A Real Economy publication

Business services industry outlook

Feb 21, 2024

Business services outlook key takeaways

Field service companies must balance keeping their staff utilized while increasing efficiencies.

Middle market advertising firms need to invest in technology to position themselves for success.

Firms that invest in technology, AI tools and first-party data will be positioned to thrive.

Business services trend #1: Marketplace differentiation

Advertising firms have seen significant changes in the marketplace over the past year. But 2024 is shaping up to be the year in which some firms differentiate themselves—primarily through technological innovations—from others that fall behind.

While there is optimism about 2024, there are threats that can impede anticipated ad growth. According to GroupM, the top five global sellers of ads are not even advertising firms. Rather, they are technology companies. Each has increased its ad revenue by 25% on a compounded basis from 2016 to 2022, beating the nearly 10% pace of the total advertising market. This growth has come as advertisers sought out digital tools, specifically those leveraging AI, that can more specifically target individual customers.

In 2024, it is clear that advertising firms are at a critical juncture. Those investing in technology, embracing AI tools and leveraging first-party data are poised to separate themselves from the competition.

Business services trend #2: Digital transformation

Middle market advertising and marketing firms must become integrated solution providers as customers demand capabilities beyond the traditional norms. The days of a firm focusing solely on advertising- or marketing-specific services are gone.

To do this, they must embrace digital transformation to keep up. We’re seeing new capabilities to generate sales that are less connected to consumer spending. This will allow middle market advertising and marketing firms to accelerate and sustain their growth. These capabilities include:

  • Data-driven and technology-focused services, which may not be closely tied to overall economic conditions, as customers go through their own digital transformations.
  • An overall wider range of services, including those outside of the traditional fields in which these companies have operated. 

Business services trend #3: Field service companies embrace technology

Labor challenges

Businesses with a field service component are highly labor driven. Companies that offer commercial cleaning, security, waste management, facilities maintenance or similar services must balance keeping their staff utilized while increasing efficiencies. The goal is to not only maintain or increase the top line, but also decrease operating costs while retaining the staff who were internally trained and cultivated. This is increasingly important as job openings continue to outpace the number of people seeking employment. 

Technological solutions

After Microsoft’s release of the Office suite in the early 1990s and the iPhone’s debut in 2007, we may now be entering the third secular economic change of the past 30 years with generative artificial intelligence (AI). We believe that generative AI will become as widespread as Microsoft tools and the iPhone in the near future, changing the way people think and work.

RSM contributors

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