Lower profits in the design sector for large firms
Design Week, the online design magazine, this week quotes from a report on the state of the top 30 UK branding and design agencies in 2019.
It reports that gross income for these large firms fell for the first time in nine years. It decreased by an average of 2.3%.
Some other highlights
- Average operating profit margins decreased from 14.9% to 9.9%.
- Operating profit per head fell from £16.6K to £10.7K, against a target suggested by MKS of £15K.
- 20 of the top 30 firms saw profits fall this year.
One reason given was economic uncertainty, leading to lower spending from clients and project delays. Note that large firms such as the top 30 are more likely to aim for large projects, which are often the ones that can be the most susceptible to economic vagaries.
Of these top 30 firms, it is interesting to note that the independents fared better than did the group agencies.
The rest of the UK independents
Accurate statistics regarding smaller UK independent creative agencies is harder to get. At Synergist, we see talented, hard-working independent agencies having to cope every day with rollercoaster economic and political uncertainties over the years. Such conditions are obviously unpredictable, but what is predictable is the fact that such rollercoasters happen.
It is times like these that a job costing and project management platform of substance can make a big difference. Getting the fundamentals right, being on top of things and knowing exactly where the profitable and unprofitable pockets of the business are will suddenly have a powerful impact on an agency at such times.
Synergist users tell us of these advantages, for example:
"I can report on job profitability to the Board based on job types so they know which area of the business is most productive. For the last two years, the figures from Synergist are as accurate as that of our accounts package. There are many decisions the Board can now make by using the information that Synergist provides through its reports.”
UK digital agency
“Synergist pulls everything together. We track income, work in progress, cost overruns, margins, time utilisation, profitability analysis – everything comes from Synergist.”