IAPI Industry Census 2014

Institute of Advertising Practitioners in Ireland

Industry Census 2014 in association with Amรกrach Research

II

Contents Introduction

4

Overview of Sector

9

Agency Income and Billings

13

Board of Directors

16

Staff breakdown

21

Age profiles

24

Forecasts 2014

31

Emerging Trends

35

Perceived Opportunities

36

Perceived Challenges

37

IV

Introduction Summary of key findings: numbers employed, confidence levels, challenges and opportunities ahead.

3

Introduction The Institute of Advertising Practitioners in Ireland (IAPI) is the trade body representing advertising agencies across the spectrum: creative, media, digital and full service.

We commissioned Amรกrach Research to conduct a survey of our members to capture key industry data. The research also captured insights and forecasts from senior stakeholders in member organisations on trends within the industry.

Of the 49 IAPI members invited to participate, data was submitted by 45 agencies, representing an excellent response rate of 92%.* Total

Creative

Media

Responses

32

22

10

Agencies Represented

45

23

22

The survey was conducted online. Fieldwork took place in April/May 2014.

Managing Directors or Financial Directors submitted the data.

IAPI had 49 member agencies in April 2014.

[IAPI has 52 members as of July 2014] Acorn

H+A Group

Mediacom

Radical

Atomic

Havas

MediaVest

Real Nation

Bloom

Havas Media Ireland

MediaWorks Ltd

Rothco

Boys and Girls

ICAN

Mindshare

Rubicon

Brando

In the Company of Huskies

Ogilvy

Shanley Media Solutions

Carat

OMD

Southern Advertising

Cawley Nea/TBWA

Initiative

Owens DDB

Starcom

Chemistry

iProspect

Parker Advertising

Target McConnells

Clear Blue Water

Irish International

Persuasion Republic

Thinkhouse

DDFHB

Javelin Group

PHD

Vizeum

Eighty Twenty

Lucidity Maxus

Pierce Media and Advertising Ltd

Zenith Optimedia

Firstcom Focus Advertising

McCannBlue

Publicis Dublin

Gaffney McHugh

MEC Global

Publicis D

4

*Some agencies responded as a group • Dentsu Aegis responded on behalf of Carat, iProspect, Lucidity and Vizeum.

• C ore Media responded on behalf of Clear Blue Water, Mediaworks, Mediavest, Radical, Shanley Media and Starcom.

• Group M responded on behalf of Maxus, MEC, Mediacom and Mindshare.

• Ogilvy responded on behalf of Ogilvy and Y&R. Since the research was concluded three new agencies, Thinkhouse, Real Nation and Publicis D joined IAPI.

Key Findings Numbers Employed Numbers directly employed by IAPI member agencies in 2013 was 1,545, compared to 1,281 in 2012, an increase of 20.6%.

More people are employed in creative agencies (including digital creative), 964 vs media agencies 581.

More people were hired in 2013 than 2012 – an increase of 13.4% in new hires.

964 full time employees in creative agencies in 2013 vs 787 in 2012 = +22% increase in staff.

581 full time employees in media agencies in 2013 vs 494 in 2012 = +17% increase in staff.

This means we have exceeded pre-recessionary levels of employment, based on our 2007 survey which showed 1,381 employed.

5

Age and Education Breakdown The average age of employees in the industry is 35.

The profile of those working in the industry is changing, with higher numbers of staff educated to Masters level. Anecdotally, this could be a mixture of new hires and people who are working as well as studying a part-time masters programme.

Board Composition We requested information on the composition of company boards for the first time. Boards are relatively small with male to female ratio of 75:25.1

Maternit y/Paternit y Leave This was also the first year that we surveyed members on the issue of maternity/paternity leave. It is encouraging that many agencies offer some form of paid leave and interesting to note that there are a variety of practices in place. A significant number of agencies also offer paid paternity leave.

Confidence In The Sector For The Year Ahead • T here has been a very significant shift in levels of confidence in the industry as a whole. Optimism is up and pessimism is down.

• 7 8% of those surveyed estimated turnover for the industry as a whole will increase in 2014. This is a massive shift on 2012 when only 20% of agency heads predicted an increase.

• 7 2% forecast that their own business will grow in 2014 and the average growth expected is 13%.

• M ore than half of all agencies expect their staff levels to increase by the end of 2014.

This compares favourably with wider industry.

Irish Times Top 1000 companies survey May 2014 says 11% of those surveyed have a female at board level.

The top 25 biggest companies have 25% female representation at board level.

1

6

Challenges and Oppor tunities

There are similar issues across the spectrum of creative and media agencies: • Cost pressures – the need to maintain and increase hourly rates • Staff recruitment and retention • Investment in pitches – time and money On a more positive note • Returning confidence of clients • Growth in digital billings and revenue

Conclusion IAPI’s Census 2014 points to a transformation in the fortunes of Ireland’s advertising industry.

Not only have members seen an improvement in their own performance, they are also much more bullish about prospects for the wider industry.

Crucially, they are also reporting improvements in some hourly rates and other indicators of growing customer demand, while most are looking to staff – up for recovery and growth.

However, there are a number of caveats to this otherwise positive picture – staff turnover is on the increase, reflecting more competition for skilled staff both within the industry and from other industries. There remains significant pressure on rates and the cost of new business pitching in Ireland remains high.

Tania Banotti

ceo

IAPI July 2014

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8

Overview of the Sector Agency type, numbers employed, breakdown of staff by department, composition of Board of Directors, creative agency income and media agency billings.

9

IAPI Play Bat for your team at the ping pong Summer Party.

Become an informed critic at our monthly Film Club.

Play for your life at Battle Of The Bands.

10

Profile of Sample – Agency Type

28% Media Agencies (including Digital)

3% Full Service Agencies

69% Creative Agencies (including Digital)

What type of advertising agency do you represent? *Question changed in 2014

Average Number of Full-Time Staff Employed

by X Agency Type 2014

2013

Min

Max

Min

Max

Total

2

167

2

137

Creative

2

119

3

96

Media

7

167

2

137

What is the total number of staff employed in your agency?

(Base: All IAPI member companies)

11

Number of Full-Time Employees X Agency Type 180 160

Creative

Number of Employees

140 120 100 80 60 40 20 0 0

5

10

15

20

25

Number of Agencies

180 160

Media

Number of Employees

140 120 100 80 60 40 20 0 0

5 Number of Agencies

(Base: All IAPI member companies) 12

10

Average Gross Creative Agency Income & Media Agency Billings

ome Average Gross Creative Inc €3,101,508 Average Media Billings €39,696,672 ome Median* Gross Creative Inc €5,569,399 Median* Media Billings €71,577,500

*The median is the middle point between highest and lowest volume turnover.

In order for us to determine what we as an industry contribute to the economy, please can you supply the following income details?

Creative agencies please supply gross income. (Gross income is defined as the total amount of fees, commission, mark-ups etc. earned during the year).

Media agencies please supply billings. (Billings is defined as the total amount of client investment put through your agency for the purchase of creative/media activities during the year).

13

Annual Income 12

10

Creative Agency Gross Income

e Millions

8

6

4

2

0

0

5

10

15

20

25

Number of Agencies

140 120

Media Agency Billings

e Millions

100 80 60 40 20 0

0

5

10

Number of Agencies

*Gross income is defined as the total fees, commission, mark-up’s etc. earned during the year. *Billings is defined as the total amount of client investment put through the agency for the purchase of media/media activities in the given 12 months.

(Base: All IAPI member companies) 14

IAPI Advocate The IAPI AAI Pitch Guidelines are the industry standard. We track pitches so members are protected.

CopyClear ensures that advertising standards are adhered to without compromising the quality of campaigns.

IAPI represent the industry to government and on the boards of the ASAI, JNRS and JNLR. We’re championing cross media integrated research in Ireland.

15

Incidence of having a Board of Directors Numbers with an Irish Board Yes 91% Yes 80%

Yes 95%

No 9%

No 5%

Total

Creative

No 20% Media

Does your agency have an Irish board of Directors? *New question in 2014

There were 29 agency responses (21 Creative and 8 Media) in relation to having a board and the total number of board members recorded breaks down as follows: Total

Creative

Media

Total Directors on Irish Boards

140

87

53

Male

106

66

40

Female

34

21

13

The average was calculated by dividing the above total by the relevant number of companies.

Average Size of Irish Boards Total

Creative

Media

Board Size

4.8

4.1

6.6

Male

3.6

3.1

5.0

Female

1.2

1.0

1.6

The Irish Times Top 1000 survey suggests female participation on the boards of the top 25 companies is 13%.

How many people sit on your agency’s Irish Board of Directors?

And how many of these board members are male/female?

(Base: All IAPI member companies) 16

17

18

Main Findings Breakdown of staff by department, age profile of employees, level of education, staff churn, maternity and paternity leave.

19

20

4

Chair/CEO/MD/Managing Partner

22 1 1

New Business/Marketing/PR

3

Account/Strategic Planning

5

1 1

Research/Information

12 12

Media Planning & Buying 2

Search/SEO *0

4

1 1

Other Media

2 12 11

Creative – Copywriters/Art Directors Creative – Digital

3 3

Creative – Design

3

4 4 4

Other Creative Studio Creative Services inc Art & Print Buying

1 1

Project Management

1 1

Digital Programmers/Web Designers

2

Digital Production

1

Digital Project Management

1 1

Digital UX/Information Architecture

1 1

3

2

3

Other Digital TV/Cinema/Radio Production

1

Production Administration

1 1

Senior Financial Staff

N/A

Junior Financial Staff

N/A

Human Resources/Training

*0

4

2

3 5

1 1 1

IT

2

PA/Secretaries All other staff

25 %

7

Account Management

Media Research

20 %

5 5

Other Executive Management

15 %

5%

10 %

% Breakdown of Staff by Department

1

3 3

2014 2013

Please provide your breakdown of staff by each of the following departments.

(Base: All IAPI member companies) 21

24

IAPI Grow IAPI regularly run day courses designed for creatives, executives, or media folk aimed at tackling client procurement depts, perfecting the art of pitching, learning how to write killer creative briefs and selling creative work.

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% Breakdown of Staff by Department – Creative & Media Total Staff (1545)

Creative (964)

Media (581)

Number

%

Number

%

Number

%

Chair/CEO/MD/Managing Partner

63

4%

27

3%

36

6%

Other Executive Management

82

5%

42

4%

40

7%

346

22%

264

27%

82

14%

New Business/Marketing/PR

9

1%

4

*

5

1%

Account/Strategic Planning

46

3%

37

4%

9

2%

Research/Information

20

1%

3

*

17

3%

192

12%

10

1%

182

31%

31

2%

7

1%

24

4%

2

*

0

0%

2

*

19

1%

8

1%

11

2%

186

12%

175

18%

11

2%

Creative – Digital

41

3%

33

3%

8

1%

Creative – Design

67

4%

59

6%

8

1%

Other Creative Studio

55

4%

53

5%

2

*

Creative Services inc Art & Print Buying

12

1%

11

1%

1

*

Project Management

14

1%

11

1%

3

1%

Digital Programmers/Web Designers

46

3%

31

3%

15

3%

Digital Production

14

1%

14

1%

0

0%

Digital Project Management

16

1%

9

1%

7

1%

Digital UX/Information Architecture

10

1%

9

1%

1

*

Other Digital

54

3%

14

1%

40

7%

TV/Cinema/Radio Production

19

1%

19

2%

0

0%

Production Administration

10

1%

10

1%

0

0%

Senior Financial Staff

47

3%

28

3%

19

3%

Junior Financial Staff

72

5%

40

4%

32

6%

6

*

3

*

3

1%

IT

13

1%

8

1%

5

1%

PA/Secretaries

34

2%

22

2%

12

2%

All other staff

19

1%

13

1%

6

1%

Account Management

Media Planning & Buying Search/SEO Media Research Other Media Creative – Copywriters/Art Directors

Human Resources/Training

Please provide your breakdown of staff by each of the following departments. *less than 1% / no response (Base: All IAPI member companies) (Base: All IAPI member companies) 23

Age Profile of Agency Staff X Type of Agency Total %

Creative %

Media %

2014

2013

2014

2013

2014

2013

-

1

1

1

-

-

21-25

12

11

10

10

14

14

26-30

26

28

22

26

32

33

31-40

40

39

43

40

35

36

41-50

15

15

17

18

13

11

51-60

6

5

7

5

4

5

61+

1

1

1

1

2

1

Under 21

Average Age 2014

2013

Creative

36

34

Media

34

34

What proportion of your staff fit into the following age categories?

Highest Level of Education Achieved by Those Working in Member Agencies 0.4% 0.2%

PHD Masters

8.5%

Postgraduate

9.1% 9.6%

14%

43.1%

Degree 13.6% 16.7%

Diploma 11% 11.3%

Leaving Cert 1.4% 1%

Other Don’t Know

10.5% 5.2%

2014 2013

Please state the percentage breakdown of the highest level of education achieved by your staff.

(Base: All IAPI member companies)

24

47.7%

Level of Staff Churn for Y/E 2013 261 230

127 85

69 41

44

35

2014 2013

Hired

Left to stay within the industry

Left to leave the industry

Let go/contract terminated

2014

2013

2014

2013

2014

2013

2014

2013

Creative

146

152

85

47

44

24

33

30

Media

115

78

42

38

25

17

11

5

In the year ending December 2013, how many of your staff were‌ (Base: All IAPI member companies)

25

Maternity/Paternity Benefits within IAPI Member Agencies Incidence of providing paid Maternity leave

Incidence of providing paid Paternity leave

No 47%

No 56%

Yes 53%

Yes 44%

(Base: All IAPI member companies)

59%

of companies provide paid maternity leave.

The 2013 IBEC Maternity Benefit report

How is paid maternity leave implemented?

Varies/depends on seniority of staff member

47%

Paid a portion of salary and keeps social welfare payments

35%

Paid full salary and refunds social welfare payments to company

18%

Paid full salary and keeps social welfare payments

12%

Paid a portion of salary and refunds social welfare payments to company

12%

Which of the following best describes how you implement paid maternity leave? Tick all that apply.

(Base: All who offer paid maternity leave)

26

27

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Our effectiveness hub www.adfx.ie provides information on the most effective advertsing in Ireland.

28

29

30

Forecast for 2014 Turnover Changes, Growth & Decline, Challenges, Opportunities and Trends

31

IAPI Nurture Get a start with Portfolio Lab and our induction guides. Quiz a panel of experts at the Big Grill and get support with our mentoring scheme. Learn more with the Diploma in Advertising and Digital Communications. Win the Doyenne Award, created by IAPI to celebrate women in advertising.

2014

Increase

2013

20%

2014

19%

2014

Strongly Decrease

2014

Remain the same

2013

Decrease

Strongly Increase

Estimated Turnover Changes for the Industry in the Year Ahead

78%

33%

2013

3% 47%

2013 2014 2013

How do you think the turnover for the advertising industry will change in 2014?

Future Forecast for My Agency

Grow

60%

Remain the same

2013 2014

Decline

72%

2014

2014

22% 33%

2013

2013

6% 7%

And what is your personal forecast for your agency in 2014?

Historical data suggests that business owners, managers and stakeholders are likely to be optimistic about their own business whilst being less positive about the outlook of their industry.

(Base: All IAPI member companies) 33

Expected Levels of Growth/Decline in 2014 Average % Growth Expected

Average % Decline Expected

2014 2013

2014 2013

N=23*

N=18*

N=2*

N=2*

3.5% 13%

15%

16%

What percentage growth do you expect for your agency in 2014?

What percentage decline do you expect for your agency in 2014?

*N=number of agencies that responded.

Decline

Remain the same

Grow

Expected Staff Levels for Year Ahead Will ....

2014

2013

33%

2014

34%

2013

2014 2013

56%

60%

9% 7%

By the end of 2014, do you expect your agency staff levels to increase, remain the same or decrease compared to current levels?

Base: (All those who predict either growth/decline) 34

“Faster turnaround and scope creep. Also continuous focus on digital channels.”

“Reduction in loyalty. More project driven relationships. Very price sensitive. More inclined to work with other agencies.”

“Increased need for specialist services.”

Creative Agencies “Much more aggressive and much less loyal. Aggressive on cost and expectation and less committed to supporting their agency in their efforts to deliver excellence.”

“Young, inexperienced clients who don’t really understand or value marketing or agencies and put way too much value on social media.”

Emerging Trends Over Past 2-3 years “Placing more emphasis on the role of media in total communications planning. Clients being persuaded by pitch doctors to tender business, to drive prices down.”

“Clients appear to depend more heavily on agency services while being ever less willing to acknowledge these as legitimate agency costs.”

“Client relationships are no longer as important as before. Decisions are driven by procurement needs in many cases and agency relationships are viewed as short term rather than long term partnerships.”

Media Agencies

35 35

Creative Agencies “Growth in scope of services and redefining the agency’s proposition.”

“Organic growth plus benefits and fall-out of mergers and acquisitions.

A returning confidence in existing clients.”

“Growing our revenue from clients outside of Ireland.”

“Digital expansion. International opportunities with existing clients.

In-house broadcast production.”

“Increased digital spends. Winning more through-the-line clients and increasing our traditional credentials. More and more clients need to understand the need for digital media and creative to be under one roof to be really effective and efficient.”

Perceived Opportunities for 2014 “To challenge the existing media agency hierarchy and to win business from them.”

“Strong pipeline for new business.

Growth in our digital team billings and revenues.”

“Diversification into new areas – sponsorship, data, learning/ development. Also to grow our research business.”

“Growing business particularly in the digital arena.”

Media Agencies

36

Creative Agencies “Managing growth of agency. Staff retention. Client profitability.”

“The decline in advertising in Ireland from clients with international brands and the increasing reliance on Irish brands.”

“Gearing up and the strain that may put on cashflow.”

“Maintaining a reasonable hourly rate so accounts can be staffed with experienced people.”

“Attracting key staff within the Irish market. Adapting our model quickly enough to technology changes within our industry. Continuing investment required for pitching for new business. Pressure to reduce rates within industry from procurement and other agencies.”

Perceived Challenges for 2014 “Increasing hourly rates productivity improvements.”

“Staff retention, pressure on staff costs. Client pressure on margins.”

“Public procurement & tendering process.”

“Salary costs/remuneration packages. Pressure on fees and trying to reduce our media costs.”

“Economic environment and pressure on costs.”

Media Agencies

37 37

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38 38

All Photography: Finn Richards Except the Pineapple image courtesy of Charlotte Audrey Owen-Meehan Illustrations: Markus Magnusson

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Institute of Advertising Practitioners in Ireland 8 Upper Fitzwilliam Street, Dublin 2.

(01) 676 5991 www.iapi.ie www.adfx.ie @IAPI_Updates