Media Buyers Lead Recovery

According to Willott Kingston Smith’s latest Marketing Services Monitor, media independents are way ahead of other marketing services sectors as they report the highest level of annual gross income since the survey began in September 1992. All other sectors are still running at lower levels than in September 1992.

The operating profit per head being earned by media independents has exceeded the rate of inflation for the first time since the survey began; gross income grew by nearly 9%. This upsurge of business in real terms can be explained because fixed costs, rather than staff costs, have remained fairly static, whilst revenue increased. The survey suggests three reasons as to why media independents are performing better:

• A number of agencies no longer have a sufficiently strong capital base to obtain credit recognition from the media owners, so they have been entering into alternative arrangements with media independents.

• It may represent a desire of advertisers to centralise media buying away from full service shops.

• The increase in the range of media which advertisers can use as a window for their product is expanding the total advertising spend.

Advertising agencies have reported increased amounts of business and increased productivity, but this has not led to increased operating profits. Agencies’ gross income has increased in absolute terms so the increase in productivity is not merely due to a reduction in staff numbers, but also to a rise in the amount of money being spent by advertisers. The survey does conclude that the future looks brighter than it did a year ago. Direct marketing has been the biggest loser during the later stages of the recession, as gross income slumped by nearly a quarter from the figures published in September 1992.

Willott Kingston Smith: 071 304 4646