Top 2022 trends for small agencies

Ad Age’s Small Agency Conference and Awards returns in person later this month, with a host of talks, workshops, keynotes and, of course, awards, celebrating the country’s hardest-working and highest-performing small shops.

A look at this year’s program touches on all the issues that have been top-of-mind for any agency serving clients in 2022: diversity, equity and inclusion; building strategic relationships; securing and sustaining talent; and—naturally—navigating the metaverse. Ahead of the conference, we asked experts from the Amp community to weigh in on these critical subjects, sharing what they’re doing to move the needle for their businesses at a time of economic uncertainty.

Predicting the financial future

With talk of a looming recession reaching its peak, agencies in 2022 are keeping a close eye on the financial horizon. “In an unsteady climate, it’s even more important to have very open and direct conversations with clients regarding budget trends,” said Just Global CEO Brandon Friesen. The San Francisco-based shop underlines the important role of agencies as trusted advisors in a time of uncertainty, with a responsibility to help clients budget for different scenarios ahead.

“Implementing very regular and rigorous revenue forecasting is a must, including accounting for both high and low scenarios,” Friesen noted.

On a positive note, there may be greater opportunities for agencies to step in and fill gaps for businesses who may be seeing internal teams downsized in budget cuts.

“More agency support than ever might be necessary,“ said Douglas Brundage, founder of Kingsland. “Fixed costs during a time like this, like staffing and office space, are the core considerations.”

Brundage’s team expanded during the first half of the year to prepare for what he believes will be an inevitable influx of work.

“The climate is not totally unpredictable and everything, especially the economy, works in cycles,” he said. “The key is to survive the downswing while also preparing for the future.” For many agencies, that survival means ensuring their clients hail from different sectors of the industry.

“If your agency is 100% focused on crypto brands and that market comes to a standstill, what’s the backup plan?” asked Jason Pampell, HireInfluence’s CEO and managing director. “By having a diverse portfolio, you can shield your business from industry slumps and ensure your revenue levels stay elevated during volatile economic climates.” Pampell also stressed the importance of preparing a “financial escape route” at least 90 days ahead of a potential problems.

Others in the industry are staying focused on expanding business in anticipation of a possible downturn. “We are always focused on growth to offset uncertainties,” said Christy Hiler, president and owner of Lexington, Kentucky-based Cornett.

Louisville, Kentucky’s Leap Group has been similarly focused on strengthening its business to safeguard against a downturn, investing in a 12-person fully dedicated internal marketing team, as well as a lead gen consultants’ team to increase awareness and boost the volume of potential business coming into the agency.

“Nobody can predict the future or put a bulletproof strategy together, but we have decided to be as proactive as we can,” said Alan Gilleo, Leap Group’s co-owner and chief marketing officer.

For smaller-scale agencies, those dollars may be less readily available to pump back into the business, with the threat of a recession felt even more sharply.

“The looming economic uncertainty is causing smaller agencies—and advertisers in general—to place renewed importance on the efficiency of marketing dollars,” said Allison Clarke, head of general market, national advertising sales, at Vizio Ads. “That’s why right now we’re working with many of the smaller agencies to help them develop direct-to-device strategies, which provides verification that ads are actually seen on TV and the ability to measure both top- and bottom-of-the-funnel metrics.”

Managers at influencer marketing platform CreatorIQ have also seen a greater need for meaningful data and performance marketing tactics coming out of small agencies.

“From a creator economy perspective, this means not just measuring impressions, reach and engagement, but actually understanding the bottom-of-the-funnel metrics like sales, site conversion and foot traffic,” said Mike Balducci, CreatorIQ’s general manager, affiliate, e-commerce and payment solutions. “For smaller agencies, the ability to show actual sales from influencer-driven social commerce and affiliate programs will help them stand out by proving return on ad spend, which can also be measured alongside established channels like search, social and TV.”

Hiring amid a labor shortage

While the total number of job openings does seem to be coming down with every month that passes, according to the latest Job Openings and Labor Shortage figures, that number still remains much larger than that of available workers in the U.S. The result has been renewed efforts across the ad industry to secure and sustain talent to keep up with business needs. For some agencies, those efforts have started with strengthening relationships and looking to their proverbial backyards to seek out worthy candidates.

“Since 2020 we’ve grown from 20 employees to over 70 and we found most of our talent by tapping into our own relationships,” said Katie Binder, head of talent at Highdive. “We are also branching out and seeking talent through new sources and channels. We know that great talent comes from different backgrounds and those different perspectives will make our work even better.”

The ethos around hiring has been similar at Just Global. Friesen credits relationship-building with helping the agency secure value- and vision-aligned team members.

“Leveraging, building and expanding  relationships require a much more high-touch approach from hiring managers and recruiting teams, but doing so results in higher-caliber talent,” Friesen said.

Remote work has opened up the hiring pool for those agencies that are more digitally focused, making them able to recruit nationally rather than locally. This is especially true for Leap Group, which has taken on a hybrid model over the past few years, and now has offices in Louisville, Cincinnati and Indianapolis.

“Before the pandemic, our employees were only in three states, but today employees are in 10,” said Gilleo, noting that Leap is currently investing $350,000 to renovate its three physical office spaces, focusing on general seating and collaborative space as opposed to assigned desks.

Company culture has also become a paramount concern for shops looking to attract new hires. “We’ve seen talent placing a much higher value on company culture than ever before,” said Todd Lower, business operations director at Grow. “They show at least as much interest in the work environment, the people and the policies as the role itself.”

Lower continued: “We’ve long invested in creating an environment that allows people to live their best lives at work and at home. That extends from the company-wide coaching model we rolled out, transparently sharing our DE&I  commitments and data and our inspiring new office space, and the evolved flexible PTO plan we implemented. These have become huge assets for us in recruiting.”

At Denver-based Cactus, the focus this year has been to “capture the magic” of the company’s culture, both to attract new hires and to retain existing talent.

“We’re doubling down on our seven core agency values, and developing a strong and genuine culture of belonging to help us attract talent at Cactus,” said Norm Shearer, the agency's chief creative officer and partner. “We’re also doing some deep work on our own employment brand this year, and a fresh set of employment brand assets.”

Diversity, equity and inclusion

Shearer also noted the importance of looking at where talent is coming from to encourage diversity and inclusion. At Cactus, a partnership with Denver Public Schools has helped develop relationships that nurture diverse talent at the high school level.

“It's 100% on us to do the work of filling the pipeline from diverse sources of talent; otherwise we’ll find ourselves scrambling to hire from the same small pool of diverse candidates coming out of portfolio schools each year,” Shearer said. Other agencies like Just Global are also focused on recruiting, in addition to strengthening already existing DE&I  policies and keeping conversations on this topic happening at the C-level.

“Career pathing is important for all employees, but especially at companies looking to build much more diverse leadership groups for the future,” Friesen said. “Establishing short- and long-term goals is paramount.”

In 2022, those goals necessarily mean moving beyond stating values to creating meaningful change through action.

“Whether that’s internally within the walls of our agency or externally with our clients, showing up and doing the work is what industry leaders should be striving towards,” said Eileen Zhao, strategic director at Fred & Farid Los Angeles. Zhao credited those DE&I efforts as a key factor in building a “creatively rich culture” while also aligning with client business goals.

Zhao also pointed to the importance of strategic partnerships in effecting meaningful change, including Fred & Farid’s work with Euphoria.lgbt as well as Urgence Homophobie “to advance DE&I and gender equity in society while also challenging clients to push this message forward when the right opportunities present themselves.”

The agency’s Paris office recently worked with the Ligue Nationale de Rugby on a campaign titled “Line for Change,” which aimed to normalize coming out conversations for rugby players. “To us, leading by example and working with partners help advance DE&I and gender-equity acceptance forward in the real world, not just the advertising one,” Zhao said.

At Cornett, partnerships with nonprofits Own It and BLAC have been instrumental in helping the agency advance its DE&I efforts.

“Less than 1% of agencies are female owned,” Hiler said. “Own It is compiling the list of female agency owners and sharing their stories. And BLAC helps bring more young Black creative thinkers into agencies, have deeper and more frequent conversations and puts out work that is built with more diverse perspectives."

In addition to strengthening partnerships, Hiler is focused on “ensuring female staff members have access to robust health care services in our current health plan or state”—an issue of particular importance given the recent overturning of Roe v. Wade. 

Marketing in the metaverse

No topic has gained more steam—or been more polarizing—in 2022 than the metaverse. For some it’s just a distraction, but others it’s the only way forward and an essential practice for agencies big and small to remain relevant.

“The metaverse won’t just shape digital experiences, it’ll dominate them,” said Karen Piper, head of strategy at Grow. “The power of a brand creating a truly immersive and virtual experience, that audiences can visit like a destination to play and create—and buy—offers an opportunity to scale. But more importantly, it gives so much power to audiences to literally plug in to create expressions of themselves, their taste and their personality.”

Piper noted that digital experiences today are largely “single player and transient,” with the metaverse offering a deeper experience for users and brands alike. HireInfluence’s Pampell made a similar point, arguing that the metaverse will make space for brand experiences unlike anything previously possible—something brands will likely require agency resources for.

“Considering the metaverse is uncharted territory for most, it’s critical for agencies to get first-hand experience on new platforms to fully understand the opportunities available and get ahead of the curve,” Pampell said. “Image is everything, so agencies should be constantly updating their digital presence to show they are in the know and setting trends, rather than playing catch-up.”

Agencies making the leap into the virtual realm will also be better able to serve clients, creating greater ease and familiarity among creative, production and media teams, noted Jason Falls, Cornett’s senior influence strategist, who passed on a key piece of advice: “The best thing agencies can do is participate. Strap on that headset and explore.”

Others, however, are less convinced.

“Enough with the metaverse, unless you have video game clients or are specifically going after gamers,” said Josh Denberg, founder and chief creative officer at agency Division of Labor, where efforts are remaining focused on existing business streams. Especially for small agencies, putting effort and resources into metaverse pursuits means an opportunity lost in other areas—and one many are not ready to make.

“I'm not sold the metaverse will be a functional, helpful, mass-adopted ‘new internet’ for quite some time, so this isn't a significant concern for us,” said Kingsland’s Brundage. “With a recession looming and stagflation stampeding, average customers will be more focused on savings and survival than exploring a virtual reality with a high barrier to entry and no clear function yet.”

Brundage also pointed out that the crypto and metaverse-adjacent clients in Kingsland’s roster still face the challenges of awareness, adoption and brand loyalty that brands in other sectors face, and will continue to need those services.

“Agencies may not always be relevant, but creativity and brand strategy will be. The metaverse shouldn’t change that,” he said.

Andy Berkenfield, CEO and partner at Duncan Channon, made the same point. He cautioned against taking the leap into a new realm before considering whether it has something of value to offer individual audiences.

“Brands and agencies love to be first movers to show innovation, but it needs to be thoughtfully considered,” Berkenfield said. He noted that a metaverse activation, while on-the-mark for gamers, for instance, may be way off for other audiences.

“The arrival of any new technology creates a temptation to chase the shiny object, but that’s not the way agencies remain relevant,” he said. “Agencies stay relevant by being smart about how real people are interacting and living in the real world and online. We must have the courage and confidence to ground our ideas in people, not platforms.”