Income Up But Profits to be Flat in 2014 According to Independent Ad Agency Survey

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According to a global survey of independent advertising agencies of Worldwide Partners, Inc., 2014 is expected to be a year in which agency incomes are up but profit margins, current-client spending and agency staffing remain relatively flat.

Al Moffatt, President & CEO Worldwide Partners

With global GDP predicted to be only about 2.5-3.0% for 2014, clients will need to be more entrepreneurial and inventive to grow their top and bottom lines.

Worldwide Partners is the world’s largest network of independent agencies, with 87 partner agencies in 54 countries with over $3.2 billion in capitalized billings under management.

The survey results for the 2014 outlook indicate that 63% of partner firms believe that agency incomes will improve for 2014 versus 2013, but 54% believe that agency profits will be the same or worse next year. Additionally, while 57% believe that agency new-business activity will increase next year, 48% (the majority) believe that spending from current clients will be the same or worse compared to 2013. Along with this, 60% of independent agency principals responding to the survey believe that client companies view business conditions as the same or worse for 2014 compared to 2013.

As is the case with most service sectors, it appears that the trend of getting the most out of people will continue in 2014. Sixty-three percent (63%) of survey respondents claim that they will keep their 2014 staffing levels the same as in 2013.

Survey respondents state that the biggest challenges for 2014 will be organic client growth, finding the right people that understand all facets of digital and traditional advertising as the two worlds continue to blend into one, and to maintain profit margins as agencies are called upon to provide a greater array of services for relatively the same amount of compensation.

Yet, while 2014 may present a challenge in terms of bottom-line growth, many independent agency owners and principals believe that 2014 will also bring great opportunities to help their clients expand geographically as they search for pockets of gold and to grow their overall digital offerings, ranging from e-commerce, to content marketing, to helping clients better understand and measure their audiences.

“According to Al Moffatt, Worldwide Partners President and CEO, “With global GDP predicted to be only about 2.5-3.0% for 2014, clients will need to be more entrepreneurial and inventive to grow their top and bottom lines. While this may put pressure on agencies of all kinds to do more with less, it also opens the door for agencies, especially independent agencies, to offer breakthrough business and creative ideas to help companies stand out from all of the increased advertising clutter and tell a better story and build a better brand in order to capture market share and hopefully increase their own profit margins, which, in turn, could trickle down to agencies in terms of increased, not decreased, ad spending. Certainly the Olympics, the World Cup and U.S. political campaigns won’t hurt.”

The 2014 Worldwide Partners survey was conducted in December 2013. Thirty-five (35) agency principals from around the world responded to the eight-question survey. The questions fielded are:

1)    How do you feel overall income will be for your agency in 2014 vs. 2013?
2)    How do you feel overall profits will be for your agency in 2014 vs. 2013?
3)    How do feel new-business activity will be for your agency in 2014 vs. 2013?
4)    How do you feel about spending levels among your current clients in 2014 vs. 2013?
5)    How do you feel about hiring new employees in 2014 vs. 2013?
6)    How do you think your clients feel about their business conditions in 2014 vs. 2013?
7)    What are the three best opportunities your agency has for 2014?
8)    What are the three biggest challenges your agency has for 2014?

About Worldwide Partners, Inc.

Worldwide Partners, Inc. (WPI) is the world’s largest owner-operated advertising and marketing communications network made up of 87 agencies employing 4,500 people in 146 offices located in 54 countries across Asia, Africa, Europe, Latin America, the Middle East and North America. Based in Denver, Colorado USA, WPI is owned by the partner agencies that make up the network. WPI exists to explore and capitalize on global business development opportunities with multinational clients for its partners and to act as a hub that harnesses the creativity, local expertise and resources of the agencies in the partnership and apply them to solve problems for clients on a local, regional and international basis. This allows partners to expand their existing client relationships geographically and to compete effectively for international new business. Clients gain access to best-in-class, entrepreneurially driven agencies steeped in local knowledge in all markets they engage WPI shops. WPI’s partner agencies manage $3.2 billion in worldwide advertising expenditures.

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Eve Riley
since: 03/2009
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