At the 2004 Exchange conference, hosted in Miami by the Association of Professional Design Firms (APDF), the conversation among design firm managers centered on the ever-changing face of the creative industry. Buoyed by improvements in market conditions nationwide, APDF members were increasingly optimistic about the profession—with good fortune, if not fortunes found over the past year. And those sentiments aren’t isolated to a few breezy conversations on the shores of Miami Beach. They are supported by a comprehensive industry study that is plotting the course of the creative profession.

Some background: In 2002, the APDF commissioned a study to assess the state of the creative industry. Seattle-based Phinney/Bischoff Design House (PBDH) was tasked to examine the attitudes, beliefs and behaviors of creative professionals in relation to their work, the economy and their clients. In the teeth of an unprecedented industry downturn, the study enabled APDF to identify and prioritize the specific issues and opportunities facing firms throughout North America. With over 400 design firms involved, the study offered both quantifiable benchmarks and qualified commentary on the needs of the market. These results were reported in Communication Arts, November 2003.

Considering the multi-year industry doldrums, 2004 has generally been a welcome return to performance. At the same time, given the cyclical nature of markets, APDF was encouraged to make a check-up on the state of the industry an annual appointment.

Scope of the study
PBDH, using research tools from its proof-centered brand design practice, conducted a three-part study in April of 2004. The study included:

Perceptual Mapping—Design professionals were asked to score their relationships to their clients and businesses within seventeen sets of opposing attributes (examples: Feast/Famine, and Relationships/Projects). They were asked to score these perceptions on the basis of both their current perceptions and minimum expected standards. Year-over-year changes offer a barometer of the health of the trade, and the esteem of the profession. Variances between their current state and expectations create an “angst index.”

Issue Prioritization—Design professionals were asked to rank functional areas where they feel the highest pressures to perform and develop their businesses. Changes in year-over-year performance reflect evolving market and organizational demands.

Direction and Momentum—In an open-ended format, respondents were asked to identify the most troubling and encouraging trends in the industry.

State of the design industry—2004
The study demonstrates clearly that the overall condition of the creative industry has improved significantly over the past year. In 2003, the focus was exclusively the ability to find, win and keep clients, and today there is evidence that this has been successful. In fifteen out of seventeen focus areas, the attitudes of respondents towards their work scored improvements over 2003. The results were applied to a 100-point index, with the areas demonstrating the greatest momentum including:

• Design professionals feel that there is increasing value placed in their thinking this year as opposed to the crank-it-out production mandates of clients under pressure last year, ( 11.06 pts).
• They sense that clients are increasingly drawn to, and motivated by, ideas instead of exclusively driven by budgets, ( 5.90 pts).
• They sense the nature of work has begun to recenter on relationships with clients, and less feeling that “the designer is just a vendor on a project,” ( 5.25 pts).At the same time, the design profession continues to see erosion in two areas;
• Rather than being awarded multi-part assignments, the scope of projects has narrowed to areas of perceived expertise, (-2.39 pts).
• Client loyalty continues to be challenged by fiscal scrutiny, with further movement towards competitive bidding/RFP’s on each project, (-1.17 pts).

Within the creative trade, it is clear that sales/business development and firm marketing remain top priorities. As in 2003, these client-facing issues continue to dominate the organizational areas of finance, human resources and operations. However, within these major categories, interesting changes are evident.

Last year the challenge of marrying the sales discipline with a creative culture was clear, as the ability to cultivate and nurture a competitive growth mentality within the workforce presented the most significant concern. This year, the respondents’ most dominant issue is the ability to operationalize sales into a recurring, sustainable process. Respondents indicated that this is a consequence of increased creative workloads competing for the time to develop their business.

In the area of marketing, last year’s imperative was for design firms to differentiate themselves. In the current environment, firm branding appears to have subsided somewhat, as firms either clarified their offering or increasing workloads lessened this pressure. As firms reassert their business development efforts, brand visibility including media relations, speaking and advertising, has risen significantly to the top marketing priority.

Managing profitable projects remains the focus in the area of finance. However, long-range financial planning has replaced cash management as a top-level concern; further evidence that the bunker mentality of 2002 has subsided.

Summary of issues
In many respects, the past few years presented a trifecta of unfortunate circumstances for the creative industry:

• The cyclical nature of market economies was evident from 2000, with a significant retreat in spending from the business sector, and the destabilizing effects of global unrest hampering the return of market confidence.
• The significant, and at times lavish, investments in brand design in the late 1990s invited severe scrutiny of these expenditures, and their contributions to business performance.
• An exponentially growing supply of capable creative workers and accessible technology led to an oversupply of undifferentiated design services, with this commoditization placing enormous pressure on fees.