2025 was a defining year for UK agencies – tough, volatile, but also revealing.

The Agency by Agency Growth Report (March 2025) put the sector’s overall growth at 7.3%, showing some level of resilience amid pressure. But beneath that headline sits a far more nuanced reality: only around one in ten agencies qualified as high-growth, generating 23% of total sector turnover and employing nearly a third of all agency staff.

In other words, most agencies were stable – not shrinking, but not really moving forward either. It seems that the gap between those who survived and those who thrived widened sharply.

At Rocksteady Finance, we’ve seen that divide up close. The agencies that protected profit, invested in consistent sales activity and built financial discipline had a good year – even when revenue didn’t soar. Those chasing growth for its own sake, or neglecting their pipeline and marketing, often ended 2025 with thinner margins, patchy sales visibility and higher stress.

This article looks at what the best-run, most profitable agencies did differently in 2025 and how to apply those lessons to build a stronger, more resilient business in 2026.

2025: A Year in Review

The macro environment made profitability hard work for everyone. UK GDP growth was only 1.1% in 2025 and is forecast at 1.2% for 2026 (ONS data), while average earnings are expected to rise 4.2% by the end of Q4 2025, a squeeze that left agencies facing rising salary bills and clients with tighter budgets.

At the same time, AI and automation are transforming delivery speed and efficiency, forcing agency owners to confront a new question: how do we protect margin when work takes half the time it used to?

Growth levels differed a lot depending on the specialisms. Newer, performance-driven specialisms such as Amazon/ Marketplace (20.4% growth) and Social Purpose & Sustainability (22%) far outperformed traditional design or branding agencies, which grew by just 2.8%.

2025 revealed a clear pattern: agencies with focus, positioning and financial discipline pulled away from those relying on momentum and instinct.

The Three Biggest Challenges of 2025

Every year brings new obstacles, but 2025 made three long-standing challenges impossible to ignore.

1. Inconsistent sales and struggle to win new business

Winning new business was, without question, the biggest challenge for agencies in 2025. Pipelines were unpredictable, with decision cycles lengthening and competition increasing. Too many agencies still relied on referrals or word of mouth, leaving them exposed when inbound demand slowed. Even among agencies reporting growth, revenue was increasingly made up of smaller, shorter projects rather than the longer-term retainers that create stability. That made forecasting difficult and cash flow unpredictable.

When new business is harder to win, the only defence is strong profitability and operational efficiency, ensuring the work you already have is delivered profitably and predictably.

2. Decreasing margins

Data from The BenchPress 2025 Report showed average agency profit margins declining again year-on-year, driven by salary inflation and client fee pressure. Many absorbed rising costs instead of increasing rates, eroding profitability. Poor utilisation and reactive pricing decisions compounded the problem – especially in delivery-heavy teams without strong commercial oversight.

3. Client budget pressure

Client budgets tightened throughout the year, with procurement functions demanding more flexibility data, and proof of impact. Retainers became harder to sell, even for well-performing agencies. Smaller project work dominated, forcing leaders to focus on cash management and recovery rather than headline growth.

The Five Habits of the Top-Performing Agencies

The agencies that achieved strong, profitable performance in 2025 did not do so by accident. They shared a consistent set of disciplines and behaviours that separated them from the rest.

1. Profit-first mindset

The most profitable agencies in 2025 didn’t chase turnover. They managed projects for recovery, tracked client and project profitability and protected margin. Growth was measured by retained profit, not just headcount or fee income.  They also recognised that not every client or service line deserved equal attention. They exited low-margin work early, freeing up capacity for high-value accounts.

2. Strong, evolving positioning and offer

High performers refined their positioning and offers to reflect where client demand was moving. They were able to position themselves as agencies delivering measurable outcomes, who have specialist depth and knowledge. Crucially, they also looked inward. Instead of chasing constant new business, they found growth in their existing client base – through tighter account management, better reporting and proactive upselling of complementary services.

3. Strong rate card & utilisation management

Every profitable agency we worked with knew exactly what an hour of team time needed to recover. They tracked utilisation at least monthly and built accountability into resourcing. Regular rate-card reviews and working on project budgets ensured pricing kept pace with wage inflation. This single habit – reviewing recovery rates quarterly often delivered a 5-10% profit lift without any new business.

4. Clear financial visibility

High-performing agencies didn’t just look at monthly P&Ls. They invested in reporting that revealed real performance by client, project and service line. They measured contribution margins, forecast-to-actual variances, and project profitability. That clarity gave leaders confidence to make decisions early, reallocating resources, revising pricing, or addressing scope creep before they hit cash flow.

5. Leadership maturity

Leadership discipline proved to be a major differentiator. At around the £500k revenue mark, founders who remained hands-on in admin, invoicing, or delivery became growth bottlenecks. The best-performing agencies built structures that gave their teams ownership of financial performance. When the founder leads strategically, rather than operating reactively, the whole organisation becomes financially smarter and more scalable. Working “on the business” is extremely difficult for any business owner. Nonetheless, it’s crucial there is time allocated to working on the overall business strategy. 

The 2026 Playbook: What to Focus on Now

2026 will not be easier, but we believe it will reward focus, adaptability and financial control. For most agencies, winning new business will continue to be competitive and unpredictable. That’s why your best strategy is to build resilience from the inside out – stronger margins, efficient delivery and data-led decision-making.

Here’s where agency leaders should focus their attention.

1. Build predictable systems and visibility

Set a weekly and monthly financial rhythm. Use dashboards, rolling cash forecasts and management reports that integrate sales, utilisation and margin data. Financial visibility is the foundation of growth confidence.

2. Refine your positioning and pricing

Stay close to the market. Tighten your positioning to align with where clients are investing – measurable outcomes, performance channels and data-led insights. Move pricing away from hours and toward output or outcome-based models, as IPG CEO Philippe Krakowsky outlined in The Drum (July 2025). As AI reduces delivery time, your value lies in judgement, strategy and insight – not labour hours.

3. Leverage AI intelligently

The Agency by Agency AI Impact Report (2025) found that 75 percent of agencies already use AI internally, yet only 23 percent mention it publicly – a sign of uncertainty around pricing and positioning. The opportunity for 2026 is to use AI to enhance, not replace. Automate admin and use AI tools to improve accuracy, speed, and analysis, while doubling down on the distinctly human elements: strategy, creativity, and relationship management.

4. Strengthen your leadership and team capability

Distribute financial understanding beyond the founder. Build financial literacy across your leadership team so everyone knows how their decisions affect profit and cash flow. Empower account leads and delivery heads to take commercial responsibility.

5. Prioritise profit and cash over growth

If new business is harder to win, profitability and efficiency become non-negotiable. Focus on improving utilisation, recovery rates and cash runway before expanding. The agencies that will win in 2026 will be smaller, sharper and financially stronger, not necessarily larger.

The Bottom Line

The Agency by Agency Growth Report showed that only 11.7% of agencies drove almost a quarter of the sector’s revenue in 2025. Those agencies weren’t lucky – they were disciplined, structured, and financially confident.

2026 won’t reward the biggest agencies. It will reward the best-managed.

If you want to understand how to build a more profitable, scalable agency without relying on constant new business – explore The Rocksteady Way, our approach to helping creative and marketing agencies take control of their finances and grow with confidence.

And if you’re ready to make that shift now, book a call with our team – let’s talk about how to make your agency financially stronger in 2026.