Agencies have cautious outlook for rest of year

HERNDON, VA: Most agencies are expecting conservative growth for full-year 2012 after seeing small profit increases so far, according to a study from software provider Deltek.

HERNDON, VA: Most agencies are expecting conservative growth for full-year 2012 after seeing small profit increases so far, according to a study from software provider Deltek.

Seventy-eight percent of agencies said they expected “moderate” growth this year, the report found. Outlooks were more positive in the US, where 20% of agencies said they anticipated “fast” growth, compared with 15% of respondents who said the same in Europe. Six percent of agencies predicted moderate growth declines this year.

Agencies have reported an average 3.45% profit increase to date this year. Permanent staff has grown less than 2% this year.

One way agencies can increase profitability is to improve some internal processes, said Drew West, director of product marketing at Deltek. The report found that while 75% of agency hours are used for client work, only 70% of that time is billed for. Two-thirds of agencies also reported unnecessary administrative expenses.

“Many firms operate with some fragmentation, with one end of the business somewhat disconnected from the other,” West said. “One of the consequences of this is billing issues, and some potential revenue left on the table.”

Agencies should move from operating in independent silos to integrating across departments, West said.

“Agencies can improve by unifying their processes and bringing everything together, including the back and front offices,” he said. “Better visibility of the different systems and processes being used leads to better communications across the agency.”

Deltek's Clarity Agency Report surveyed more than 300 PR, marketing, and advertising agencies in the US and Europe.

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