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Almost 90% of digital and design agencies believe their clients now expect more work for less money, according to a new survey.

The Design Industry Voices report, which interviewed 500 agency staff, found that 80% said client budgets have been reduced and more than two-thirds (70%) said clients expect more work in pitches for free.

The survey by Fairley & Associates, Gabriele Skelton and On Pointe Marketing is now in its fourth year and suggests that digital and design agencies are feeling the squeeze as a result of the economic downturn.

This is despite the fact that the Econsultancy and Experian Marketing Budgets 2012 Report showed increasing levels of investment across a range of digital channels and disciplines.

According to the Econsultancy research, based on a survey of more than 500 companies and agencies, more than two-thirds (68%) planned to increase their digital budgets for 2012, compared to 45% of companies increasing overall marketing budgets.

Three-quarters (74%) of companies were investing more in digital marketing technology in 2012, up from 67% who expressed similar intent in 2011.

The Design Industry Voices report also suggests that agencies are experiencing a huge turnover in staff and relying heavily on freelancers.

Almost two thirds of respondents said they are employing fewer permanent staff (61%), using more freelancers (66%) and more than two fifths are using more unpaid interns (41%).

Furthermore, more than half (59%) of staff intend to change job in the next twelve months, while more than a third (34%) have been with their agency less than a year.

But the reliance on freelancers isn’t necessarily bad news for the workforce. Separate research from Boox shows that the average wage for freelancers is £50,820 per year; almost double the national average wage of £26,093.

Just over one in five (22%) freelancers earn less than £20,000 per annum and one in three (31%) earn £50,000 or more per year.

However, across the board earnings for freelancers are mostly staying the same or decreasing, with marketing, PR and advertising proving to be among the most polarised industries in terms of pay.

The report shows that while around 40% of marketers saw their pay decrease in 2012, just under a third (31%) saw their wages rise. This suggests it is an industry undergoing a number of changes, which is why fewer freelancers have seen their wages remain static compared to other sectors.

The report also asked what motivated respondents to go freelance. Overall 4% said it was because they were struggling to find work, but this jumps more than fivefold to 22% for PR/marketing/advertising practitioners.

ICM’s data comes from a survey of 1,000 UK freelancers and contractors between 25 and 27 September 2012.

So, does this fit with your experience of working at an agency or as a freelancer? Let us know in the comments section.

David Moth

Published 7 January, 2013 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

1680 more posts from this author

Comments (6)

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dan barker

dan barker, E-Business Consultant at Dan Barker

Thanks for the post - & the report makes an interesting read too.

I'd mentioned on Twitter, but worth pointing out just how 'design' centric the survey is (despite them highlighting 'digital').

o). 51% of respondents were designers
o). 9.2% strategists
o). 18.1% account managers
o). 7.2% production
o). 5.4% new business
o). 1.3% HR
o). 7.6% 'other'

Here's the screengrab from the report: https://twitter.com/danbarker/status/288251978675539970

ie. the numbers & opinions should all be read in a 'design' context rather than 'digital'.

dan

over 3 years ago

David Moth

David Moth, Editor & Head of Social at EconsultancyStaff

@Dan, thanks for pointing that out, it's certainly heavily weighted towards the design industry.

over 3 years ago

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Stef Brown

Just to clarify, because the research for Design Industry Voices was anonymous, I'm afraid it's impossible to know how many respondents were from digital agencies versus design agencies. The role of 'designers' (and every other role) could have been from either type.

over 3 years ago

Jacob Ajwani

Jacob Ajwani, VP of Strategy at Yieldify.com

"90% of agencies say clients expect more work for less money"

isn't that the game plan for all industries?

over 3 years ago

Philip Allen

Philip Allen, Studio Director at D. Agency

I agree Jacob, everyone wants more work for less in a recession but 70% of clients expecting more for free in the pitch is definitely something I am seeing in digital.

I think clients accept there is a high propensity for digital to fail their expectations. This results in more detail and more assets being requested at the pitch stage such as detailed Functional Specifications, Rapid Prototypes, Design Compositions etc.

At this point, clients can put pressure on the budgets in the knowledge that they haven’t missed anything too critical.

It’s painful, but it’s the reality.

over 3 years ago

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Max Webster-Dowsing, SEO Consultant at RBS Insurance

The issue is that many clients cannot see a viable return on their digital marketing. Especially the larger clients. Having been on the client side and had agencies trying to justify themselves for their extortionate fees, I can totally understand this. This is the inherent problem with digital their is not always return that is clearly defined at the end of it being the nature that it is. I do think many agencies get far too complacent and need to up their game, this industry is becoming more and more difficult so it only stands to reason that they should be doing more.

over 3 years ago

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