2023 Predictions for Marketing Communications Federal Contractors
Now that the calendar has officially turned, I want to share some insight on a few trends that I think will shape the year to come—but first, a quick note about the past 365 days.
Compared to recent years, 2022 was the same…but different. Federal spending on marketing communications didn’t change much, but the industry landscape changed rather significantly. Perhaps most notably, for the first time (as far as I can recall) a non-holding company network was the largest recipient of federal marketing communications dollars.
That’s big news, and I think more big changes to the federal landscape are just around the corner. Here’s what marketing firms should be ready for in 2023:
Mid-markets and large businesses will compete as small businesses. While the NAICS size standards have increased, many mid-sized marketing communications firms remain sized out. Expect to see more mentor-protégé agreements and JV partnerships this year as mid-markets and large businesses look for ways to compete for set asides. We already saw many larger firms employ this tactic last year, including WPP’s Ogilvy and VMLY&R as well as Fors Marsh Group, and it could have the biggest impact on contract battles related to Veterans Affairs and the Department of Defense. Keep this in mind when sizing up the anticipated competitive set for a given contract and/or consider it as part of your own firm's strategy.
There will be fewer new players entering the market. While we saw an uptick in the number of firms looking to enter the federal market during COVID, that trend has slowed dramatically in the face of a pending recession. The overall number of contracts awarded in 2022 decreased markedly from prior years, which likely gave some prospective new players pause. Expect many of them to remain on the sidelines in 2023.
Teaming wins contracts. This trend has been several years in the making and I think it will continue to play out in 2023. Government customers are becoming more and more convinced that so-called 'full-service' agencies can't deliver everything they're looking for, and many contracts have unique requirements that warrant bringing in specialized firms (e.g., to deliver messaging aimed at specific multicultural audiences or complex technology solutions).
Federal agencies will continue favoring contract vehicles. The number of standalone contracts is dwindling and will continue to shrink in the year ahead. Expect federal customers to opt for solutions procured via GWACs and multi-award IDIQs and BPAs, if they aren't already. And if you're not already on those vehicles, make them a priority in 2023...this will be invaluable in future years.
I'm sure 2023 will bring its fair share of surprises, but we'll continue to offer insight as these and other key trends unfold—and if you ever want to learn more, just get in touch.
Until then, here's to an exciting year ahead!