B2B marketing agencies continued to grow strongly during the 2006 financial year, reporting an average increase in gross profit of 18 per cent. This is down from the rather more spectacular figure of 30 per cent reported in last year’s Agency Survey, but is still impressive, and reflective of the general health of the business marketing sector. The new figure represents the third consecutive year of strong growth – the first B2B Marketing Agency Survey back in 2004 demonstrated growth amongst consultancies of 12 per cent per year.
The B2B Marketing Agency survey is the most detailed, most accurate and most representative poll of business marketing agencies, with a cut-off of at least 50 per cent of revenue achieved through work for B2B clients.
Congratulations must be said, once again, to Gyro International, which tops the league table of agencies for the third year running. More significantly, its growth has escalated to the point where it is effectively out of sight of its nearest rivals. True, it isn’t the biggest marketing agency in the world, or even the UK, but to achieve this level of growth predominantly through B2B clients is a very special achievement and requires talent, dedication andabove all exceptional leadership. Much of Gyro’s growth has been achieved through acquisition, both within the UK (most notably of Manchester-based Cicero) and overseas, but that does not detract from the achievement. It must surely be only a matter of time before this 350-strong B2B agency giant floats.
Winners and losers
Whilst most agencies reported strong growth figures, this trend was not universal, with some contributors reporting a decline in revenues during this period. This may reflect the more changeable economic climate during the financial period in question, or the increasing unpredicatability of financial planning for agencies, given the lack of strategic direction or commitment often offered or required by clients.
This conclusion is supported in the responses to to the survey question regarding ‘biggest challenges facing B2B marketing agencies’. Pressure on clients budgets was, for the third year running, by far the biggest area of concern for agency practitioners, selected by 44 per cent of respondents. However, staffing was confirmed as an issue of growing concern, attracting the second largest response to this question (23 per cent, up by five per cent on the previous year). Perhaps surprisingly, ‘the role of procurement’ and ‘ability to measure campaign effectiveness’ have both declined in the last 12 months.
Generally though, optimism remains high amongst the B2B agency community, and generally unchanged from last year, with three quarters of consultancies describing the state of the market as ‘buoyant’. Only 15 per cent selected ‘challenging’.
Traditional channels still hold sway
Despite the growing influence of digital channels, the most popular services/disciplines offered by B2B agencies are still ‘traditional’ ones; specifically direct mail, branding and advertising. Email and website design/construction have entered the top five, and are expected to take a greater share of budget next year, remain some way off challenging the dominance of snail mail.
This may be a consequence of the fact that the specialist B2B email solution providers (e.g. Concep and Newsweaver) are not represented in this survey and that if they were, the picture would be different. Alternatively it may be because direct mail continues to generate results, because integrated campaigns are the best way to reach a B2B audience, and as a result traditional channels will always be part of the mix.
Fast movers
In terms of who B2B marketing agencies are working with, the top five industry sectors were largely unchanged from kast year’s B2B Marketing Agency Survey, with technology the out-and-out leader, closely followed by business services and professional services. Interestingly, although the decline of the UK’s manufacturing base has been well documented, companies in this sector still represent a significant proportion of the client base of over a third of B2B agencies. Meanwhile, construction has overtaken automotive, perhaps reflecting both the death of the UK car industry and the property boom.
As usual the list of fastest growing agencies is dominated either by those coming from a very low base, or who have grown by acquisition. Marketecture, Flamethrower and Itineris fall into the former group, whilst Gyro and Loewy fall into the latter. Whilst the achievements of these agencies should certainly not be denigrated quite the opposite it is useful to focus on those agencies in the ‘fastest growers’ top ten that don’t fall into either camp. Cognito and The Marketing Practiceboth built on their base to put in strong performances during this period and may prove to be the agencies to watch out for next year. Outside of the top ten, significant year-on-year growth was also reported by Mason Zimbler, Tidalwave and Second2.
Data shown relates to the 2006 financial year, typically ending December 06 or April 07, or nearest equivalent. To qualify for this league table, marcoms agencies had to generate at least 50 per cent of their income from B2B clients. The following agencies completed the survey but were not included in the league table because they did not meet this criteria: Intelligent Marketing, 23 Red, Dig For Fire. Ogilvy Primary Contact was prevented from supplying financial data due to the Sarbanes Oxley legislation.
