IBISWorld expects revenue in the graphic design sector to increase at an average annualised rate of 4.3% in the five years to 2000-10. After a disastrous year in 2008-09 for the media and advertisers, graphic design firms are expecting to bounce back in 2009-10. Unfortunately, it is unlikely that this industry’s recovery will come until sometime in late 2010.
The advertising and manufacturing sectors were by far hit harder than the economy at large as the global economy went into a tailspin. Spending on advertising dried up through a combination of flailing confidence and a move to web-based services. The result was a moderate drop in revenue for graphic designers in 2008-09 – a slump that will continue, albeit modestly, in 2009-10.
Falling consumer and corporate sentiment have led to a dire year for the advertising industry. Media companies are reporting falling revenue, while advertising firms are expecting a sharp drop in growth. Although improving confidence will result in a smaller contraction for the industry in 2009-10, the good times are unlikely to resume in full until the beginning of 2011.
Expenditure is once again increasing in the areas of web page maintenance and for web pages that provide eCommerce solutions to clients. The overriding factor now affecting this industry is the change in the actual budget allocations by corporate and government clients to all forms of advertising and web design and maintenance/update activities, which is affected by the overall economic growth situation.
While 2009-10 is shaping up as a tough year for graphic designers, the longer-term outlook is far more positive. After a contraction in that year, IBISWorld expects industry revenue to increase at an average annualised rate of 4.3% over the ensuing five years to 2014-15.
In 2010-11, as a result of a strongly recovering economy, some major clients will begin to invest more heavily in advertising in order to prop up revenue growth through marketing, in an effort to increase market share and client loyalty.
First and foremost among the drivers of this renewed growth is a resurgent advertising sector on the back of a broad-based economic recovery. A revival in consumer retail and other expenditure, and, therefore, in advertising and promotions requiring graphic design input, will ensure robust demand. A continuing move by clients towards use of more cost-effective, targeted and direct forms of promotional expenditure will also drive growth.
Continuing strong growth in web-based advertising and products will be one of two major drivers of growth. The other will be a renewed embrace of advertising as the economic climate improves. The national economy is expected to grow steadily as it emerges from this international slump and as such, so too will solid advertising market spending and re-packaging and branding activities.
Convergent technology will blur the boundaries between sectors, so revenue opportunities will arise from designing graphics that are compatible with both PCs and within mobile telephony. On the supply side, it is believed that technology will continue to improve the quality and reduce the production cost of design work. Harnessing technology will be a major challenge for the industry over the next five years. The graphics design industry will need to trade and position itself as providing quality and professional outcomes within the time and budget specified by clients and to their complete satisfaction.
Key success factors for operators in the industry:
For further information on the graphic design sector see here.
Robert Bryant is the general manager of business information firm IBISWorld.
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