Wyomissing, Pa.— Though the economy continued to falter, the financial data reported in Second Wind’s 2010 Annual Agency Survey Report shows that advertising agencies had a stable year in 2009.
“Financial results showed that average total billings dropped only slightly from $5,634,792 in 2008 to $5,610,991 in 2009, representing a 0.4 percent decrease,” said Laurie Mikes, Second Wind COO. She added that the composition of billings remained consistent with a few notable decreases: creative billings dropped 12 percent from $839,790 to $736,676; photography billings dropped 27 percent from $58,083 to $42,638; public relations billings dropped 29 percent from $217,374 to $153,477 and outside purchases (typically freelancers and other suppliers) dropped 29 percent from $431,154 to $305,510, representing the largest billings decrease.
“All of these decreases,” Mikes noted, “are symptomatic of overall client budget cuts and shifts in how smaller ad agencies and marketing firms operate.”
Second Wind, which is in its 23rd year, is a member-based organization allowing more than 750 midsize and smaller ad agencies and marketing firms to share their expertise. Second Wind surveys its members annually on topics including financial/accounting, payroll/employee benefits, operations, technology, new business and planning.
Mikes pointed out that traditional media remains the largest segment of agency billings, accounting for more than 36.9 percent of total billings. This year the survey also gathered numbers for online media, which represents 4.6 percent of total billings or $256,793.
“This number is sure to grow in coming years as clients push more and more of their media dollars to online vehicles and opportunities,” said Mikes. “The strength of these numbers also reflects the fact that the media continues to be an area where agencies provide unique and valuable services.”
One unexpected decrease occurred in digital and internet-related billings, which fell 21 percent from $353,712 to $280,401. Mikes suggested this drop may represent decreased client expenditures in website design, programming and social media management, among other services, and might be directly attributable to the lengthy recession’s impact on marketing budgets.
Account service billings remained stable at $696,466, representing a slight increase from 2008. Account planning/strategy/research also remained stable at $220,404. “This bodes well for agencies,” said Mikes. “It shows that although clients may not be putting money toward new programs and initiatives, they are staying engaged with their agencies and allowing them to service current business and possibly entertain new opportunities.”
Margins were erratic across the board and increased or decreased in several categories. Most notably, the survey shows that traditional media margins fell a substantial 6.7 percent from 14.9 percent in 2008 to 8.2 percent in 2009. Said Mikes, “This really demonstrates how agencies are talking a big hit on traditional media commissions. However, agencies are receiving an impressive 9.2 percent margin for online media, despite the fact that most online media do not offer the traditional 15 percent agency commission.”
Printing margins were reported at 31.1 percent in 2009, up from 18.3percent in 2008. “As agencies have continued to lose other sources of income, printing billings may be helping to offset those losses,” remarked Mikes.
Even with the dramatic shifts in billings, margins and costs from 2008 to 2009, agencies reported smaller decreases than anticipated by many. Total AGI in 2009 was reported as $2,298,155, which is down 12 percent from $2,613,008 in 2008. Overall, responding agencies ended the year with an average net profit (before taxes) of $246,303, accounting for 10.7percent of AGI. This is a substantial drop from 2008, but agencies should feel good about ending 2009 in a profitable position considering the many challenges they faced throughout the year.
In addition to annual surveys, seminar and workshop opportunities, members of Second Wind benefit from daily access to critically needed business resources and creative information programs. A major resource is Second Wind Online, with its high-powered, data-rich Knowledge Base, and popular members-only Forums.
For more details on Second Wind’s 2010 Annual Agency Survey Report or other Second Wind offerings, call 610-374-9093, email info@secondwindonline.com; or visit www.secondwindonline.com
# # #
Second Wind Contact: Laurie Mikes
laurie@secondwindonline.com
Second Wind Ltd.
P.O. Box 6284, 1424 Penn Avenue
Wyomissing, PA 19610-0284
610-374-9093
Second Wind Online
Find Second Wind on Facebook
Follow Us on Twitter
What's Working at Small to Mid-size Ad Agencies
Second Wind RSS
“Financial results showed that average total billings dropped only slightly from $5,634,792 in 2008 to $5,610,991 in 2009, representing a 0.4 percent decrease,” said Laurie Mikes, Second Wind COO. She added that the composition of billings remained consistent with a few notable decreases: creative billings dropped 12 percent from $839,790 to $736,676; photography billings dropped 27 percent from $58,083 to $42,638; public relations billings dropped 29 percent from $217,374 to $153,477 and outside purchases (typically freelancers and other suppliers) dropped 29 percent from $431,154 to $305,510, representing the largest billings decrease.
“All of these decreases,” Mikes noted, “are symptomatic of overall client budget cuts and shifts in how smaller ad agencies and marketing firms operate.”
Second Wind, which is in its 23rd year, is a member-based organization allowing more than 750 midsize and smaller ad agencies and marketing firms to share their expertise. Second Wind surveys its members annually on topics including financial/accounting, payroll/employee benefits, operations, technology, new business and planning.
Mikes pointed out that traditional media remains the largest segment of agency billings, accounting for more than 36.9 percent of total billings. This year the survey also gathered numbers for online media, which represents 4.6 percent of total billings or $256,793.
“This number is sure to grow in coming years as clients push more and more of their media dollars to online vehicles and opportunities,” said Mikes. “The strength of these numbers also reflects the fact that the media continues to be an area where agencies provide unique and valuable services.”
One unexpected decrease occurred in digital and internet-related billings, which fell 21 percent from $353,712 to $280,401. Mikes suggested this drop may represent decreased client expenditures in website design, programming and social media management, among other services, and might be directly attributable to the lengthy recession’s impact on marketing budgets.
Account service billings remained stable at $696,466, representing a slight increase from 2008. Account planning/strategy/research also remained stable at $220,404. “This bodes well for agencies,” said Mikes. “It shows that although clients may not be putting money toward new programs and initiatives, they are staying engaged with their agencies and allowing them to service current business and possibly entertain new opportunities.”
Margins were erratic across the board and increased or decreased in several categories. Most notably, the survey shows that traditional media margins fell a substantial 6.7 percent from 14.9 percent in 2008 to 8.2 percent in 2009. Said Mikes, “This really demonstrates how agencies are talking a big hit on traditional media commissions. However, agencies are receiving an impressive 9.2 percent margin for online media, despite the fact that most online media do not offer the traditional 15 percent agency commission.”
Printing margins were reported at 31.1 percent in 2009, up from 18.3percent in 2008. “As agencies have continued to lose other sources of income, printing billings may be helping to offset those losses,” remarked Mikes.
Even with the dramatic shifts in billings, margins and costs from 2008 to 2009, agencies reported smaller decreases than anticipated by many. Total AGI in 2009 was reported as $2,298,155, which is down 12 percent from $2,613,008 in 2008. Overall, responding agencies ended the year with an average net profit (before taxes) of $246,303, accounting for 10.7percent of AGI. This is a substantial drop from 2008, but agencies should feel good about ending 2009 in a profitable position considering the many challenges they faced throughout the year.
In addition to annual surveys, seminar and workshop opportunities, members of Second Wind benefit from daily access to critically needed business resources and creative information programs. A major resource is Second Wind Online, with its high-powered, data-rich Knowledge Base, and popular members-only Forums.
For more details on Second Wind’s 2010 Annual Agency Survey Report or other Second Wind offerings, call 610-374-9093, email info@secondwindonline.com; or visit www.secondwindonline.com
# # #
Second Wind Contact: Laurie Mikes
laurie@secondwindonline.com
Second Wind Ltd.
P.O. Box 6284, 1424 Penn Avenue
Wyomissing, PA 19610-0284
610-374-9093
Second Wind Online
Find Second Wind on Facebook
Follow Us on Twitter
What's Working at Small to Mid-size Ad Agencies
Second Wind RSS