Survey Finds A/E Firms Reducing and Reallocating Marketing Dollars
Median marketing costs, as a percentage of net revenues for A/E firms, continued their slide from a recent peak of nearly 6% in 1997 to 4.1% in 2002. "Counter to last year's analysis, however," said Bill Fanning, director of research at PSMJ Resources, Inc., "firms report slightly higher marketing costs as a percentage of gross revenues. This is due to overall marketing expenditures increasing at a greater rate than gross revenue, resulting in a small increase in these percentages."
Median marketing spending for promotional activities dropped with respect to last year to levels in the 6% to 11% range, while marketing spending for presentations increased into the 8% to 18% range. This indicates that the design industry decided to allocate more of its available funds to marketing activities that focus on direct client contact rather than to general firm promotion and advertising.
"There is some undeniably good news in the results," said Dan Daniels, series editor of the PSMJ Resources surveys. "Proposal hit rates reversed last year's decline and improved to 33% in 2002, up from 30% in 2001."
Annual billing rates improved by 7% last year, reversing a dip in 2001 to about 5%. Even though the median increase in business backlog is only 6% (a drop from almost 15% a few years ago), it is still a positive decrease.
"With the future direction of the economy still uncertain, it is imperative that each firm assess its marketing and financial position in realistic terms and make every decision using very solid numbers. This is not the time to be 'working off the back of the envelope,’" noted Daniels.
PSMJ's 2002 A/E Benchmarks for the Marketing Professional provides marketing data and historical trends, which have been collected by PSMJ Resources over 27 years, and is available for purchase from the publisher either in print or on CD.