Advertising agency bosses' outlook becoming more cautious

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Donal O'Donovan

The outlook for the Irish advertising sector is increasingly downbeat insiders think - though most practitioners still believe the market and their own firm are on course for growth next year.

The number of insiders predicting turnover across the sector will "increase or strongly increase" has dropped from 74pc in 2016 to 58pc in 2017, according to the the Institute for Advertising Practitioners in Ireland (IAPI) Census - a survey that tracks attitudes within the industry.

A sizeable minority of agency bosses surveyed now think there is a realistic prospect of contraction. However, they are more optimistic when it comes to their own businesses. Some 74pc are still forecasting growth for their own agency, only modestly lower than in 2016.

That sentiment is buoyed by the prospect of new clients entering the market here, greater internationalisation, revenue from programmatic ads and growth in demand for specialist services including PR.

IAPI launched the Census five years ago - in the midst of the downturn - to measures the pulse of the industry across topics including agency revenue and billings, staffing, services and age/gender profile, by surveying senior stakeholders from IAPI member agencies.

That is done by surveying senior stakeholders from IAPI member agencies

The past number of years had been characterised by strong optimism, but that picture has become more mixed with stronger headwinds now expected through 2018, according to IAPI CEO Tania Banotti.

Despite challenges including the fallout from Brexit and the increasing monopolization of digital revenue by Facebook and Google, the past year was positive for the industry.

Trend data, based on the 12 agencies that participated in the research, show media billings rose by 11pc from €449.7m in 2015 to €497m in 2016 for these agencies.

Data from across the 13 creative agencies participating in the survey shows a 3pc fall in the average gross creative agency income, down from €42.2m to €40.8m.

While there are pressures in the home market, agencies across creative and media reported that 27pc of their income in 2016 came from international business, up from 11pc in 2015, according to the survey.

Even so, the cloudier outlook is set to translate into a slowdown in hiring. The 42pc of agencies that expect staff levels to increase this year, is well down from 77pc in 2016. Digital skills are in demand though, with four out of 10 firms self-reporting a skills gap that they are seeking to close.

IAPI's membership ranges on the creative agency side from a firm with fewer than 10 staff to the largest member with 150 people.

Within those firms the staff is overwhelmingly young - just 6pc of staff are over 51. Women make up a majority (52pc) across the industry, but that collapses to just one-in-five at the top CEO/managing partner level. That is well below the 27pc of women in top jobs in the UK. At board level things are better in Ireland, with women making up 28pc of company directors.