The perils of setting up a marketing company have been laid bare in a new analysis which reveals that over a third of new firms fail before reaching the five-year mark, with ad agencies the most likely to go to the wall.
Digital marketing agency Avid Panda analysed data from Companies House to find the number of new companies within the marketing industry that were incorporated between January 2021 and December 2025. It then compared that to the number of marketing businesses that have gone into administration, liquidation, or are now dissolved.
Over the past five years, 39% of new marketing companies have shut down. Out of 87,785 companies that started in this period, 34,116 have already ceased trading.
A breakdown of business type highlights that the hardest type of marketing company to run is an advertising agency; some 41% have already shut their doors for good within five years of opening.
Agencies are followed on the “scale of doom” by market research firms (38%) and media businesses (36%).
On the opposite end, companies in PR and communications have the lowest business mortality rate (29%).
In response to the findings, an Avid Panda spokesperson said: “A lot of new marketing companies are coming into the industry with strong ideas, but struggle to find their footing due to pretty tough economic challenges.
“Rising National Insurance contributions have already pushed up employer costs at a time when margins are already tight, and many smaller agencies simply can’t afford to provide the competitive salaries needed to attract and retain good talent.”
The agency points out that with AI tools becoming essential across marketing, from content creation to data analysis, keeping up with that technology generally requires serious investment and training. Many larger agencies can absorb the cost much more easily, while newer firms usually struggle to justify or even fund the same level of AI implementation and automation.
Avid Panda concluded: “All of this is having a knock-on effect on hiring. We’re already seeing a shift away from building teams around junior roles. Instead of training from the ground up, many agencies are choosing to hire fewer people but at a more senior level, so they can hit the ground running and deliver immediate value.
“Junior roles aren’t disappearing entirely, but the way companies recruit is changing, and we expect that trend to continue as firms adapt to rising costs and increasing competition.”
Related stories
Bellwether Reaction: ‘Stay agile, prioritise targeting’
Budgets on life support as Trump gives firms the willies
Forrester: Agencies must slash staff and diversify or die
Haste makes waste: Out of sorts backend hits AI roll-out
Marketing AI revolution ‘still three to five years away’
AI investment pours in to UK but privacy fears increase
Marketers jump on AI with gusto but keep a tight grip
Be the first to comment on "Exposed: Why launching an agency is a risky business"