News analysis
Scotland’s marketing communications industry needs to do more to market its own image and successes if it is to have any hope of stopping the exodus of the country’s clients to agencies outside Scotland, a new report into the industry has found.
The research, which was commissioned by Scottish Enterprise, Scottish IPA, DMA and Marketing Society in Scotland and compiled by research company EKOS, was first discussed in 2002 when a steering group – made up of representatives from those organisations – identified a need for an authoritative analysis of the marketing communications industry in Scotland.
Since then, EKOS has interviewed Scottish clients and agencies to find out their views on the challenges and opportunities for the industry in Scotland to try and put a figure on how much the industry turns over and its worth to Scotland’s economy. Clients accumulated by the steering group were approached directly, while the industry was polled using an online questionnaire.
Although the results are not startling, the research does throw up one sobering fact; the marketing communications sector in Scotland retains only 25% of its domestic business. That statistic – certainly among the 30-odd stakeholders who have already had access to the research – has polarised opinions on the solution: does the industry need to look further afield for clients or do clients in Scotland need to be made aware of how it is in their best interests to do support the Scottish industry? Or even both.
As an industry, the research found that marketing communications as a sector turns over between £700-£800 million. The highest-spending Scottish clients that it should be servicing had an accumulated spend of £428 million, yet the amount spent with the Scottish marketing industry was just over £45 million.
There could be several reasons for this.
With a lot of agency appointments being made by brand managers at middle management level, the decision to appoint an untried Scottish agency over a London-based incumbent is one that many marketers won’t gamble on. There could also be an element of superficiality in the decisions to appoint agencies outside Scotland. Many young brand managers will relish the opportunity to go to London for a meeting, followed by the obligatory schmoozing afterwards.
That said, the fourth largest advertiser in Scotland in 2004/2005 was the Scottish Executive spending between £6.5 – £7.5 million. Its activity has increased over recent years. In 2000/2001, it was the 11th largest advertiser.
There is also a definite image issue with Scotland. Too often the tartan and heather image of Scotland prevails. The occasional attitude of ‘it’s cheaper to have a Scottish agency’ is hardly ever tempered with the opinion that a Scottish agency often works harder for its money. Even talent which comes to Scotland to work is often viewed as having ‘settled down’.
As a sector, the research shows that Scottish marketing communications employ 7,400 people, rising to 40,000 when the supply chain is taken into account. Supply chain level of employment has grown 20 per cent since 1998, although due to the difficulties experienced by the printing industry the production sector has seen a fall in employment by 18%. Salaries have also risen in the period between 1998 and 2002. The average salary in the marketing communications industry, according to the EKOS study, is £21,200 (comparable to £17,900 in 1998). Agency employees were paid slightly higher than newspaper publishing, while motion picture, video production and market research staff were the lowest paid in the sector.
There is always the argument – when criticising Scottish clients who use agencies outside Scotland – that Scottish communications companies themselves outsource for commercials production, print and other needs. The research, however, has shown that respondents felt that while the supply chain was strong and competitive in certain areas (mainly price and creativity), in others it was weak. Production services such as printing were seen as weaker as neither the volume nor scale was there to create a robust market. The production of TV adverts was felt to be too closely aligned with the film production industry rather than broadcast television, and that coupled with a lack of supply led to production work heading south.
Design emerged as a growing area. Using research from the British Design Initiative’s survey, the research showed that 42 per cent of design businesses in Scotland reported an increase in turnover compared to 13 per cent, which reported a decrease. Comparably with the rest of the UK, it shows the market – which turns over £262 million according to the research – is in growth.
Graeme Atha is chairman of the Scottish Marketing Association (SMA), which was set up earlier in the year to promote the industry. Commenting on the research, he said: "At last we know the scale of the task ahead and the companies that we need to target with our message. Also that we need to work more effectively and collectively to promote the strength and depth of talent that exists within the Scottish marketing services community. This is particularly important if we also want to attract both talent and clients from outwith Scotland.”
The full EKOS research - which runs to some 95 pages - will not be published until decisions are made about the best way to tackle the issues raised.