Business-to-business marketing communications agencies continued to grow in 2007 with the top 40 consultancies reporting an average increase of just under 21 per cent in growth profit, and 22 per cent in staff. B2B Marketing’s annual Agency Survey shows the agency community is experiencing its fourth consecutive year of growth, suggesting the sector remains buoyant. However, given that these figures represent the previous financial year, (concluding in either April or December), next year’s results may look different as the credit crunch starts to bite.
The best evidence for this comes in the response to the survey question “How would you describe the state of the market?”. This question was designed to reflect current perceptions of market strength, rather than measure financial performance from last year and the results arguably function better as a barometer. Respondents were split three ways between describing the market as buoyant’, static’ and challenging’. This is not surprising, although it represents a significant shift from last year’s survey, when the overwhelming majority (75 per cent) described the market as buoyant’ and only 15 per cent as challenging’.
Having said that, the 2008 survey was conducted against a backdrop of bank collapses on Wall Street and mergers in the UK, which would certainly undermine optimism surrounding business prospects. At the same time, there is little evidence agencies are experiencing anything more than a general softening of the market, and it is too soon to say what impact a recession would have on this sector.
Top score
With regards to individual agencies, the results highlight the continuing success story that is Gyro International. The largest B2B agency in the UK has gone from strength to strength since this survey was first conducted in 2005, and must be recognised as a genuine rival in scope and reputation to some of the largest, mostly consumer-focused, marketing agencies. Gross income figures of £50 million and year-on-year growth of 35 per cent are significant achievements, particularly in the current climate.
Gyro’s focus over the last year has been developing its international offering and it now boasts significant presence across Europe, in Scandinavia and beyond. This growth is testament to the unstinting efforts of CEO Gary Brine and his team.
Absent without leave
There are a number of absentees from this year’s league table. Sadly, Flamethrower – which was ranked 35 in 2007, and one of the fastest growing consultancies – ceased trading earlier this year following the failure of one of its clients to pay its bills. Another significant absentee – but for a different reason – is Tidalwave, which has been a top ten agency over the past three years, but this year declined to provide figures following a change in business strategy. RCA is also no longer on the list – it has ceased trading under that identity re-emerging as a two-man band consisting of ex-RCA owner Tony Carpenter and Mark Wells, its ex-creative director.
New names to appear include Amaze, which incorporates last year’s 27th-placed agency Pavilion and Swindon-based HSM. Further down the league table, eMarket2, Black Pig and Precis Marketing are also new names for the league table, demonstrating that the conveyor belt of startup agencies is continuing to function.
Underachievers
As usual, companies at the bottom end of the league table are well-represented in the list of fastest-growing agencies, which is due to the fact it’s easier to achieve significant percentage growth figures when starting from a low base. However, that is not to belittle the achievements of smaller agencies as generating momentum to move a business forward is hard in any circumstances. Special mention should be made of Precis Marketing, which has achieved phenomenal growth between year one and two, and is a company to watch for the future.
This table also highlights impressive performances at the top end, particularly by Second2 and Volume. The latter is pursuing a strategy of expansion by acquisition, buying in complementary skillsets with the aim of building a multi-function marketing services operation with the ability to cut costs and ease relations with the procurement personnel. This is an innovative way of approaching the changing marketing environment, and MD Chris Sykes and team at Volume should be commended for their vision.
Concep Global has also demonstrated impressive incremental growth,
largely through overseas expansion. As a creative agency with a core strength
in email, its single-minded focus on the B2B sector appears to be paying off.
Digital migration
In terms of the disciplines offered by agencies and their popularity, it seems traditional techniques are finally being overhauled by online or digital ones.
The most popular discipline’ or skillset amongst B2B agencies is website design/management’, which was identified by 40 per cent as being amongst their
top three services offered. This is a jump of 13 per cent on last year. At the same time, direct mail and advertising have declined in popularity, slipping from many agencies’ top three services. Indeed, in the last year, B2B firms have embraced the word digital’ – which was assumed to be a catch-all for any kind of marketing using the Internet – with 33 per cent of agencies putting it amongst their top three services.
But whilst the service proposition may be evolving, that’s not to say they are abandoning traditional marketing techniques. Far from it: direct mail is still offered by 89 per cent of agencies (up from 2007), whilst print advertising is handled by 76 per cent and exhibition stand design by 78 per cent. Traditional marketing channels continue to have an impact in promoting business products and services, and as long as this is the case, agencies will continue to offer them.
This year’s survey represents a year in transition for B2B agencies as they adopt new techniques and adjust to a harsher economic climate. Those who adapt fastest and most convincingly to this new environment will undoubtedly perform well in next year’s league table.
B2B Marketing’s Agency Survey will be rerun in October 2009. If you are interested in participating, email editor Joel Harrison at [email protected] in August.
2008 B2B MARKETING COMMUNICATIONS AGENCY LEAGUE TABLE
2.34
