The Small Agency Growth Alliance (SAGA) Q1 2025 Agency Owner survey offers a snapshot of the challenges and opportunities facing small PR and marketing agencies. Despite economic uncertainties and policy concerns, agency owners remain cautiously optimistic about their prospects for the year ahead.
Economic concerns and policy impacts
A significant majority of agency owners are worried about the economic conditions and government policies that could impact their businesses. Nearly 91% expressed concern about economic impacts, while 80% are worried about government policies. However, trade and tariff policies are less of a concern, with only 16% very concerned about their potential impact.
These concerns reflect broader economic trends and the ongoing impact of government decisions on small businesses. For instance, some owners reported losing significant revenue due to policy changes and budget cuts. One owner noted a 40% revenue loss in January 2025 attributed to tariffs and budget cuts.
A mixed bag in 2024
Last year was marked by mixed results for the agencies surveyed. Almost equal numbers reported revenue increases and decreases compared to 2023, with 41% seeing higher revenue and 46% experiencing declines. Profit changes followed a similar trend, though some agencies managed to reduce expenses faster than revenue losses, mitigating the impact.
Project work played a crucial role, with 57% of agencies deriving more than a quarter of their revenue from such projects. Retainer revenue continues to be an important focus, but only 55% indicated it represented more than half of their total revenue for the year.
The survey also highlighted the personal sacrifices made by agency owners in 2024. Many reduced their own compensation to ensure employee salaries and bonuses were maintained, reflecting a commitment to their teams despite tough times.
Client base and revenue streams
The client base for these agencies is generally small, with half having 10 or fewer clients and 93% serving 30 or fewer clients. Nearly half reported an increase in client numbers by the end of 2024.
Mergers and acquisitions
Mergers and acquisitions (M&A) were not a significant focus for most agencies in 2024. Only a small percentage considered selling or merging, and even fewer took concrete steps toward these actions. Most owners do not expect to rely on selling their agency for financial planning, and 25% stated they never expect to sell their businesses.
Outlook for 2025
Despite the challenges, agency owners are cautiously optimistic about the future. A strong majority expect both revenue and profits to increase over the next 12 months, with 64% anticipating revenue growth and 60% expecting profit increases. However, a significant minority remains pessimistic, reflecting the ongoing economic and policy uncertainties.
Most owners expect to maintain their current staffing levels, with only 24% planning to increase their workforce and 5% anticipating reductions. This stability in staffing suggests that while agencies are optimistic about growth, they are also cautious about expanding their teams amidst uncertainty.
Owner Comments
When asked to describe their 2024 performance and 2025 outlook, many owners characterized the past year as “meh” or satisfactory, while others reported more extreme experiences, calling it “great” or “scary.” For the year ahead, owners generally expressed cautious optimism, though some noted challenges such as high interest rates and economic uncertainty affecting their clients.
Conclusion
As small PR and marketing agencies navigate the complexities of 2025, they face a delicate balance between optimism and caution. While economic conditions and policy shifts pose significant challenges, the sector’s resilience and adaptability are evident in a willingness to embrace project work. Despite these challenges, many owners remain hopeful about their ability to grow and thrive in a rapidly changing environment.
