Prolific North’s Top 50 digital agencies are generating an impressive £818.5m for the Northern economy – but new research reveals overall profits have plummeted.
Following the release of the Top 50 Digital Agencies ranking for 2025, we’ve delved into the data to uncover what’s really going on across the North’s digital sector.
The latest research, compiled for Prolific North by long-time research partners Mustard, reveals a more complex picture. While total turnover of the North’s top digital agencies has seen a substantial boost, pre-tax profits are shrinking considerably. So, are economic pressures continuing to bite or are agencies simply investing more heavily in talent, technology, and M&A?
READ MORE: The Top 50 Digital Agencies List for 2025 revealed
Richard Walker, director at Mustard, said: “This year’s rankings suggest a sector entering a new phase that’s not defined by explosive growth but by strategic consolidation for most.”
He continues: “Top players are adapting to shifting client demands, economic pressures and technological change to create a more resilient digital economy in the North.”
Mustard’s research paints a notable shift. The combined turnover of last year’s Top 50 agencies was just under £700m, before climbing to nearly £818.5m this year – an impressive 17% increase year-on-year.
But when you pair total turnover of nearly £120m with the profitability data, it’s a different story. Combined pre-tax profits for the top 50 agencies were around £53m last year. However this year’s top 50 agencies have seen a steep decline in pre-tax profits, with that figure falling to £19.2m. That’s a 63% decrease.
Interestingly, the average pre-tax profits in 2024 across the top 50s stood at just over £1m whereas in 2024 this has more than halved to an average of £392,000. It’s a stark statistic.
“The results reflect a lot of what we’re seeing in our data nationally, where stability is now the dominant characteristic across the sector,” explains Tom Salmon, co-founder of data and insights platform Agency by Agency, on the total turnover.
Agency by Agency recently published The Growth Report, which reveals an overall growth rate for the UK agency sector of 7.3 %.
“Nationally, more than two-thirds of all agencies fall into the ‘stable’ category, suggesting that whilst high performance captures attention, the majority of agencies are planning their operations in a steady way.
“It’s interesting to see how specialists have risen in the rankings, again reflecting what we’re seeing nationally where new specialisms are outperforming traditional agency strongholds. This isn’t simply about new services replacing old ones, but suggests a movement away from generalists towards agencies that can solve specific, complex problems exceptionally well.”
As for the profitability stats, it’s important to note the Top 50 list is not a like-for-like comparison year-on-year. However, from our own observations, although the profitability downturn isn’t uniform across the top 50 digital agencies, 12 agencies had pre-tax losses in 2025 compared with four in 2024.
“The 17% increase in turnover across the Top 50 digital agencies in 2025 is a positive signal of demand and market activity. However, the 63% drop in pre-tax profits suggests deeper structural and economic pressures at play which to be fair we have seen across the market,” explains Phil Gripton, Partner at global growth and M&A advisory firm Waypoint.
He offers a number of observations on some of the challenges facing agencies more widely in this market:
- Rising operating costs – The increase in employer National Insurance contributions to 15% from October 2024 has directly impacted payroll costs, especially for larger agencies. Inflationary pressures and higher costs of talent retention (especially for mid- to senior-level roles) have also squeezed margins.
- Investment in infrastructure and talent – Agencies who are on a strong growth trajectory tend to have to make significant investments in leadership, data, analytics, and operational infrastructure to future-proof their businesses. These upfront costs may be being made in the Top 50 and are not yet yielding proportional returns. The shift toward building internal capabilities (e.g. in AI, analytics, and sustainability) is capital-intensive and often hits the bottom line before delivering top-line growth.
- Client demands and pricing pressure – Clients are increasingly demanding integrated, multi-channel solutions at competitive rates. This has led to margin compression, especially for agencies that haven’t yet fully automated or streamlined delivery.
As the top 50 digital agencies is not a like-for-like comparison, Gripton also says its worth noting the 2025 cohort may include “newer, faster-growing agencies that are still in investment mode and not yet profitable”.
You can check out the full ranking for 2025 here. We’re considering a follow-up piece on the topic with agency leaders, so if you’d like to get involved please email [email protected] and [email protected]
