The IAPI board have identified a number of key areas that require attention at agency and industry levels in 2018. Based on consistent feedback from our member-base, the board have highlighted the area of commerciality as one of the key challenges in 2018 and beyond.
Our industry is the key driver of growth for our clients. Our offering is both unique and transformative. When executed well it is a potent force for innovation, differentiation, and building brand value for our clients. Since the start of the global recession in 2008/09, we as an industry have continued to deliver brilliant work for our clients. During this period the margins earned were understandably affected, while the value of the work was not. While it was important to support our clients through this challenging time, it is also important to recognise that the economic terrain has now shifted significantly for the better, while some of the behaviours have not.
As the leading representative and advocacy organisation for the Irish marketing and communications sector, we have a duty to ensure that the processes currently operating in our industry are best practice, fit for purpose and representative of the current business environment.
The objective of the commerciality committee is to help our member-base build successful commercial models across media, creative and production disciplines. Our success will be defined and mapped to an increase in the industry average operating profit margin.
Currently the average operating profit margin of IAPI agencies is around 10.9%. This is not a sustainable model as it exposes half of our industry to significant financial risk and going-concern issues. This average profit margin is too tight given the significant increase in GDP in Ireland over the last few years. This low average net profit is the greatest threat to our industry, and if not addressed and rectified, will cause catastrophic damage to our industry in the next down-turn.
We have set out the following 3-step process to address this issue.
Step 1
Meet a selection of our industry CFO’s and CEO’s to map the challenges faced across a broad cross-section of our industry. Based on these findings we will then look to identify the main consistent issues faced by our members. At this point we feel it will be important to involve pitch doctors and possibly clients, for two reasons. First, to understand the challenges faced on the client side to see if there are avenues we can explore to resolve these issues. Secondly, to educate our clients on best practice and the advantages for them, as well as for the industry in adopting them.
Step 2
Based on the learnings from the process outlined in Step 1, we will set out to create IAPI guidelines around a number of key areas, to help initiate best practice and standardise areas that have caused concern historically. We will also look to extend to all member agencies working templates that will help them navigate and understand the key commercial areas of their business.
Step 3
This step will be the final step in the process and will be primarily a process designed to effectively map the success or failure of the commerciality committees’ initiatives. This will be done by way of measuring hard KPI’s, while also combining soft metrics and commentary from member agencies around their experiences of the new initiatives and tools. While this committee will be run as an IAPI committee and initiative, we would be delighted to welcome any member agency that would like to get involved with the process. Involvement can range from insight-sharing to helping to refine/execute the process.
If you are interested in finding out more or to get involved, please email john.mathews@huskiesagency.com
