State of the Industry 2025: how are creative agencies faring?

We’re nearly a third of the way through the year already, and if 2024 felt like navigating rough waters, then 2025 has brought its own set of challenges. Amid a global trade war, economic uncertainty is growing, while AI continues to reshape how we work and the tasks we face.

How are these changes impacting creative agencies on a daily basis? Are clients cutting back on spending? Is acquiring new business becoming tougher? Or is the outlook not as bleak as anticipated? We’ve asked our community to share their candid experiences, thoughts, and emotions. These insights have been compiled into a special report on the ‘State of the Industry’ for 2025.

Let’s explore the key trends shaping the agency landscape currently and delve into the challenges individual studios are confronting, the solutions they are implementing, and the enduring drive fueling impactful and meaningful work.

Facing Challenges

Charlie Bowden, creative director at Kesselskram, echoes the sentiments of many, expressing a sense of uncertainty. He notes a noticeable tightening of client budgets, with clients being cautious in their spending and seeking to stretch their budgets further amid recent inflationary pressures.

Similarly, Karl Doran, founder and creative director at Flow, shares a similar experience, highlighting a challenging first quarter with significantly fewer project wins despite substantial pitching efforts.

Despite these difficulties, agencies remain optimistic. Ryan Stone, creative director of Lambda Films, notes an increased interest in creative work, particularly in video and animation, but mentions persistent challenges such as prolonged decision-making processes and shrinking budgets.

AI Dilemma

In addition to economic challenges, agencies are also grappling with the impact of AI. While AI continues to divide opinions among clients, there is a growing concern about the assumptions surrounding quicker project delivery and the existential questions it raises about visual communication.

Creative Resilience

Despite these obstacles, agencies are embracing the challenges as opportunities for inspiration and innovation. The industry is witnessing a resurgence of creative bravery and a focus on storytelling and longer-form content.

Looking Ahead

The industry is witnessing shifts towards more niche agencies and an influx of small independent studios. Recruitment remains a challenge, and agencies are adapting to changing client demands while striving for balance and continued growth.

Amid these challenges, there are signs of recovery and cautious optimism among agencies, with many expressing positive sentiments about the remainder of 2025. The industry is evolving, and creativity is becoming more essential in navigating uncertainties and driving innovation.

In essence, 2025 is pushing creativity to new heights, fostering fresh thinking, and encouraging businesses to adapt and thrive in a rapidly changing landscape. Standing still is not an option in this dynamic environment.