Lots has changed since 2002- perhaps a drop in fee income reflects a changed landscape for communications
Research published online today suggests on average UK agencies have lost up to 20% of their agency fee income over the past 10 years.
The contraction is comprised of a 26.5% decline in creative services, 18.4% drop in account management and a more modest 5.3% dip in planning.
The survey conducted by the advertising trade association The MAA coincides with the updated publication of the latest Agency Remuneration Best Practice Guide from the trade bodies IPA, ISBA, MAA and PRCA.
The guide offers fresh views regarding the various agency remuneration models, and its timely publication will serve to remind agencies (as if they needed it) that the commercial pressure on them to improve value for money on a declining earnings model are getting tougher to manage.
However, to an outsider it hardly comes as a surprise that there is greater focus upon remuneration models and genuine measures of VFM from creative services. Brand owners have experienced huge changes in consumer expectations since the birth of social media channels.
All sectors have been effected. As the technology finally caught up with the pre dot-com hype only now can consumers enjoy the benefits of on-demand services and user derived content from devices they carry in their pocket (rather than plug into the mains).
Those agencies that are growing and making money are doing so despite the current tough climate. While the figures suggest that traditional creative services and account handling are less well received compared to 2002, surely this also suggests that the de-layering of agencies (particularly digital ones) means that the process of client management is becoming less complex.
Clients are now managed by a number of individuals across the combined resources of an agency (as in the Golin Harris g4 model) resulting in a closer working relationship between the brand owners and the creative teams rather than the more formal client team structure from 2002.
Fond memories of billing at 2002 rates are gone (for now). What matters is being well organised and using the full wealth and facilities of a creative business. Account handling systems have a significant impact on resource planning and financial management, so by combining the correct remuneration models (as detailed in the excellent Industry Guide) with robust systems then most agencies will look forward to increased profits that don’t compromise the value of their creative talents.
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