TL;DR

• It's been a strangely flat year for agency leader outlooks. We're sitting about where we were in 4Q25: smaller projects are easy to land, larger ones are stuck behind tight client budgets, and sales cycles keep stretching.
• AI is great and garbage at the same time. It's making some work faster while killing demand for other work, but it isn't changing overall demand for digital services.
• For 2H, GEO and in-person events look like the leadgen plays, and we expect marketing and sales budgets to grow as a percent of revenue.
• Pricing is holding across most of the market.
• On delivery, most shops aren't capturing AI efficiencies, so I still think protecting your seniors holds.
• Overall, it seems like a good time for agency leaders to take a step back and reevaluate their goals and plans.
• We published an Agency Partner Program Report on the state of the 556 programs in our directory. The benefits for agencies were much bigger than we expected, and a well-run program can drive millions in revenue for even a small vendor. If you work with a vendor partner program, please share it with your contact.
• If you'd like help improving your agency's growth, check out our Growth Review Service, or grab a spot on our calendar to discuss the details.

What to Watch in 2H2026

We’re halfway through the third quarter and smack dab in the middle of vacation season.

Things are quiet, but that won’t last long.

The back half of the third quarter and the fourth always seem to bring a mad dash for companies to hit their goals for the year. While we’re still in the slow part, I want to review what we’ve seen so far this year and what we’re watching for the second half.

1H2026

It’s been a strangely flat year for agency leader outlooks. There have been some fluctuations in sentiment, but overall, we’re sitting right about where we were in 4Q25.

This doesn’t mean that nothing has changed, but it does summarize the various offsetting forces pulling at agency leaders this year.

Smaller projects have been easy enough to come by, but the larger ones have suffered due to tight client budgets. That’s a big shift from 2025, when, as long as agencies showed realistic ROI calculations, they’d land sizable projects at a normal rate.

Similar to the project size shifts, we’ve watched sales cycles get drawn out more than anyone would like. Lead sources can help (referrals close fastest), but there’s only so much agencies can get out of their current client rosters.

AI is great and garbage at the same time. We’ve seen more offsetting forces here, where it’s making some work faster while killing demand for other work, but it isn’t changing overall demand for digital services.

Industry-by-industry demand has shifted throughout the year, but we’ve really seen the most fluctuations in service-by-service demand. SEO has taken off as the de facto route into AI recommendations, so we’ve seen a bunch of strength there. AR/VR and mobile apps have been declining for years now, and we’re at the point where it almost seems strange to devote time to either.

Leaders entered this year with concerns around sales, margins, and leadgen, and halfway through, we’re still seeing many shops wrestle with these. Sales and leadgen concerns prompted us to write the Growth Guide and revamp our Agency Growth Review Service. We’ve been fortunate enough to see a ton of interest for those, and I believe they’ve provided much-needed support, but a large portion of the industry is fighting against macro and industry factors that simply make selling a chore right now. A major part of that seems to be an increase in the difficulty of overcoming buyer inertia and getting prospects to let agencies help them. It’s a frustrating spot to be in.

A bright spot has been shops holding steady on pricing. While some shops have experienced some pricing pressure, we haven’t seen too much discounting in the market.

2H2026

With that context, here’s what we’re watching for the rest of the year.

For leadgen and sales, it seems like GEO and in-person events are the plays for now. People hire people they trust. They trust you because they’ve interacted with you, your work, or someone else has vouched for you. As search shifts to AI shortlists GEO instantly becomes more important (as long as users actually click through and engage). In-person events have been growing in popularity again over the last year, and they’re a perfect spot to demonstrate your thinking and expertise. They’re also a major time/energy sink, so they need to be done strategically, but overall, I like them as a channel. With a shift in channel strategy comes a reevaluation of marketing spend, and I would expect agency marketing/sales budgets to grow as a percent of revenue at the expense of net margin. It’s becoming more expensive to seriously compete in this industry.

While most shops are holding steady, we have seen some movement at the lower end, and it’s been proven year-over-year that shops that raise prices grow faster. I have a feeling this will make proper positioning even more valuable going forward. Beyond positioning, it’s important for leaders to ensure that their business model components are aligned so they don’t fall into pricing-structure-positioning mismatches that pull them in different directions. In light of client expectations around AI use, it’ll be interesting to see which pricing models and value-framing resonate with prospects.

Delivery is another area that’s gotten stranger. I haven’t seen many shops that have used AI to create efficiencies that they’re able to capture. Most of the time, they find out that they can do more work or better work, and that eats up employee time. I wrote a newsletter about protecting your seniors (devs, designers, marketers), and I still think that holds. This is more of a 2027 topic, but as leaders start planning for next year in September/October, it makes sense to keep an eye on it now, especially given the amount of available talent. Then you have the shift toward more contractor usage, which could increase the value of project managers (as if good ones weren’t already coveted enough).

Overall, it seems like a good time for agency leaders to take a step back and reevaluate their goals and plans. That might just be the time of year talking, but it’s better to do it now, while it’s a bit slow, than when you get 10 new projects dumped on your desk that need to be done by Dec. 31st. Our Growth Review Service is a good way to do this.

Partner Programs Should Grow Your Agency

A few weeks ago, we published a directory of the 556 agency partner programs we analyzed. Today, we’re launching our report on the state of these partner programs and the massive opportunity that vendors have to help agency leaders build better agencies.

If you work with a vendor partner program, please consider sharing that with your contact.

We put this together because many agencies were underutilizing these programs, and some larger ones could see substantial benefits by participating more purposefully.

Many of these programs are for things your agency is already doing, so even a small benefit can be worth it. But we found that the benefit sizes were actually much bigger than we expected. There’s also the potential for these programs to deliver significantly more value for both the agencies AND the vendors.

This comes with the huge caveat that you should select the best tool for the job. Don’t go with a sub-standard solution just because they put a shiny agency program on it, but if the solutions are similar, it makes sense to evaluate what each vendor does for its partners. There can be a decent amount of high-margin revenue, support, or training that comes with some solutions that doesn’t come with others.

Everyone Actually Wins

Good for Agencies

Best practices have always flowed slowly throughout this industry.

This is a frustrating thing to watch from outside an agency, but I bet it is maddening to experience inside one. Solved problems that layer on top of one another to slow growth or reduce profitability can be incredibly frustrating.

The more we can identify and share what works, the better it is for every agency in the industry.

Good for Vendors

There’s a massive financial case to be made for this kind of “rising tide strategy.”

We modeled the three vendor-growth levers in our Agency Partner Program Report (pg 9-11). The summary is that a well-executed program for a small vendor can drive millions of dollars of revenue just by helping their current agencies grow a bit faster.

The potential for larger vendors is in the hundreds of millions of dollars.

Good for Promethean

We’ve built our business around helping agencies grow.

For us, that starts with uncovering truths about agency success through surveys, interviews, observational research, consulting, and experimentation. We share what we learn with agency leaders and agency consultants to help everyone make more informed decisions that drive above-average growth and profitability.

The more we learn, the more we can share, and the more agencies can benefit.

We’ve had the pleasure of working with some of the top agency partners, helping them build the strategy and content for their partner programs.

We believe this is the path to doing the most good in the space, and we would like to do more of it.

Building Better Programs

We’re helping vendors round out their partner programs, and we’d welcome any intros or connections. Simply forwarding this to partner contacts would be helpful.