UK Agencies Now More Optimistic About Business Climate
The majority of UK communications agencies are now more optimistic about the business climate than they were three months ago, according to new research from the Communications Agencies Federation.
The latest Agency Barometer survey shows that a total of 65% of agencies and consultancies have increased their income forecasts for the coming year, compared to just 21% revising them down during the same period.
The survey supports a recent report from the Institute of Practitioners in Advertising, which suggests that a rising tide of corporate optimism could cause adspend to climb to levels not seen since the height of the dotcom boom (see Bellwether Reveals Increasing Optimism For Advertisers).
The Communications Agencies Federation research shows the climate is improving rapidly for smaller agencies and those that are not advertiser specific. However, larger agencies are yet to experience the uplift and just 50% of those with a gross income in excess of £10 million claim to have revised their forecasts upwards.
Budgets committed to new media activity were found to be the most buoyant in the fourth quarter of last year as advertisers turned to more accountable and cost-effective forms of marketing.
The research shows that traditional media budgets remained under pressure, but not as much as in the third quarter, as the improving economic conditions gave rise to a level of optimism that could translate to an increase in marketing and advertising expenditure.
Almost 70% of agencies and consultancies surveyed indicated that they were more optimistic about their financial prospects that they were three months ago, with only one in three reporting they were less optimistic.
There was also good news on the recruitment front with almost 50% of 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 14% of respondents expecting to see a reduction in the number of full time staff.
Commenting on the findings, Matthew Hopper, chairman of the Marketing Communication Consultants Association said: “It is good to see that the predicted uplift so long talked about is coming through on the ground. However, it is the small and medium sized agencies that are seeing the most movement and in the areas of one to one communication such as field marketing, direct marketing and new media.”
Graham Lancaster, chairman of the Communications Agencies Federation, added: “I warmly welcome these more optimistic findings from the communications agencies sector, but we should temper this with the knowledge that the increase in confidence comes from a painfully low base. The findings I believe reflect a leaner and fitter agency sector, ready and coiled to take advantage of wider domestic and global economic recovery.”vantage of wider domestic and global economic recovery.”
A consensus of recent forecasts complied by MediaTelINSIGHT suggests that the UK advertising market looks set to pick up during 2004 with expenditure expected to rise by 4.4% on average over the coming year. However, recent research from the Chartered Institute Of Marketing suggests the economic recovery will not be as swift as first thought (see Marketing Spend Expected To Grow By 3% During 2004).
Communications Agencies Federation: www.cafonline.org.uk
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