Future

Future

Intro

The outlook for the future

The outlook for the future is still cautious with the industry facing into a challenging, uncertain phase. This uncertainty is reflected in the wider business arena as Brexit still looms large. The latest KBC Bank sentiment index from July 2018 showed that only 7% of companies say the consequences for their business operations have become clearer of late while 17pc say they have gotten less clear.

The reality is that advertising and media agencies are facing many of the same challenges and opportunities as the wider media and communications landscape. The successful ones are realigning their business models with emerging and future client needs, both through leaner and more efficient processes for media buying etc, but also through investment in the type of advisory and strategic skills and services that will remain immune to disruption for the foreseeable future (just look at the success of the PR industry in this regard).

There are, therefore, signs that our confidence is returning as the industry seeks to reassert itself as a vital part of the growth engine for Ireland.

Future

The Irish success at Cannes Lions this year, the world class standard of entries in the 2018 ADFX Awards, and the increased success in winning international business is allowing our collective work to speak for itself. We now have the evidence and case studies that demonstrate the strategic, commercial and creative value of our industry.

The opportunities cited by respondents are a good indication of how the senior industry leaders are looking to transform their business and compete on the world stage.

After a decade of spoof-marketing we are starting to see clients attributing real value to ideas and creativity again. All the sophisticated marketing weaponry in the world means nothing without the right ammunition
Seán Hynes, Creative Director, Bonfire

Perceived Agency Opportunities for 2018

Creative

Bringing more production in-house due to the democratising effect of new technologies International business opportunities

Media

Programmatic growth

Creative

Continued Digital Growth.

Media

Diversified service offerings

Creative

Growing business with existing clients. Have taken on several new clients and already seeing more opportunities with them.

Media

New revenue streams from consolidation of non media services such as data and research and strategic thinking.

Creative

Reshape our offering into Full Service in response to client needs. Integrate creative, media, strategy, digital etc.

Media

For media agencies to expand our product offering and take a lead role in content development, particularly on digital platforms.

Creative

Developing new revenue streams in content, production and CX.

Media

Up selling to existing client along with building on our digital services.

Creative

Continue to develop our strategic abilities and onboard new talent to compete with the Consultants.

Media

Organic growth from the existing client base.

Emerging trends indicate a continued downward pressure on rates and margins from an equally pressurised client base.

The recession is over, the recovery is gathering momentum and yet business seems tougher than ever for many in the sector. Some of this may be explained by the normal ebb and flow of competition, pitch wins and losses, as well as the usual uncertainties of change in a sector shaped by ‘fashion’ as much as economics.

But there’s more at play than the challenges we’ve all dealt with before. That little word ‘disruption’ hardly does justice to the scale, pace and nature of the changes affecting agencies and their clients. When clients are no longer certain that their business model will survive the next few years, it’s hardly surprising that they look to their creative and media agencies to help them navigate a rapidly changing environment. At the very least clients should be seeking their advice. But too often, clients look on their agencies as cost centres rather than partners, ending in a negative sum game of procurement, fixed or falling fees, and ultimately a sense of mutual disappointment if it doesn’t work out.

For instance, there is a lot of discussion around the increase in Procurement decision making power, however, the percentage of clients using procurement departments has only risen by 4% over the past five years.

Emerging Trends Over Past 2-3 years

Creative

Clients are aggressively targeting cost reduction and are no longer seeing the relationship as a partnership

Media

Clients looking to consolidate/reduce number of agencies they use.

Creative

Continuing pressure on rates and more clients with procurement departments.

Media

Transparency requests. Audits. Fighting reputation issue

Creative

Reduced budgets, unrealistic pitches for low budget values, increased competition.

Media

Cost cutting, pitching environment

Creative

Continued Online growth. More clients focus on new emerging markets.

Media

Increase in social media advertising but a lack of understanding of the ROI.

Creative

Digital and analytics becoming increasingly campaign critical .

Media

Scope creep is a huge problem. Clients want more and more from their agencies but want to pay less.

Creative

Skills gap in Marketing Departments.

Media

Clients becoming more digital savvy and looking for opportunities to bring some digital services in-house.

The industry has become very cognisant of more external threats, including the looming problems posed by Brexit, as well as competition from large digital firms such as Facebook and Google.

However, the industry is set to meet these challenges head on – staff levels are anticipated to increase by more organisations than in the previous year, and growth expectations remain high.

Perceived Agency Challenges for 2018

Creative

Influence of Facebook and Google in taking marketing spend away from agencies. Constant pitching to win and retain business Paucity of talent in certain key areas.

Media

Rising wage demands, Rent costs and Brexit uncertainty.

Creative

Brexit Staff retention vs tech giants Declining client budgets Increased competition Global warming - work days lost due to adverse weather conditions.

Media

Clients moving digital in-house.

Creative

Finding and keeping great people/talent.

Media

Winning new business & retaining digital staff.

Creative

Brexit Trade War.

Media

Increasing demands from clients for low margins Increased demands from clients for time, audits and transparency of reporting.

Creative

The main challenges are lack of industry representation and a race to the bottom between existing agencies.

Media

Achieving volume growth.

Creative

Client budgets, lack of talent in marketplace, Traditional approach to pitching.

Media

Pressure on fees in pitches (race to the bottom). Increased role of Google and Facebook, which reduces role of local publishers and the relationship with local advertisers and agencies.

The challenge to agency leaders remains the same; to keep their teams focused and working together on delivering profitable work for clients while investing in the services, skills and technologies that will build a sustainable future for their businesses.  It’s a big ask, which is why it feels tough some of the time.  Agencies that can stay the course will reap the benefits of growth and success in the years ahead for both your agency, your client and ultimately for Ireland.