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Agency Growth Driver Survey reveals profits increase

But MAA warns agencies that they are less valued in strategic terms in debate focused on improved profitability.

MAA member agency profit margins have improved over the past year, according to the new Agency Growth Driver Survey.

The research reveals that the average operating profit margin for agencies that took part was 13.7 per cent, an increase on 12.5 per cent in 2016. More than 40 MAA members contributed to the research.

There was a significant range in profit margin, with the top five-performing agencies averaging 30.1 per cent profit margin and the bottom five a minus 7.9 per cent margin.

Despite the broadly encouraging news on profitability, Andrew Reeves, the MAA’s commercial director, warned the assembled audience from member agencies: “We’re not valued as much as we were in strategic terms.”

Reeves, who announced plans to make the Growth Driver a more organic, ongoing piece of research, said that this is an issue for many agencies because, despite their investment in strategic people, “we’re still not focused on client business requirements.”

The group discussed issues such as charge out rates for senior people, the move towards project-based work and the related resource issues, and the importance of pricing and the need to move towards a model that is more value-based.

David Meikle, the consultant and former agency executive, then talked through his “How To Buy A Gorilla” presentation, based on his forthcoming book of the same name that launches in June.

Meikle emphasised the importance of trust in the agency/client relationship in terms of delivering work that creates real value for both parties. He warned that the role of procurement is simply to save money and argued “agencies that are doing well are defining what real value is.”

For more information about the Growth Driver Survey and events focused on improving agency profitability and commercial performance please contact Matt Sullivan, the MAA’s Head of Membership.

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