It is encouraging to be able to report, courtesy of the specialist
accountant, Willott Kingston Smith, that the marketing services industry
enjoyed its best year since the start of the decade as clients spent
more, agencies made better profits, more people were employed,
productivity per employee increased and the overall cash position
improved (see feature, p32).
The UK economy is benefiting from stagnant inflation and low interest
rates, but this optimism does not yet extend meaningfully into the
Clients of the top 50 groups have spent 10 per cent more than in the
previous year, nudging pounds 20 billion in total. Of that, however, the
industry retained pounds 191 million in pre-tax profits - a margin of
less than 1 per cent. There is little cause for celebration and the
results fall far short of the 80s boom years.
More serious still, the encouraging figures disguise a shift in the
allocation of marketing spend between different sub-sectors, with direct
marketing and media independents gaining at the expense of ad agencies.
Here is incontrovertible proof that many clients care less about the
medium and more about the message.
Media independents have been doing exceptionally well, although their
rate of growth now seems to be slowing down, possibly because
‘dependants’ are fighting back, and possibly because the independents’
gross margins are slipping as they chase more volume.
Overall, thanks to the strong management and creative abilities at
Abbott Mead Vickers BBDO, Simons Palmer Clemmow Johnson, Howell Henry
Chaldecott Lury and several other prominent agencies, there is still
plenty of evidence to point to outstanding creativity being linked
directly to financial success. That may not be what the clients’ finance
directors expected to hear, but it is a deserved and continued relief
for those who wish to enjoy working in the advertising industry.