Following the success of Event's inaugural Brand Experience League Table, it is back in an expanded form for 2016, produced with media insights agency Vivid Interface.
Vivid contacted more than 130 agencies between January and March this year to produce a table of the largest brand experience agencies in terms of experiential billings, based on information given by respondents. The research also sought insights into the cost of pitching, the challenges for brand experience agencies when it comes to employees, budgets and suppliers, for example, as well as developments shaping the industry.
How things have changed
When it comes to experiential billings, most respondents reported an increase between 2014 and 2015, Some, however, saw a decline, including Innovision and Sense. Brand Brewery saw the biggest year-on-year increase in experiential billings, up 104% from £1.29m in 2014 to £2.63m in 2015. XYZ (+70%), Avantgarde (+67%) and TBA (+66%) also saw a huge uplift in their figures. Gross turnover-wise it was much the same story, with just over a third of respondents deriving their entire gross turnover from experiential activity.
Average client budgets for experiential activity in 2015 varied from £70,000 to £850,000, with the highest average budget figure down 25% on 2014's figure of £1.1m. The biggest annual experiential budget for a client last year came in at £8.14m.
The cost of pitching
The average cost of new client pitching, per account, either remained the same or increased for the majority of respondents. In only one case did the average cost fall (from £25,000 in 2014 to £20,000 in 2015). However, average costs varied widely from agency to agency, with the lowest at £2,000 and the highest £65,000. This compares with £1,500 and £50,000 respectively in 2014.
Balancing the books
One key challenge cited by respondents was the pressure to deliver the same high-quality campaigns with ever-decreasing budgets. Many of the agencies we spoke to said clients' budgets were generally getting smaller, and there was often a focus on price rather than quality. One spoke of the impact of budgets being approved then cut entirely, due to external client factors, which is tough to recover from quickly, even with new client wins in the same financial year.
Another commented that clients coming into experiential for the first time often have unrealistic expectations of what can be delivered for a small budget. It is clear from our research that there is a desire for budgets to increase.
Payment terms are another headache for agencies, with the length seemingly getting longer. Last year we reported that the previous norm of 30 days was now a thing of the past, with 60-plus day terms verging on standard. However, in this year's report, some agencies said they are having to deal with payment terms of up to 90 days, and one agency reported that terms have reached 120 days in some cases, causing serious cash-flow issues.
Clients' lead times
The general consensus is lead times are tight and, in a lot cases, getting tighter, with delayed approvals on pitches resulting in less time for the actual planning stages. However, lead times are by no means causing big problems for everyone, with some stating that although they are short they are manageable, and some noting that pitch lead times are actually increasing.
While for the most part agencies were happy with suppliers, some noted a lack of differentiation between them. Others described a shortage of options and the fact that some suppliers can become stretched if they are working with different agencies simultaneously.
On the subject of venues, sticking points were the ability to find new spaces to offer clients something different, along with responsiveness, a lack of large-scale spaces and an insistence on using preferred suppliers.
Not all doom and gloom
While lead times and budgets may be heading southwards, and clients have an increasingly demanding wish list, the industry is overwhelmingly optimistic about its future. As one agency said: "The biggest challenges are positive ones. The challenge around creative excellence is top of that list and drives us forward as an agency."
Asked to rate their business optimism for the next 18 months, 10% of respondents gave the highest rating of 10 points (highly optimistic), while most (83%) gave a rating of between 7 and 9 points.
This year's report showed 60% were members of an industry association, with the Marketing Agencies Association (MAA) and the Event & Visual Communication Association (EVCOM) having the highest number of members among respondents. The Institute of Promotional Marketing (IPM) was also a popular choice.
Agencies said the MAA's working initiatives were very relevant to the challenges they face, and that the body was progressive in its approach, while EVCOM held useful networking events.
70% - Highest increase in experiential billings from 2014-2015
£65k - Highest average cost of new client pitching, per account in 2015
15% - respondents registered a decline in experiential billings from 2014-2015
£8.14m - Highest annual client experiential budget in 2015
The Brand Experience Report
Additional sections of the report will be published online throughout May, with the full document available to download at the end of the month.
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