The State of Digital Agencies in 2025: Still Tough. Slightly Better. No Room for Passengers.
If you run a digital agency, this probably won’t surprise you:
The last two years have been bruising.
Budgets were cut.
Clients churned faster than expected.
Teams were hard to motivate, harder to retain.
And many agencies found themselves busy… but broke.
According to Rand Fishkin’s 2025 State of Digital Agencies, things are slowly improving, but only for agencies that adapted. Everyone else is treading water or quietly going under.
This isn’t a return to “the good old days”.
It’s a reset.
A Market That Punishes Generic Agencies
One of the clearest signals from the research is this:
Generic, full-service agencies are struggling.
Not because they’re bad.
But because “good” is no longer good enough.
Clients are smarter than they were five years ago. They understand the basics of digital marketing. They’re sceptical of big promises, vanity metrics, and one-size-fits-all solutions. And increasingly, they know when they’re paying agency prices for work that could be done by a freelancer… or a piece of software.
Agencies that are surviving, and even growing, tend to share three traits:
A clear niche or positioning
A consultative, advisory relationship with clients
A focus on outcomes, not outputs.
This mirrors what we see daily inside GYDA: the agencies that win are the ones that are distinctive, not just competent.
AI Isn’t the Threat. Commoditisation Is.
Let’s address the old ‘elephant in the room’.
AI is not “killing agencies”.
What it is doing is killing undifferentiated, low-value services.
Basic copywriting.
SEO content at scale.
Simple design tasks.
Reporting and analysis that adds no insight.
If your value proposition is built on deliverables that AI can replicate faster and cheaper, you don’t have an AI problem… you have a positioning problem.
The agencies doing well are not competing against AI. They’re using it to:
Increase internal efficiency
Reduce delivery friction
Free senior people up to do strategic oro consultancy work.
AI rewards agencies that think. It punishes agencies that just produce.
The Shift from “Doer” to Trusted Advisor
Another clear pattern: thriving agencies are no longer order-takers.
They challenge briefs.
They educate clients.
They say “no” more often.
And crucially, they price based on value and impact, not time and effort.
Hourly billing and bloated retainers are becoming harder to defend in a world where output is cheaper than ever. What clients are paying for now is:
Judgment
Experience
Strategic clarity
Confidence in uncertain conditions.
This is exactly why consultative selling is becoming a survival skill, not a “nice to have”.
Leaner Teams. Smarter Resourcing.
The research also shows a rethink around hiring.
Instead of chasing scale for its own sake, agency leaders are:
Building lean, senior-heavy cores
Using freelancers for commodity work
Outsourcing what doesn’t create differentiation.
This reduces risk, protects margin, and keeps agencies agile in unpredictable markets, something we’ve long argued is essential for sustainable growth.
Big teams don’t create resilience.
Clear strategy and strong leadership do.
What Agency Leaders Should Do Now
If this all feels uncomfortably familiar, good. That’s the point.
Here’s where to focus next:
1. Audit your services
If AI or a freelancer could replace it tomorrow, ask why you’re still selling it.
2. Get sharper on positioning
Who do you really serve? Why should that client choose you?
3. Embrace AI properly
Use it to streamline, not to race to the bottom on price.
4. Rethink pricing
Move away from time-based models. Start charging for outcomes.
5. Elevate the client relationship
Your job is not to “do marketing”. It’s to help clients navigate complexity and uncertainty.
A Final Word
Rand Fishkin’s conclusion is pretty blunt, and we agree with it:
AI isn’t killing agencies.
It’s killing lazy, undifferentiated, low-value services.
For agency leaders, this is a moment of choice.
You can cling to old models and hope things go back to how they were.
Or you can refocus, reposition, and raise your standards.
The agencies that do the latter won’t just survive the next few years.
They’ll define what a modern agency actually looks like.