Recession Over For Agencies?

According to Willott Kingston Smith’s Marketing Services Monitor for February 1994, operating profit per head in agencies has shown the first increase since Monitor started in January 1992. The index has risen 5% and, according to WKS represents the beginning of recovery.

However this improvement in efficiency has been achieved despite a further decline in the aggregate gross income earned by the agencies in the sample; this reduced income has been handled by fewer people and therefore gross income per head has improved whilst employment costs per head have remained similar. According to the report, agencies are reporting that clients are becoming slightly more reliable when it comes to committing to advertising expenditure.

Among media independents, there was still a decline in operating profit per head, despite a substantial cut in average employment costs per head. Billings and gross income fell slightly. Media independents are the only companies in the marketing services sector where operating profit per head has almost kept pace with inflation.

INDEXED OPERATING PROFIT PER HEAD

Operating profit index (1985 = 100)

Willott Kingston Smith – Marketing Services Monitor071 304 4646.