After a reasonably solid performance in 2023, when revenues increased by around 22%, the financial fortunes of many Irish agencies took a turn for the worse in 2024 with revenues falling by 10% while media billings declined by around 4%, according to the latest IAPI Census 2024.
However, approximately 76% of agencies surveyed by IAPI for its Census predict that revenues for 2024 will increase over 2023 with 21% expecting a decrease with just 3% forecasting no change for the year.
According to the Census, “the average revenue (or fee income) reported by respondents for 2023 was €5.8m across all agency types. Media agencies take in the largest profits in the industry. Independent Creative and Networked Creative Agencies saw year-on-year revenue growth. All other agency types reported a fall in revenues”.
However, the Census notes that “agencies are optimistic about the coming year and are predicting, on average, a 35% increase in revenue for 2024 compared to 2023.”
The Census also notes that “with revenues slightly down for many agencies, it is not surprising that the average profit margin was only 8%. Agencies are predicting a 10% profit margin for 2024, which is slightly more conservative than last year’s estimate of 13%. This reflects the difficult economic circumstances of the past 12 months,” it says.
The Census also highlights that 95% of agencies won new business since the start of 2024, with 41% of new business gained in the past 12 months coming from pitch wins. PR, media and events agencies are the most likely to win new business without a pitch and as result, they rely most heavily on their networks for new business,” says the Census.
With the cost of pitching continuing to be a challenge for the industry, the Census points out that overall costs fell year-on-year with agencies now spending 302 hours and an average of €21,480 per pitch.
The Census also highlights that many agencies continue to international business, “with 38% of business coming from international clients and for domestic clients in international markets. This is reported as a key priority area for growth in the industry.”
Despite a difficult trading year, IAPI members remain optimistic, the Census points out. “Agency Leaders continue to be optimistic, with 89% believing their agency will do as well, if not better than 2023 and 92% believing the industry as a whole will perform as well if not better. Notably, optimism about the industry as a whole is higher this year compared to the previous. Leaders have expressed concern about tightening budgets and increased cost pressure from clients, as well as tighter deadlines and a move to more in-housing of advertising and creative services.”
When it comes to homeworking in the advertising industry, over half of IAPI members (56%) say their staff are in the office at least 3 days per week with the number of agencies adopting two days or less in-person policy (33%) falling year-on-year.
With artificial intelligence (AI) dominating many marketing and advertising conversations this year, the IAPI Census found that 53% of respondents believe they are “proficient or very proficient” in AI and the majority of leaders feel positively about its potential.
Speaking about the findings of Census 2024, Charley Stoney, CEO of IAPI says: “Anecdotally, 2024 has been an extremely busy year for IAPI members and the industry in general. Shorter turnaround times, ever-changing and tactical briefs have resulted in creating more work for agencies, however, it has come at a significant cost to the sector given that marketing budgets have not increased in ratio to the workload.
“So, while it is disappointing to see revenues and profit margins so low across the sector, it is not surprising to see that stark reality coming through in this years’ census”, she says.
“There is a need for the industry to update the charging model and put far more emphasis on outputs, rather than inputs. This has been discussed for several years now and I would urge the industry to prioritise these changes in the near future in order for the sector to remain sustainable in the long term. I would also ask that brand owners and marketers acknowledge the changing nature of their briefs and reflect this more in the budgets allocated for their agency partners.”
To download a copy of IAPI’s Census 2024 click HERE
