Is good design becoming a commodity?

Donald Trump has single handedly breathed life back into the “other social media app” – Twitter. The platform had gone stale. It loses money every year and had a declining user base. Cue the late-night crazy tweets about Hillary Clinton, illegal wiretapping, and voter fraud, and voila, Twitter is again alive and kicking. The tweet storms turned into a tractor beam for followers and it hasn’t stopped. If there is one thing to be learned by watching from a distance, it’s that the power of marketing and connecting through social media has become more relevant than ever.

And the same can be said of the AEC industry. Social media is increasingly a viable platform where firms can tell their stories. It’s a place to connect with clients, employees and prospective clients and employees. Though the social media landscape is quick to change, we noticed that responding firms were not effectively using social media in its current form. For all platforms, the majority of respondents stated that they do not actively engage in re-tweeting or reposting content from employees, clients, affiliated organizations and industry experts. Sharing and interacting is a core component of the power of social media. It will be interesting to see how these numbers shift in the next five years.

Zweig Group recently released the 2017 Marketing Survey of Architecture, Engineering & Environmental Consulting Firms. This publication has undergone a transformation in the last few years to try to gather the most relevant information for firms that want to better understand the ever changing marketing landscape of the AEC industry.

We were pleased to see that firms are beginning to look at their marketing departments as critical components of their business cycle. Total marketing spending as a percentage of net service revenue jumped this year to just over 5 percent. This represents a significant increase from historical values that have hovered around 3.5 percent. The bulk of that spending (40 percent), is coming from true “marketing labor” where “other marketing labor” was around twenty percent and proposal preparation came in just above eleven percent. We also noticed that marketing consultation for training and market research were areas where firms increased their investment last year. These elements grew from around 2 percent to over 3 percent of the total marketing spend. Some areas that declined were travel, entertainment and trade shows.

When asked about proposals and the dollar volume that firms submitted last year, we found the average firm is submitting around 4.5 times their net service revenue as proposals. The average proposal size had a median of just over $50K and an overall average of just over $250K. Firms working predominantly in the private sector were more active in both the dollar size and volume of their proposals but were less effective at converting those to actual sales than firms working in the public sector. Overall, firms are getting short-listed around half of the time and are winning bids on just over a quarter of their submissions. To put this in perspective, if a firm submitted $100 million in proposals, they won roughly $25 million in work. Not too bad!

This conversion is the reason investing in business development and marketing should be a key component of every firm’s growth strategy. As the older generation begins to phase out of the industry, the good ole boy relationships become less effective and the new leaders are tasked with generating and cultivating those relationships. So much business is won and retained through personal relationships, but there is an established fear that design is becoming a commodity. If this is in fact true, firms and their staff will need to adjust to the behaviors of the “new client” and effectively market their services and the value they add to the process.

Check out the 2017 Marketing Survey of A/E/P and Environmental Consulting Firms here.

Posted in Press Releases, Surveys, Zweig Blog | May 15th, 2017 by