grow in a Tough Market

JACKSONVILLE, Fla., March 13, 2025 /PRNewswire-PRWeb/ -- Digital agency leaders are navigating an increasingly complex landscape, balancing economic uncertainty, artificial intelligence (AI) adoption and shifting client expectations, according to The State of Digital Services 2025, a joint industry report from The Bureau and Promethean Research. The study highlights the latest industry trends and strategies that separate thriving agencies from those struggling to adapt.

According to the report, digital agency growth stabilized in 2024, with an overall increase of 4.6%. However, growth patterns varied significantly by agency size. Studio shops (0-9 full-time employees) rebounded closer to their long-term growth rates, while small agencies (10-24 FTE) saw slow but steady gains. Medium agencies (25-49 FTE) and large agencies (50+ FTE) experienced their first recorded contractions. In addition, budget freezes are also rippling through the agency space as 78% of leaders are bracing for a moderate-to-large impact from U.S. economic instability.

"This report provides the critical insights agency leaders need to navigate the evolving landscape and make informed decisions about their growth strategies." -- Nicholas Petroski, founder of Promethean Research

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Key report findings include:

  • AI Emerges as a Central Force: Agency leaders identified AI as the biggest disruptor. However, most agencies aren't highly advanced in AI implementation. The greatest progress has been made in AI-driven copywriting and coding, while adoption remains slower in design, project management and sales functions.
  • Offering a Mix of Services Boost Revenues: Agencies that expanded or shifted services experienced notably higher growth compared to those that maintained or reduced their offerings. Specialization continued to outperform generalist models, with specialists reporting faster and more consistent gains.
  • Pricing and Client Size Drive Performance: Agencies that raised rates saw an average of 8% revenue growth and posted stronger margins. In contrast, rate reductions correlated with a 6% revenue decline. Agencies that shifted to larger clients also outpaced industry averages in revenue growth.
  • Workforces Realign and See High Employee Turnover: Average agency headcount dipped by 4%, primarily due to declines in small agencies. Many compensated by increasing contractor use by nearly 20%. Employee turnover remained elevated at 23%, with the highest turnover rates in the smallest agencies.
  • Stable Net Margins and Rising M&A Interest: Industry-wide net margins held steady at 14%, with studio shops leading at 19%. Nearly half of all agencies reported openness to mergers or acquisitions in 2025, driven by growth aspirations or personal exit strategies.

"Agencies that embrace change, whether through pricing adjustments, specialization or AI implementation, are seeing the strongest results," said Nicholas Petroski, founder of Promethean Research. "This report provides the critical insights agency leaders need to navigate the evolving landscape and make informed decisions about their growth strategies."

The Bureau, a member-led community supporting agency leaders, collaborated on the report to provide actionable insights for firms of all sizes. "This data-backed research helps agency leaders future-proof their businesses, especially as client needs shift and competition intensifies," said Carl Smith, CEO of The Bureau.

The findings are based on a survey conducted in February 2025, gathering insights from 151 digital agency owners and managers across North America. The survey sample included agencies of varying sizes, with an average agency size of 26 employees and a median size of 13 employees. Respondents provided data on revenue growth, pricing models, workforce dynamics, AI adoption and broader industry trends shaping the digital services landscape.

Sponsored by Parallax, The State of Digital Services 2025 is available at research.prometheanresearch.com. To learn more about Promethean Research, visit www.PrometheanResearch.com, and for insights and networking opportunities for agency leaders, visit www.BureauofDigital.com.

About Promethean Research

Promethean Research is the leading research and consultancy for digital service companies. They're a specialized advisory firm that provides in-depth market analysis, strategic guidance, and data-driven insights for digital agencies. The company helps agencies identify new opportunities, design sustainable growth strategies, and optimize go-to-market strategies through rigorous research and expert consultation. Through their data-backed approach to strategy, Promethean Research delivers customized solutions that address complex business challenges. Through these tailored services, clients gain the clarity and direction they need to make informed decisions and accelerate sustainable growth. For more information, visit www.PrometheanResearch.com

About The Bureau

Founded in 2012, The Bureau is a trusted member-led community where leaders connect, share, and grow together. Connecting professionals from agencies, in-house teams, product companies, and global brands, The Bureau fosters a culture of support that's built on real interactions and shared experiences. Through events, insights, and shared resources, we help leaders soar above challenges, strengthen their teams, and evolve into the leaders they were meant to be. For more information, visit https://bureauofdigital.com/

Media Contact

Cathy Atkins, The Bureau, 1 617-236-0500, [email protected], https://bureauofdigital.com/

SOURCE The Bureau

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