TL;DR

• NEW SURVEY: Web Host Sentiment open through 5/30.
• Agency leaders are slightly optimistic about their agency's outlook for the rest of the year.
• Many leaders view 1H25 as a low point, so it’ll be pretty easy for the second half to be better.
• Web development services face polarized demand depending significantly on client industry health and exposure.
• We saw high demand for strategy services (digital and marketing strategy).
• The weakest services were content marketing, social media marketing, and email marketing.
• ​If you'd like help, we offer a two-week sprint that identifies and prioritizes revgen blockers.

NEW SURVEY: Web Host Sentiment

We're running a new survey to better understand how digital agencies feel about the various web hosts.

As always, participants will get the full report for free.

This survey is open through 5/30, so if you're involved in any web hosting decisions at a digital agency, we'd love to get your insights!

2Q25 Digital Agency Pulse Check

Last time, we shared a quick pulse check survey to see how agency teams are feeling about the second half of the year.

First, a huge thank you to everyone who participated! It really does help us understand more about the agency world and makes it possible to share what we learn.

On to the results, overall, they were better than we expected.

The average agency leader is slightly optimistic about the second half.

Even in light of all the uncertainty out there, leaders are hopeful for a slightly better 2H25.

Pipeline health might just be the thing driving this, but not in the way you’d think.

In our pulse check survey, we asked respondents to rate their sales pipeline health at the beginning of the year and today.

Average pipelines are slightly weaker today than they were at the start of the year.

At first, that seems to contradict the optimism. If sales look weaker than usual now, how could leaders still be optimistic about the second half of the year?

Good thing we asked them to elaborate.

When we analyzed the long-form answers to “…how would you describe your agency’s business outlook for the rest of 2025?” we found the answer.

Many leaders view 1H25 as a low point, so it’ll be pretty easy for the second half to be better.

Leaders also mentioned active discovery phases and upcoming projects that aren’t reflected in pipeline metrics, which are boosting their optimism. Beyond this, they also pointed to seasonal patterns of the second halves typically being better than the first halves.

Those who gave pessimistic responses cited internal agency challenges, sector-specific downturns (nonprofits, automotive, manufacturing, ecommerce), and broader economic uncertainty.

Finally, we wanted to get a better sense of which services were doing well and which weren’t.

Agency leaders were split on web dev/design being a strong or weak point. This seems to come down to their individual industry and sector exposure more than any fundamental strength or weakness in the services themselves. Agencies serving robust sectors like private healthcare continue to see strong web dev/design demand, while agencies tied to struggling sectors such as automotive, nonprofit, and ecommerce face reduced demand.

We don’t believe this polarization is due to commoditization but rather reflects clients' budget constraints and economic realities in specific industries.

Excluding web dev and design, we saw high demand for strategy services (digital and marketing strategy). As many digital services face commoditization risks from AI, site builders, and in-housing, the shift we’ve seen toward higher-level strategy work over the last few years seems to be showing up here as well.

Unsurprisingly, the weakest services were content marketing, social media marketing, and email marketing. All traditionally popular services that have become increasingly commoditized in recent years. Demand for these seems to be dwindling faster as budget-sensitive clients scale back spend on less-strategic services in light rising economic uncertainty.

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What Can Agencies Do?

If your pipeline feels weak now, you're not alone. Obviously, focus on closing active opportunities and stay cautious with new hires or major expenses until pipeline strength returns. If you'd like help, we offer a two-week sprint that identifies and prioritizes revgen blockers.​

There’s a clear link between improving sales pipelines and higher optimism levels. Prioritize improving your pipeline through intentional messaging, referrals, and clearly defined service offerings. It's easy to let opportunities slip, but keep your sales team focused on converting early-stage discussions.

Agencies are seeing uneven strength and weakness based on the industries they serve. This really drives home the advantage of staying nimble that we’ve been harping on lately. Keep your head up and evaluate your industry exposure regularly. If you’re over-exposed to industries that look like they could be in trouble for a while, consider shifting your revgen activities towards industries that have better outlooks.

Apply that nimbleness to your service mix too. Double down on high-demand, strategic services to secure steady revenue. Reassess or reposition lower-demand services and find ways to innovate, specialize, or bundle these to improve value to clients. View this through the factory-consultancy lens. If you’re tied to a commoditized service mix, make sure you’re not structured like a consultancy. But sometimes it's better to adjust your mix.

Overall, the market remains challenging but manageable. Proactively adjust your focus, specialize your offerings, and improve your sales pipeline management to navigate this uneven economic environment.

Things are better than we thought out there.

Until next time,

-Nick