Design groups that specialise in certain areas of design are performing more strongly than those that pick up all the work they can, says Mandy Merron, partner with accountant Willott Kingston Smith.
WKS’s Financial Performance of Marketing Services Companies 2004 report shows that there are indications of improving market conditions in the branding and design sector, although company profits remain in decline.
‘In the current conditions, consultancies with a very clear focus are performing much better than those taking every bit of work they can get their hands on. Focus is awfully important,’ explains Merron (pictured).
The report claims that operating profits fell by an average of 21 per cent across its top 30 design groups, although the averages are distorted by the size of Enterprise IG. The companies are ranked according to gross profit, shown in the most recent accounts filed at Companies House.
Corporate identity, exhibitions and branding ‘still seem to be struggling’, while digital and graphic design groups appear to be trading more strongly.
Over the past two years discretionary spend on design, particularly on corporate identity and brochures, has often been cancelled or deferred, Merron adds.