B2B marketers cut agency spend as work moves in-house

Forrester research shows B2B marketers are becoming more selective with agency spending, with slower budget growth as more work moves in-house.

The report found that 93% of companies still use agencies in some form. But fewer marketing leaders expect to increase spending on those relationships over the next 12 months. Only 28% expect overall agency budgets to rise, down from 41% in Forrester's previous survey. Meanwhile, 46% expect no change and 19% expect a decrease.

The shift suggests agencies remain part of the B2B marketing mix, but buyers are narrowing where they believe external support is justified. Marketers continue to place the highest value on agencies for work that requires specialist skills, scale or an outside market view.

About a quarter of respondents expect agencies to handle most or all of their advertising, creative and media work. A similar share, 26%, say the same for public relations and media relations.

Investment pullback

The sharpest falls in expected investment growth were in digital marketing and content creation. Expected spending increases for digital marketing fell by 20 percentage points year on year, while content creation and development dropped by 15 points.

Social media management and operations, along with brand strategy, development and management, also recorded notable declines. In both categories, expected investment increases were down 17 percentage points.

These areas tend to include more execution-heavy work, which internal teams can now absorb more easily. AI tools and changing operating models are allowing marketing departments to produce, optimise and scale more of that work themselves.

Agency selection

The study also found that AI is becoming a more important factor in how marketers assess agency partners. While buyers increasingly say AI matters in partner selection, satisfaction with agency performance in that area remains low.

That creates a difficult backdrop for agencies seeking more budget from existing and prospective clients. Firms now need to show clearer expertise and make a stronger case for why certain work should remain outsourced.

Forrester said the pattern marks a shift away from broad growth in agency relationships and toward tighter scrutiny of incremental spending. Rather than expanding external support by default, marketing leaders are reviewing which tasks require outside expertise and which can be done more efficiently by internal teams.

Karen Tran, Principal Analyst at Forrester, outlined that shift in the report's findings.

"B2B marketers are not walking away from agencies, but they are becoming far more disciplined about where agencies add value. AI has changed how marketing work is executed, and leaders are reassessing which activities require external expertise and which can be delivered more effectively in-house. The biggest declines in expected agency investment are occurring in areas such as digital marketing, content creation, social media and brand strategy. These are functions where AI is helping internal teams execute more work themselves. Marketing leaders increasingly view AI capabilities as important when selecting agencies, but satisfaction with agency performance in those areas remains low. Agencies have an opportunity to close the gap, but many have not yet demonstrated the expertise marketers are looking for. As AI enables more work to move in-house, agencies must prove where they provide expertise, scale or outcomes that marketing teams can't easily replicate themselves," Tran said.

Changing relationships

The data indicate that agencies are unlikely to disappear from B2B marketing, but their role is changing. Companies still appear willing to rely on external partners in disciplines where specialist knowledge or external perspective is difficult to replicate internally.

But cooling budget expectations point to a tougher spending environment across a broad range of agency services. As internal teams use AI to handle more routine production and operational work, agency groups may face greater pressure to differentiate their work in strategy, communications and specialist execution.

The findings also suggest agency reviews may become less about scale and more about proof of value. With nearly half of respondents expecting budgets to stay flat and almost a fifth preparing for cuts, the market for B2B agency work is entering a more selective phase.

For agencies, the most immediate pressure appears in categories where clients believe technology and in-house teams can now deliver more work directly. For marketers, the figures show an effort to control costs while retaining outside help in areas they still consider difficult to reproduce internally.

Across the survey, the central message was that agencies remain widely used, but the threshold for new spending is higher than it was a year ago. Just 28% of B2B marketing leaders expect overall agency relationship budgets to increase, compared with 41% in the earlier survey.