July 08 2008

Digital agencies optimistic despite economic gloom

Digital agencies are being positive about the next 12 months and project that they will grow their turnover by an average of 28% year-on-year in 2008, according to research published today

E-consultancy’s Digital Agency Rate Card Survey 2008, based on a survey of 328 UK agencies, found that four in five agencies (80%) estimate that their 2008 revenue will outstrip their turnover for 2007.

The research found that agency charge-out rates have gone up by an average of 17% in the last two years (since 2006) and are projected to increase by an average of 9% over the next 12 months.

Most encouragingly, 90% of agencies surveyed said that they were “quite” or “very” optimistic about the future of their businesses over the next year.

However, the outlook from the perspective of digital agencies is not as rosy as it was in 2005 when E-consultancy last carried out its rate card survey. Three years ago, 96% of digital agencies were quite or very optimistic about the year ahead. The proportion of agencies who say they are “not very optimistic” has increased from 3% in 2005 to 9%.

The issue of staff recruitment and retention continues to be seen as the biggest challenge for digital agencies, according to the survey carried out in April and May.

Linus Gregoriadis, Head of Research at E-consultancy, said: “Digital agencies are generally very upbeat about the short to medium term future despite the continued gloom within the wider economic environment. However, running digital agencies profitably is undoubtedly becoming more challenging. Coupled with increased competition in the marketplace, the trend towards paying higher salaries means that margins are inevitably being squeezed.”

He added: “There is still a chronic shortage of suitably qualified professionals in a number of specialties which is reflected by higher salaries. This is good for individuals but not necessarily for the agency bottom line.”

The survey benchmarks day rates for around 50 individual job roles including positions such as SEO consultant, online marketing manager, head of media and information architect.

by Marcus Austin (Web Editor)