Why business expectations for marketing agencies are changing

Small and medium businesses (SMBs) have long relied on marketing agencies to get the word out and create demand for their services. Lead delivery was every agency’s bread and butter. But now, with recent technological developments, and especially with the growing adoption of AI, expectations are shifting.

Where leads were once the main priority for SMBs, expectations are now rising and lead delivery alone isn’t enough. These businesses want their marketing agencies to be strategic partners who know their business intimately and understand what it takes to get tangible results, faster.

vcita recently conducted a survey of SMBs, which asked them about their relationships with their marketing agencies. The results reinforce SMB sentiment of wanting true partnership and showcases the ways in which marketing agencies need a shift in strategy when it comes to winning over SMBs.

For instance, consider that more than half (52%) of SMBs today outsource their marketing, yet nearly 40% let go of their agencies — the majority (56%) within the first year of partnership. With budgets tightening and pressure for performance mounting, SMBs are scrutinizing every dollar spent, all the more so amidst the uncertainty of tariffs and volatile inflation.

So, how can agencies keep up with an SMB landscape that expects outcomes, not just activity?

The Value Dealbreaker

“Value for money” is the most important factor when SMBs choose a marketing agency. A lack thereof is the most common reason they walk away. Nearly two-thirds of SMBs surveyed who churned agencies did so because they didn’t see enough value. While the agency might deliver the promised leads, the SMB expects the value to be much more tangible: deals won and money in the bank.

When SMBs part ways with an agency, they often cite unmet expectations. It’s a phenomenon that isn’t just about price, but about impact. If an agency can’t quickly demonstrate how their work drives measurable business results, they risk being dropped.

Agencies should approach the first six months with a new client as the critical “prove it” phase – doubling down on better communications, clearer KPIs, and proactive reporting. In other words, not just delivering campaigns, but providing SMBs with the tools and services they need to successfully nurture leads into paying customers.

The AI Expectations Gap

The meteoric rise of AI is one of the clearest catalysts for the shifting expectations of SMBs, who now increasingly want their agency partners to bring new technological solutions alongside creativity and strategic expertise.

While nearly 69% of SMBs say their agency already provides AI tools, among those whose agencies don’t, 60% say they wish they did.This reflects a growing awareness among SMBs that AI can not only improve efficiency and enable personalization, but it can help them punch above their weight in competitive markets.

SMBs are especially interested in AI tools that save time and improve consistency in the content creation process; automate or accelerate their ability to respond to customers with speed and ease; and improve sales cycles with personalized estimates.

Agencies that embrace AI will also gain efficiency within their own operations, while strengthening their strategic value for clients. Those that resist it will quickly become outdated.

From Vendor to Advisor: Redefining the Agency Role

For agencies, this repositioning is as much a mindset shift as an operational one.

To reduce churn and deepen client relationships, agencies must stop thinking of themselves as hired hands and start positioning themselves as growth partners who can offer overarching strategic guidance, not just one-off tactics.

Agencies that can help SMBs understand why a certain campaign is working, or how to improve ROI, will fare better than those that merely execute.

This shift also requires agencies to lean into new services, from analytics and reporting to business management and brand development. This is where AI will once again prove a powerful enabler, helping agencies scale personalization and deliver smarter, faster insights.

Agencies can bridge the gap between activity and results by acting as coaches, not contractors. That means proactively guiding SMBs through their marketing strategy, turning data into action, and offering advice that aligns with broader business goals.

Opportunity Lies Ahead

The challenges facing today’s marketing agencies are also a clear growth opportunity.

Consider that nearly half (43%) of SMBs expect to increase their marketing budgets in the coming year, with plans to invest more in social media management, paid search, and email marketing, services that lend themselves to AI augmentation.

Many SMBs have also expressed interest in purchasing additional services from agencies, such as online presence optimization, brand development, reporting & analytics, and broader business management tools.

Strategic Acumen + Tech-Savvy = Retention

The takeaway is clear: client retention in 2025 is about value, partnership, and innovation. It’s evident that there’s an appetite for a broader, more holistic agency relationship. Agencies must step up to meet this demand and work tirelessly to earn trust of their clients.

Marketing agencies that can adapt to these expectations won’t just reduce churn. They’ll become indispensable allies in their clients’ growth journeys, and earn the loyalty they need to stay competitive into the future.

Editor’s Note

Rich Hargrave has over 25 years of digital marketing, mar-tech and SaaS sales experience, and has held various leadership positions at Hibu, Web.com, Hearst, Yelp and Reputation. At vcita, Rich is responsible for the growth and success of the Global Agency, Channel and Reseller partners. 

vcita is an SMB tech company dedicated to helping small and medium businesses thrive in today’s digital world by providing them with the tools to manage and grow their business. inTandem by vcita is a platform designed to serve the needs of SMB service providers, offering a customizable, white-label, platform that allows organizations that serve SMBs to bring their clients all the essential vcita tools under their own brand. For more information, visit www.vcita.com or follow them on LinkedIn.