Media Agencies Expect To See Client Expenditure Increase
The outlook is continuing to improve for the majority of UK media agencies, which expect to see income and new business activity increase significantly as the advertising recovery gathers pace.
The latest quarterly CAF Agency Barometer shows that a total of 65% of media agencies have seen an increase in committed client budgets since first being set, compared to just 18% reporting a decline in expenditure.
The survey of 138 established marketing communications agencies found that budget commitment was positive across all sectors, with media spend, sales promotion, direct marketing and new media showing gains.
The economic climate continued to improve in the first quarter of this year and more than 70% of media agencies described the new business sector as buoyant, indicating that confidence is gradually returning to UK marketing industry.
The vast majority of agencies and consultancies indicated that they were more optimistic about the financial prospects. An impressive 72% of media outfits claimed to have increasing their forecasts for the 2004 calendar year, compared to just 10% reporting a downward revision.
Overall, larger communications agencies, with a gross income over £10 million, were found to be considerably more optimistic than in previous quarters, with 88% claiming to be happy with their financial prospects, compared to just 33% in the previous quarter.
There was also good news on the recruitment front with 51% of communications agencies indicating they they were likely to increase the number of full-time employees on their payroll in the next six months. This compared to just 47% of respondents in the previous quarter.
Commenting on the findings, IPA president, Stephen Woodford, said: “This is tremendously encouraging news for the entire agency industry, which we should see translated into improved financial and employment figures sometime in 2004.”
Chairman of the Marketing Communication Consultants Association, Chairman Matthew Hooper, added: “It is very encouraging to hear that agencies are now feeling positive about the future. What is also pleasing is that these agencies are upgrading their forecasts and looking to recruit once again following a period of uncertainty in marketing communications.”
The survey supports a recent report from the Institute of Practitioners in Advertising, which reveals that current budgets were revised up in the first three months of 2003 following higher than expected sales revenues and an improvement in profits (see Recovery Slowly Gathers Pace For UK Advertisers).
Communications Agencies Federation: www.cafonline.org.uk
Recent Related Stories from NewsLine Sorrell Upbeat On Prospect Of Advertising Recovery Confidence Returns As Top Advertisers Increase Spend Improving UK Economy To Boost Advertising Market In 2004
Subscribers can access ten years of media news and analysis in the Archive