Digital shops profits soar by 56 per cent, Friday, 29 February 2008 12:00AM

The operating profits of the 40 largest digital agencies in the UK rose by 56 per cent in 2007, according to a survey by New Media Agencies Financial Intelligence.

As well as expanding demand for digital advertising, the growth was also put down to companies rationalising their existing operations into a single business.

However, the research also shows that operating profit margins remained low at 8.6 per cent, compared with a historic benchmark of 15 per cent among traditional agencies.

It also reveals that much of the growth is spread across a select group of agencies: five reported operating profits of 20 per cent or more, while 25 had margins of below 10 per cent, and three recorded operating losses.

G2 Interactive recorded the best operating profit per head, followed by ILG Digital, Start, Outrider and Win. AvenueA, Poke London and Agency Republic made the top ten, while Profero and Wheel/LBi were among the least profitable companies per staff member.

Bob Willott, the editor of the report, said: "Profit margins and staff utilisation levels varied enormously from the impressive to the depressive."

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