IAPI Industry Census 2015

Industry Census

Introduction Key Findings Sector Overview Agency Types Age Profile of Agency Staff Agency Income and Billings Staff Overview Breakdown by Department Breakdown by Gender Board of Directors Maternity Benefit Forecasts 2014 Agency Forecasts Energing Trends Perceived Challenges Percieved Opportunities

02 06 08 10 12 15 16 18 20 23 24 28 30 34 35 37

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.

4

Industry Census 2015

IAPI had 54 member agencies drawn from the Irish advertising industry in March 2015. This is the third year we have conducted the research allowing us to track progress.

Of the 54 IAPI members invited to participate, data was submitted for 45 agencies, representing an excellent response rate of 83%.

IAPI participating members

Industry Census 2015

The survey was conducted online and the fieldwork took place March/April 2015 Of the 54 IAPI members invited to participate, data was submitted for 37 companies representing 45 agencies.

Respondents self-identified as fullservice, creative or media agencies.

Creative and Full Service agencies have been combined under the heading ‘Creative’ for analysis purposes.

Full Service Chemistry DDFHB Epsilon Focus Gaffney McHugh ICAN In the Company of Huskies Javelin Rubicon Target McConnells Creative Atomic Bloom Boys & Girls Brando CawleyNea\TBWA Havas Irish International Isobar McCannBlue Ogilvy Owens DDB Persuasion Republic Publicis D Publicis Dublin Rothco Thinkhouse Media Carat Clear Blue Water Havas Media Ireland Initiative Universal McCann iProspect Maxus MEC Global Mediacom Mediaedge MediaVest MediaWorks Ltd Mindshare OMD PHD Media Radical Starcom Vizeum Zenith Optimedia Number of full time staff employed in creative and media agencies

5

6

Industry Census 2015

Industry Census 2015

IAPI’s Census 2015 points to a transformation in the fortunes of Ireland’s advertising industry in the last two years. 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 greater client confidence and investment. Most are staffing-up for recovery and growth. But there are a number of caveats to this otherwise positive picture. More competition for skilled staff both within the industry and from other industries, unceasing pressure on rates from clients, globalisation of the Irish market and the diminution of influence of Marketing Directors within client companies.

Agency Income Gross creative income is down while media billings continue to rise. One reason for the fall in creative incomes may be global accounts being run from London and other centres. Other factors may include: media owners creating more content for media agencies, global use of content simply repurposed in Ireland and clients re-using existing creative materials.

Gender A positive development is the number of women at CEO/ MD/ Managing Partner level has risen from 13% in 2013 to 18% in 2015. Boards are relatively small and women make up 22%, a slight drop on 2014. This compares favourably with the top Irish companies1.

Key findings Challenges and Opportunities There are similar issues across the spectrum of creative and media agencies: • Cost pressures and the need to increase hourly rates • Staff recruitment, retention and salary inflation • The investment required in new business pitches On a more positive note opportunities include: • Clients coming into investment mode • New areas of work for agencies • Delivering solutions in real time • Leveraging the power of data to demonstrate effectiveness.

Numbers Employed Numbers directly employed by IAPI member agencies in 2015 was 1,611 full time staff compared to 1,545 in 2014.More people were hired in 2014 than 2013: 357 people hired, a significant increase over 2013.However, 162 of them were ‘movers’ in the industry, twice the number of movers than in 2012 indicating lots of movement of talent and ‘cost of talent’ pressures as a result.

We are a young people’s business: 77% of people employed are under 40. The average age of employees in the industry is 36 in creative agencies and 33 in media agencies.

Numbers Employed

2014

2013

Full–Time Staff

1,611

1,545

Every two years we ask agencies about gender breakdown of roles. While the industry is completely balanced, 50% male 50% female in overall terms, there are a number of ‘gendered areas’.

There has been little change in the last two years. Account management is 71% female vs 29% male. Digital Programmers and Web Designers are 78% male vs 22% female. HR and training is 80+% female vs 20% male. Creative roles are the reverse – around 70% male vs 30% female.

Maternity/paternity leave It is encouraging so many agencies offer some form of paid maternity leave and interesting to note the variety of practices in place. There has been a jump in the number of agencies offering paid maternity leave from 53% to 73% this year. The uplift can up attributed to a couple of factors.

Some agencies who participated last year didn’t offer paid maternity in the 2014 survey but do this year. In addition, some of the new agencies taking part in the research in 2015 offer this benefit. A significant number of agencies also offer paid paternity leave.

Tania Banotti CEO, IAPI June 2015

1

Irish Times Top 1000 companies survey May 2014 says 11% of those surveyed have a woman in a board role. The top 25 biggest companies have 25% female representation at board level.

7

Sector Overview There has been a very significant change in levels of confidence in the industry as a whole. The shift in the 3 years we have been doing this research is dramatic.

In 2013 the first year of our research, nearly half of all agencies predicted a decrease in turnover. In 2015 no agency has. In fact 81% of agencies are predicting an increase in turnover.

10

Industry Census 2015

Industry Census 2015

Profile of Sample – Agency Type

59% Creative Agencies 30% Media Agencies 11% Full Service Agencies

For the rest of the report Creative and Full Service agencies have been combined under the heading ‘Creative’ for analysis purposes.

1,095

516

Q What type of advertising agency do you represent?

Total Number of Full-Time Staff Employed 2015

1,611

2014

1,545

2013

1,281

Base: All IAPI member companies

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

Average Number of Full-Time Staff Employed 2015

2014

2013

Creative

38

38

34

Media

26

25

27

Total

33

31

31

Min

Max

Creative

2

125

Media

11

135

Total

2

135

2015

Q What is the total number of full-time staff employed in your agency?

Base: All IAPI member companies

68% Creative & Full Service

32% Media

Number of full time employees by agency type

11

12

Industry Census 2015

Industry Census 2015

Number of Full-Time Employees

by Agency Type

2012

Level of Staff Churn

65% of Creative Agencies have 50 or less staff. 75% of Media Agencies have 50 or less staff.

13

2013 2014

120

357

100 80 60

261

40

Number of Employees

Number of Employees

140

20 0 Creative Agencies

Media Agencies

230

162 127

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

85

69 55

Creative

Age Profile of Agency Staff

85 35

44

54

Media Average Age

2015

2014

2013

Creative

36

36

37

Media

33

34

34

% Creative

Hired

Left to stay within industry

Q In the year ending December 2014, how many of your staff were‌

% Media

% Total

2015

2014

2015

2014

2015

2014

Under 21

*

1

0

0

*

*

21-25

10

10

17

14

12

12

26-30

24

22

33

32

27

26

31-40

39

43

35

35

38

40

41-50

21

17

10

13

17

15

51-60

6

7

4

4

5

6

61+

1

1

*

2

1

1

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

Left to leave industry

Let go/contract terminated

Industry Census 2015

Industry Census 2015

15

Creative

Annual Gross Income

Gross Creative Income (in millions)

Media Gross Creative income is defined as the total amount of fees, commission, markup’s etc. earned during the year.

14 12

Media billings is defined as the total amount of client investment put through your agency for the purchase of media/ media activities.

10 8 6 4 2 0 Creative Agencies

€33,963,637

160 140 Media Billings (in millions)

14

€2,936,814

120 100 80 60 40 20

Average Creative Agency Turnover [in Millions]

Average Media Agency Billings [in Millions]

0 Media Agencies

Gross Income Average Gross Creative Income* Average Media Billings* Total Gross Creative Income* Total Media Billings*

Agency income - creative and media agencies

* Average based on direct agency comparisons for 2014 and 2015

2015

2014

%

2,936,814

3,330,058

-12

33,963,637

32,156,310

6

58,736,271

66,601,163

-12

407,563,649

385,875,715

6

Q In order for us to determine how much our industry contributes to the economy, can you please supply your company’s gross creative income/mediabillings for 2014?

Staff Overview We are an industry of SMEs with the majority of agencies employing 50 people or less. Numbers directly employed

by IAPI member agencies in 2015 was 1,611 full time staff compared to 1,545 in 2014, an increase of 4.1%.

Three quarters of all agencies expect their staff levels to increase by the end of 2014.

There has been the greatest level of new hires in the industry for the last 3 years; 357 people were hired.

18

Industry Census 2015

Industry Census 2015

Breakdown of Staff by Department

Breakdown of Staff by Department

Creative Media

Creative

Media

Chair/CEO)/MD/Managing Partner

3%

6%

Other Executive Management

5%

7%

Account Management

22%

18%

New Business/Marketing/PR

2%

–

Account/Strategic Planning

6%

Research Information Media Planning & Buying

Number

%

Number

%

Total

%

Chair/CEO)/MD/Managing Partner

33

3

29

6

62

4

Other Executive Management

57

5

37

7

94

6

242

22

94

18

336

21

New Business/Marketing/PR

21

2

2

*

23

1

3%

Account/Strategic Planning

65

6

13

3

78

5

–

–

Research Information

4

*

2

*

6

*

1%

41%

Media Planning & Buying

10

1

209

41

219

14

Search/SEO

10

1

30

6

40

2

Account Management

Search/SEO

1%

6%

Media Research

1

*

5

1

6

*

Media Research

–

1%

Other Media

3

*

3

1

6

*

Other Media

–

1%

Creative - Copywriters/Art Directors

204

19

0

0

204

13

Creative - Copywriters/Art Directors

19%

0%

Creative - Digital

48

4

2

*

50

3

Creative - Design Creative - Digital

4%

–

68

6

0

0

68

4

Other Creative/Studio Creative - Design

6%

0%

40

4

0

0

40

2

Creative Services inc Art & Print Buying Other Creative/Studio

4%

0%

8

1

0

0

8

1

Project Management Creative Services inc Art & Print Buying

1%

0%

23

2

2

*

25

2

Digital Programmers/Web Designers Project Management

2%

–

37

3

3

1

40

2

Digital Production Digital Programmers/Web Designers

3%

1%

19

2

0

0

19

1

Digital Project Management Digital Production

2%

0%

14

1

0

0

14

1

Digital UX/Information Architecture Digital Project Management

1%

0%

9

1

0

0

9

1

Other Digital Digital UX/Information Architecture

1%

0%

11

1

17

3

28

2

TV/Cinema/Radio Production Other Digital

1%

3%

27

2

0

0

26

2

Production Administration TV/Cinema/Radio Production

2%

0%

17

2

0

0

17

1

Senior Financial Staff Production Administration

2%

0%

31

3

8

2

39

2

Junior Financial Staff Senior Financial Staff

3%

2%

41

4

21

4

62

4

Human Resources/Training Junior Financial Staff

4%

4%

2

*

5

1

7

*

IT Human Resources/Training

–

1%

4

*

6

1

10

1

PA/Secretaries IT

–

1%

24

2

9

2

33

2

All other Staff PA/Secretaries

2%

2%

22

2

19

4

41

3

All other Staff

2%

4%

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

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

19

20

Industry Census 2015

Industry Census 2015

Breakdown of Position by Gender - IAPI only ask for gender breakdown of staff every 2 years % 2015

21

Male Female

% 2013

Chair/CEO)/MD/Managing Partner

82

18

87

13

Base: All IAPI member companies providing gender breakdown

Other Executive Management

54

46

69

31

*Question changed in 2015

Account Management

29

71

30

70

New Business/Marketing/PR

73

27

42

58

Account/Strategic Planning

46

54

43

57

Research Information

33

67

50

50

Media Planning & Buying

43

57

50

50

Search/SEO

65

35

50

50

Media Research

67

33

0

100

Other Media

50

50

55

45

Creative - Copywriters/Art Directors

74

26

67

33

Creative - Digital

67

33

70

30

Creative - Design

71

29

71

29

Other Creative/Studio

70

30

64

36

Creative Services inc Art & Print Buying

50

50

67

33

Project Management

24

76

20

80

Digital Programmers/Web Designers

78

22

90

10

Digital Production

65

35

89

11

Digital Project Management

71

29

50

50

Digital UX/Information Architecture

44

56

60

40

Other Digital

61

39

50

50

TV/Cinema/Radio Production

33

67

47

53

Production Administration

47

53

29

71

Senior Financial Staff *

51

49

n/a

n/a

Junior Financial Staff *

23

77

n/a

n/a

Human Resources/Training

17

83

15

85

IT

80

20

86

14

PA/Secretaries

3

97

0

100

All other Staff

46

54

33

67

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

82%

18%

Chair/CEO)/MD/Managing Partner

33%

67%

29%

Account Management

65%

Research Information

71%

29% Creative - Design

33%

71%

35%

76%

Project Management

67%

TV/Cinema/Radio Production

51%

27%

46%

49%

Senior Financial Staff

54%

New Business/Marketing/PR

Account/Strategic Planning

74%

67%

26%

Copywriters/Art Directors

Search/SEO

24%

73%

71%

29%

Digital Project Management

17%

83%

Human Resources/Training

Breakdown of position by gender

33% Creative - Digital

44%

56%

Digital UX/Information Architecture

80%

20% IT

22

Industry Census 2015

Industry Census 2015

Percentage Breakdown of Staff by Gender 2015

2013

Male

50

49

Female

50

51

Base: All IAPI member companies providing gender breakdown

Q Please provide your breakdown of staff by gender

Board of Directors - Agencies with an Irish Board

Total Yes - 89% No - 11%

Percentage of Agencies with an Irish Board

Creative Media

% Creative

78% Male

22% Female

% Media

% Total

2015

2014

2015

2014

2015

2014

Yes

88

95

91

80

89

91

No

12

5

9

20

11

9

Q Does your agency have an Irish board of Directors?

Average Size of Irish Boards and Gender Breakdown

Percentage breakdown of board of directors

Base: All IAPI member companies

2015

%

2014

%

Male

3.7

78

3.6

76

Female

1.1

22

1.2

24

Total Board Size

4.8

4.8

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

23

24

Industry Census 2015

Industry Census 2015

Maternity Benefit - Incidence of providing maternity leave 2014

2015

Yes - 73%

Base: All IAPI member companies

No - 27%

Yes - 53%

No - 47%

Maternity Benefit - Implementation

Base: All who offer paid maternity leave

% 2015 Paid a portion of salary and keeps social welfare payment

56%

Paid full salary and refunds social welfare payments to company

33%

Paid full salary and keeps social welfare payments

0%

Paid a portion of salary and refunds social welfare payment

19%

Q Which of the following best describes how you implement paid maternity leave?

27% No Minimum Employment Period %

73% Yes

Base: All who offer paid maternity leave

2015

2014

More than 2 years

30

35

Up to 2 years

48

47

No minimum/depends on staff member

22

18

Q What is the minimum employment duration that applies before a staff member qualifies for paid maternity leave?

Agencies providing maternity benefit

25

26

Industry Census 2015

Industry Census 2015

Incidence of Paid Paternity leave

Base: All who provide paid paternity leave

2014

2015

Yes - 41%

No - 59%

Yes - 44%

Duration of Paid Paternity leave Up to 3 Days

Base: All who provide paid paternity leave Caution small base

13%

2015

5 Days

47%

10 Days

Up to 3 Days

2014

33%

14 Days Not specified

No - 56%

7% N/A

7%

5 Days

43%

10 Days

36%

14 Days

7%

Not specified

7%

Q How many days paid paternity leave do you provide to staff?

Duration of paid paternity leave

27

Forecasts 2015 IAPI’s Census 2015 points to a continued turnaround in the fortunes of Ireland’s advertising industry. 86% believe industry turnover will increase in the year ahead and a similar level (78%) forecast growth for their own agency’s turnover.

78% of agencies are forecasting that their own business will grow in 2015 and the average growth expected is 13%.

Industry Census 2015

Industry Census 2015

Changes for the Industry in the Year Ahead

Base: All IAPI member companies

Average expected growth/decline 23

29

13%

13%

Number of agencies that responded

Average percentage growth expected Average percentage decline expected

3.5% 20%

33%

19%

14%

Remain the same Decrease

3%

2 2

Strongly Decrease

2013

2014

2015

Q What percentage growth / decline do you expect for your agency in 2015?

47%

2013

15%

Strongly Increase Increase

← Decrease

Base: All those who predict growth/decline

81%

← Decline

Increase →

16% 78%

2014

2015

Expected staff levels for the year ahead

Base: All IAPI member companies

Q How do you think the turnover for the advertising industry will change in the year ahead?

Forecast for my own agency

Grow →

Base: All IAPI member companies 33%

56%

70%

Grow 60%

34%

7%

9%

2013

2014

Remain the same

30%

72%

← Decline

Grow →

Decline 60%

78%

2015

Q Do you expect your staff levels to increase, remain the same or decrease?

Grow 33%

22%

22%

2013

2014

Remain the same Decline

6% 7%

Average % of clients using procurement dept

2015

39% 35%

2015 2014 2013

41% Q What is your personal forecast for your agency in 2015?

31

18

Growth →

5%

← Decline

30

Q What percentage of clients use a procurement department for agreeing fees?

32

Industry Census 2015

Decline 0%

Industry Census 2015

Stay Same 22%

Grow 78%

Future forecast for my agency

2015 & Beyond IAPI’s Census 2015 points to a transformation in the fortunes of Ireland’s growing advertising industry There has been strong growth in the number of staff hired in 2014 and this is set to continue in 2015 with 7 in 10 agencies expecting their headcount to grow by the end of the year.

Procurement remains a thorny issue - 39% of agency clients use a procurement department, a process that is widely believed to have a negative knock-on effect within the industry (i.e. margins, client relationships, service demands/ delivery etc.)

33

34

Industry Census 2015

Industry Census 2015

Emerging Trends Over Past 2-3 Years

Perceived Agency Challenges for 2015

Creative

Media

“Disconnect. The significant value of personal relationships are lost in the electronic world.”

“More strict procurement. Longer credit terms."

“Clients more procurement led.

Clients still unwilling to take calculated risks, still very cautious.

Imbalance in relationship still exists – supplier vs. partner."

“Client service being expected to be ‘always on’.”

"Younger marketing executives.”

“Move to consolidate agencies, more services coming from one agency.

Marketing Directors now replaced by Commercial Directors.”

Creative Media “Short term planning for media spend (quarterly) gradually giving way to longer term planning (1+ years).”

“Much more centralisation and globalisation of the Irish market with more and more accounts being awarded and controlled from outside the State. Convergence is also rapidly changing our client businesses and the services they require from agencies.”

“Procurement led negotiations.”

“More movement to procurement negotiations and pitch doctors/ auditors driving down rates leading to agencies pitching at unrealistic media costs.”

“Recruiting great staff. Higher overheads including rents, wages etc. Continuing pressure from procurement on rates.”

“Pressure on hourly rates, increased competition in the creative space from traditionally non-creative agencies.”

“War for talent especially as the economy improves, wages will rise.

Increased tendency for clients to go to pitch as procurement departments continue to rise in power & seek to justify their existence. Increasing complexity for clients around the various offerings & services other agencies claim to provide."

“A lot of work is moving out of the Irish economy (KBC Bank, Aer Lingus) and a lot of global clients are streamlining services to take place in other markets with small local adapts to global creative being used.”

“To continue to meet the demands from our clients while maintaining our margins. Retaining key staff in a very competitive employment market.”

“To break through client & intermediary inertia and get them to look beyond the existing media agency hierarchy when considering which agencies to pitch for business.”

“Increased focus on digital procurement. Margin pressures.

Staff retention.”

“Salary rates added to lack of suitably qualified digital staff.”

“Increased client focus on digital.

Availability of good quality digital staff. "Pressure on digital staff retention/salaries due to Google/ Facebook/LinkedIn presence.

Continuing influence of procurement.

Continued margin pressure."

35

36

Industry Census 2015

Industry Census 2015

Perceived Agency Opportunities for 2015 Media Creative “Indigenous growth. Clients slowly coming into investment mode.

Opportunity to make better content in digital environment.”

“Leveraging the power of data to inform KPIs for clients and improve client retention. Deliver creative and innovative solutions that can evolve in real time in the digital eco-system.”

“Our main opportunity is to go back to being a niche specialist agency working on a more consultancy basis.”

“Increased focus and investment in new areas such as shopper marketing. Conversions across channels.”

"Clients slowly coming into investment mode..."

“Advertising revenues increasing so new business and increased revenue from existing and new services.”

“Programmatic. Data analysis and visualisation. Content creation.”

“Data and technology advances.

New business drive based on past experience. Growth of digital and data offerings. Growth of social.”

“Grow existing client base. Embrace digital growth. Additional global networks wins.”

37

Institute of Advertising Practitioners in Ireland 12 Clanwilliam Square, Dublin 2 01-6765991 www.iapi.ie @iapi_Updates