Are agency proft margins too high?

is the headline on an article on page 19 of this week's Campaign.

It is about the ISBA Paying for Advertising report which came out this week and is always worth a read (along with the Kingston Smith report that I mentioned a few blog postings back).  As the article says "The good news is that agency profit margins remain "remarkable resilient".  The bad news being that advertisers seem to resent the fact".

It is a hard one to comment on as we all want to make sure that the agency is making a decent profit, on the right things and is treating the agency in an open, honest and transparent way.  Still to this day there are agencies making revenue on areas such as production costs and annual insurance premiums.  This often support the fact that the scope of work has increased, the resource on the account has increased but yet there has not been an conversation with the client (marketing and procurement) on making sure that the fees match the work and that everyone is happy with all the ancillary costs.

It is up to all of us to make sure that those regular conversations happen, and we aim to work in a partnership way of working.


I am working with a great client at the moment who really wants to make sure that they are getting a 'good deal' by looking at the way that they work with their main agencies first.  By then looking at the marketing and admin processes, we can then look at the commercial construct of the relationship.