Design profits rise, but staff costs are becoming a drag, survey shows

The KingstonSmithW1 Marketing Monitor shows that average operating profits per head among surveyed consultancies are up to £11 540 up from £9 235 six months ago. Gross income has risen by 5.5 per cent in this period.

This is a marked contrast to Marketing Monitor figures from a year ago, which show that profitability had dropped by 1.3 per cent.

KingstonSmithW1 has described the latest figures as ‘a welcome improvement’, but warned about a 5.4 per cent increase in employment costs, which is driven by consultancies employing more staff.

KingstonSmithW1 says, ‘The time for tough decisions is approaching, as companies continue to report reduced productivity.

‘The benefits seen from reduced non-staff overheads have boosted margins; however, it is unlikely that any further deterioration of productivity can be compensated for in this way, since consultancies have spent the last few years stripping back overheads as far as they can.’

The Marketing Monitor is compiled every six months by surveying consultancies across all marketing disciplines.