BRUSSELS: Less than a quarter of European advertising agencies expect revenues to increase this year, reflecting the difficult financial climate being experienced in much of the region.
The European Association of Communications Agencies, the umbrella group, polled members of its 22 national association affiliates, which include the IPA, AACC, IAPI and KOMA.
Overall, 43.5% of respondents regarded 2011 as being an "average" year when compared with 2010, versus 21.7% describing this period as "good", and 26.1% defining it as "rather poor" or "poor".
"The expectation for the industry in 2012 is split between stability and falling turnover", said Dominic Lyle, Director General of EACA. "The economic uncertainty is continuing to exert considerable pressure on agencies across Europe."
In assessing client behaviour, 40.9% of firms questioned reported investment levels in advertising had gone down, whereas 31.8% pointed to an increase and 27.3% stated expenditure was static.
More specifically, 87% of the panel agreed that marketing budgets had been altered due to economic factors, whereas only 13% disagreed with this opinion.
New media, online advertising and ecommerce had seen the strongest change according to 77.3% of interviewees, standing at 59.1% for traditional ads, and 22.7% for sponsorship and promotion.
As a signifier of the challenging financial conditions, 52% of the sample revealed communications were now more heavily orientated towards price and 30% cited the use of "more aggressive" appeals.
When discussing remuneration packages, 33% of agencies were paid on a project fee basis, 32% received hourly fees, 30% relied on commission, and just 5% were rewarded on results.
Looking at 2012, 35% of the featured organisations predicted agency turnover would be unchanged, 30% thought there was likely to be a decrease and 26% anticipated an improvement in returns.
When measuring communications effectiveness, all clients utilised performance indicators like market share, awareness, economic efficiency and advertising spend.
Post-advertising tests logged 36.4% here, while positively influencing brand value and the results of pre-testing both registered 31.8%.
Other trends identified in the analysis was the growing importance of pitch consultants, mentioned by 71% of contributors, and a rising demand for a broader range of services, on 81%.
Data sourced from EACA; additional content by Warc staff