In My View: All these tales of woe make me excited about the future

After leaving a large agency, I have been in the fortunate position recently of returning to planet Earth and talking to people in a more open way than being an alien (competitor) allowed.

Talking to the heads of other agencies large and small, I've found that the challenges they face are the same, and there is a distinct pattern emerging that I have seen in other markets.

Project profit margins are at an all-time low. This is in part due to increased competition and the sheer number of agencies chasing what is only a slightly bigger pie. It's also down to our friends in procurement advocating selection of a "partner" based on price and not value, as well as squeezing margins - not allowing mark up of third party costs and ensuring hotel commissions are also returned to the client.

With more agencies trying to make their mark, it is all too easy to over discount and "buy work" to build a relationship with a new client and consider whatever margin made as incremental profit that will recover more overhead.

The pitch process is getting longer, there are more companies on each pitch, the cost seems to be increasing and overall win rates are decreasing.

And how do you differentiate yourself in a crowded market?

You may think these issues are obvious, but it is the consequence of them that is interesting. There are many talented agencies out there that create superb events for longstanding clients, but when you take into account the above and the cost of being in business, they are not making the profits they ought to - if at all.

This is why I think we are in for a change in the event agency market over the next year or two, as it seems ripe for consolidation. Venture capitalists and private equity houses are interested, larger businesses are considering a more acquisitive strategy, and smaller agencies are looking at joining forces with broader comms agencies with an existing client base.

A consolidated market means fewer but larger players, a more level playing field, perhaps greater attention for live communications, and it may help agencies get back on a more equal footing with clients. The planets are aligned for an increase in mergers and acquisitions and I for one am excited.


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