The Top Global Trends In Creative Agencies And What They Mean For Finance Teams: Part 1

From profit margins to financial management tools, our latest research reveals the agency trends that every CFO and finance director should know.

Business seems to be booming in agencyland, but are opportunities to increase profitability being missed? Deltek teamed up with the ad agency bible Campaign to survey 670 professionals working in creative agencies across more than 30 countries worldwide – and the results make interesting reading for agency CFOs and financial directors.

The first thing to say is that, for many agencies, business appears to be thriving. The majority of survey respondents (62%) said their company was producing more work than it did a year ago, while around half (49%) reported that they had gained more clients over the past year, and a similar number (46%) had increased the size of their workforce in the same time period. 

However, bigger workloads, bigger client bases and bigger teams did not always add up to bigger profit margins. In reality, over a third (37%) of respondents reported their agency’s profit margins were lower than they were a year ago, while only around a quarter (26%) said they had increased profit margins year-on-year.

So what’s behind the pressure on profits? A number of survey respondents talked about the competitiveness of today’s market, with rivals, disruptive new agency models or (frequently) clients themselves pushing down rates.

Globally, the number-one problem for agency finance teams was “Following up on open invoices and purchase orders”, with 61% of respondents reporting this as a challenge. It was followed by “Chasing late timesheets and expenses” – a bugbear for half (50%) of finance teams.

It will come as no surprise to senior finance professionals that chasing other people – be they suppliers, clients or internal staff – remains the top headache for their teams. Or, as one anonymous respondent succinctly put it, the biggest challenge of the job is “arm twisting”!

The third biggest finance challenge was admin-related in nature: “Reconciliation of data from different sources” was an issue for over a third (39%) of respondents. This perhaps reflects how much incoming information finance teams need to juggle, sort and process in their day-to-day work.

What agencies really want

As the full report shows, the number-one area that most agency professionals felt their company could improve on, with around 59% mentioning it as an area for growth, was “Improving productivity and efficiency”. But profitability also ranked highly on most agency professionals’ wishlists: 53% felt their agency could have a “More profitable new-business strategy” and 48% dreamt, more generally, of “Increasing profitability”.

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