Why So Many Agencies Will Go Bust in the Next 18 Months

It’s the question no one wants to ask out loud. Yet many agency leaders are quietly panicking about it: “Will my agency even survive the next 18 months?”

The uncomfortable truth? Many won’t.

And it won’t just be the “small” agencies. Even mid-sized agencies with healthy pipelines right now could find themselves in trouble tomorrow.

Here’s why.

1. Over-reliance on short-term retainers

Too many agencies are still clinging to 30-day rolling contracts or project scraps.

When clients tighten spend (and they will (and many are already)), that revenue disappears overnight. If your value isn’t deeply embedded or if your pricing is still “hours on a spreadsheet”, you’re exposed. Vulnerable. To be honest, you are naked!

No long-term agreements. No performance-led fees. No predictability. It’s like building a business on quicksand.

2. No clear positioning (have I said that before?)

If your elevator pitch is “we do everything for everyone”, you’re toast.

Generic, vanilla, beige-looking, me-too agencies get commoditised fast. Which means you’ll be competing on price. And that’s a race you’ll never win unless you have incredibly deep pockets.

The agencies that survive will be the ones who can clearly articulate:

• why you?

• why now?

• why not someone else?

3. Failure to adapt to AI and automation

AI isn’t a fad. It’s not going away.

Clients already know that parts of SEO, PPC, and content can be done faster and cheaper. If your model is built on “execution only”, you’re already replaceable.

The winners? Agencies that use AI to boost efficiency, margins, and strategy depth. Pretending it doesn’t exist is like Blockbuster ignoring Netflix.

4. Weak financial controls

Here’s what we’re still seeing (and data from Wow and GYDA backs it up):

• Gross profit margins under 50%

• Overheads creeping above 30%

• Zero cash buffer

It doesn’t take much. One or two lost clients and you’re on the ropes. Remember: cash, not revenue, is king.

5. Poor leadership and culture cracks

Many agency founders are great marketers. But great CEOs? Not so much. They are agency owners not business leaders…

When there’s no strategy, no KPIs, no engaged leadership team, the business stalls.

In a tough market, weak leadership leads to disengaged teams. Disengaged teams lead to client churn. And churn kills agencies. Va va voom…

6. Lack of differentiation

Far too many agencies rely on referrals or RFP scraps.

When inbound slows (and it is slowing), they’re left with an empty pipeline.

The agencies that survive will have a proactive engine: outbound, thought leadership, partnerships, and predictable lead generation... a marketing flywheel.

7. Clients in-housing (that is a word?)

Post-pandemic, more brands are bringing teams in-house.

They’re keeping strategy, data, and performance inside. Agencies only get called in for hyper-specialist, one-off projects.

If you’re not positioned as a strategic partner, you’ll get sidelined. Simple as that.

Final Thought

The writing’s on the wall. Agencies that fail to adapt, specialise, and get their house in order will go under.

The ones that thrive? They’ll:

• Double down on positioning

• Embrace AI intelligently

• Fix their finances

• Move up the value chain

Be a trusted partner, not just a supplier. That’s how you survive.