IAPI conducted a Leaders Pulse Survey at the end of Q1 2021. This is the third such survey in the last 9 months – the first two taking place in June and October 2020.
Three quarters of IAPI leaders took part in the survey – 26% from media agencies, 47% from creative agencies and 18% from PR, Event & Experiential agencies.
“Over the past year and a half, I have observed the industry put their heart and soul into their work, the wellbeing of their teams and business success for their clients. I am more than pleased to see that this hard work is starting to pay off again.” says Charley Stoney, CEO, IAPI. “If Q1 performance can be up YOY over lockdown, it bodes very well for the remainder of 2021. While agency leaders predict a 7% growth in revenue this year, I predict double-digit growth for our industry and am confident I will be proved right.”
Reflecting on their 2020 performance, the actual YOY decline in revenue and media billings for 2020 was better than anticipated, due to an unexpectedly strong Q4. The industry’s performance for 2020 was 7% ahead of the forecast made by IAPI Leaders in the Oct 2020 Pulse Survey.
40% of Media agencies showed an increase in fee income and 25% of Creative agencies. PR and Communications agencies appear to have had a comparatively good year with only 1 in 4 experiencing a decrease in revenue YOY.
Media agency respondents report media billings decreased YOY as expected but, not as much as forecast in Oct 2021, when they forecast a decline of over 10% YOY. The average media billings decline YOY for 2020 is now estimated at -8%.
2020 also saw an increase in global business for IAPI members with an average of 19% of the client base being International (clients based outside Ireland), vs. the 2019 Census figures of 15% on average. On average respondents indicated that 18% of their work was for International markets, with one quarter of agencies stating that 30% of their work was for international markets.
Overall the industry estimates a marginal growth of 2.4% in revenue income for Q1 2021 vs. Q1 2020. Media agencies are ALL showing an increase YOY (2021 vs. 2020) for Q1 – the average increase is estimated at 5% with an average growth in Media Billings of 6%. 1 in 4 Creative agencies show a growth of 20% or more for Q1 2021.
There has been a huge amount of new business activity in 2021 so far, with 63 new pieces of business have been gained by respondents this year. 9 out of 10 agencies have gained new business in Q1.
Interestingly nearly half of the Creative business gains did not require a Pitch, reflecting the current thinking that a full-blown pitch process is not always appropriate for demonstrating creativity. For PR & Communications only 17% of business gains came through pitching.
Having said that, the majority of agencies (9 out of 10) have taken part in pitch processes in Q1 2021, making the average number of pitches per agency at 4 so far this year. 70% of all pitches were managed directly by Clients and 30% by Pitch Consultants. 6 out of 10 creative pitches, even those involving networked agencies are being managed directly by clients. The reverse if the case for Media pitches, where 70% of pitches are managed by consultants and clients appear most inclined to manage Events/Experiential and PR pitches themselves.
The industry as a whole is optimistic about 2021 with an average predicted growth of 7% in Revenue/Fee Income. Again, predictions differ slightly when you look at each type of Agency Services.
- All bar one Media Agency respondent predicted a growth in Revenue Income for 2021.
- PR and Communications agencies are also optimistic with 3 out of 4 predicting a growth in revenue.
- Nearly one third of Creative agencies predict income growth of 15% or more, with all bar one predicting some level of growth.
- ALL Events & Experiential agencies predict growth in 2021, with one third anticipating growth of 15% or more.
Maintaining agency culture is the biggest challenge facing (75%) agency leaders (and all agency folk) at the moment. The sector is already planning “Return Events” for their teams to give everyone something to look forward to as the country starts to open up.
Leaders are also concerned about motivating their teams (66%) and building and maintaining relationships (63%) as we continue to work remotely.
The industry as a whole, is still very much concerned about helping to maintain their teams’ mental health. 8 out of 10 agencies are actively encouraging their staff to engage with the TABS & IAPI Employee Assistance Programme – smash.
There is still uncertainty over the exact timing and nature of the industry’s Return to Office. 6o% are still working on it with only 2 in 10 agencies having firm plans in place. However, 16% of agencies are already open for staff who wish to work from their offices safely.
The vast majority of Industry Leaders anticipate that their staff will return to the office either part-time or full-time. 6 out of 10 believe that over half their workforce will work part time from home in future. Similarly to their teams, agency leaders also see themselves working from home for 1 or more days a week in future. This bodes well for systematic behavioural change in the sector and an allowance for much more flexible working patterns.
While it is anticipated that the majority of staff will be using the office part-time, it seems that only 18% is actively considering a reduction in space right now. However, with another 40% intending to consider it, smaller, less expensive office space could become a future trend for the sector.
