British agencies are becoming leaner and meaner by working their staff
harder, paying them less and earning more money from them, according to
The ad industry has finally lost its 80s reputation for profligacy and
poor management in the shake-down following the recession, claims the
industry and company data analyst, ICC Information.
Its survey shows just how deeply the recession has reduced staff numbers
at top agencies, where the average number of employees has dropped from
more than 150 in 1991 to about 100 last year.
But the study also suggests that staff are being better utilised, with
average profit per employee having more than doubled from pounds 1,300
to pounds 3,600 over the same period.
At the same time, agencies have managed to keep a firm grip on salaries,
with average pay dropping from a high of pounds 21,700 in 1993 to less
than pounds 20,000 in 1994.
Greater financial discipline also appears to be extending into other
areas of business, with agencies shown to be getting better at chasing
their clients for payment.
Two years ago clients took an average of 60 days to settle invoices. By
last year they had succeeded in reducing the period to 53 days, although
this is still far in excess of the traditional 30-day payment terms
common throughout most British industries.
The survey also found that agencies are getting better at settling their
own bills, with media invoices being paid within an average of 40 days
last year - six days earlier than two years ago.
But the improvements have yet to be translated into significantly higher
profitability. The survey shows that 22 per cent of agencies are still
recording a loss, although the figure has dropped from 32 per cent in
Annette Smart, an ICC executive, said the findings showed agencies had
learned lessons from the recession and begun to recognise the importance
of using research to target new business.