Focus on the market
Sixth Austrian Creative Industries Report
Cooperation with corporate customers
Companies are the most important customer group of the creative industries
- Private enterprises are the most important customer group of the Austrian creative industries. In 2013, they accounted for almost two thirds of the total turnover of the industry.
- The private-sector client companies come from virtually all sectors of the economy. Creative inputs are an essential part of many value-added processes in both the manufacturing and service sectors.
- The majority of private-sector companies - over 70% in 2013 - regularly draw on services from the creative industries.
- Most frequently, private-sector client companies request creative services in the areas of graphics, layout and image editing, software programming, advertising and marketing, and product design and layout.
- Only in a few creative sectors, such as music, books and artistic activities, as well as in sub-sectors of the design industry (fashion, jewellery) do private households, rather than companies, form the most important group of customers. In the field of architecture, the public sector also plays a major role as a customer.
Exports contribute 15% to the turnover of the Austrian creative industries
- The private-sector client companies of the Austrian creative industries do not only come from Austria. In 2013, about 15% of the sector's turnover was generated with corporate customers from abroad.
- It is rather the smaller creative industries companies that have been able to land foreign orders. The innovation orientation of the offer proves to be an essential success factor for a foreign presence.
Low order volume per customer company
- The order volume per client company and year is usually very low and is below 10,000 euros for many client companies. This amount is often distributed among various creative services and several contractors.
- For creative industries companies, this means implementing a large number of client projects, each on a small scale.
- The particular challenge here is that each assignment usually has to be tailored to the specific needs of the client, and project requirements can often change during implementation.
- The clients appreciate the fact that the creative artists combine high quality and professional competence with a flexible approach to their specific wishes and at the same time bring in new ideas and innovative approaches.
Concentration on a few customers as a success factor
- Creative industries enterprises that succeed in balancing a strong customer orientation with innovative solutions profit from a high level of customer loyalty and are hardly exposed to price competition, i.e. in such business models the price offered is not the only decisive criterion for the awarding of contracts.
- Creative industries companies that concentrate on a small number of customers can implement such a strategy more easily. However, this strategy bears the risk of a greater dependence of the own business development on the development of the client companies.
- Overall, not all creative industries enterprises currently see themselves as "innovation service providers". In particular, the contribution they can make to the supply of ideas and innovation processes for their customers is often underestimated.
Customers very satisfied with creative services
- Overall, the customers are very satisfied with the creative services. Despite high quality demands, the vast majority of customers state that the quality of the services always or at least mostly met their expectations. The smooth communication and the adherence to the calculated prices are also praised by most customers.
- Customers are particularly interested in the refreshing ideas they receive from creative professionals. In particular, they see creative services as a way to improve their own innovation performance and thereby better differentiate themselves from the competition.
- When clients involve creative industries companies in their internal processes, which happens very often, this is done in order to let them participate in their own innovation projects.
Creative capacities in client companies and networks within the creative industries
Customer companies' own creative capacities a key demand driver
- The demand for creative services on the part of client companies is essentially driven by the existence of their own creative capacities. Companies without their own creative capacities demand creative services significantly less often.
- The higher the creative capacities of the client companies are, the more likely they are to be able to formulate their requirements clearly, to use creative services effectively and to shape the cooperation with creative professionals successfully.
- Creative employees in client companies represent an important door opener for the creative industries. In particular, client companies with their own capacities in advertising, design and graphics make more intensive use of external creative services.
Creative employees in client companies as partners for creative industries companies
- The "door-opening function" of creative employees in client companies results from the fact that they are better able to recognise the value of creative services and integrate them into their own processes.
- External creative services complement our own capabilities in terms of both capacity and specific know-how.
- The creative industries should thus regard creative employees in client companies as important partners with whom they can jointly formulate and implement projects.
- The potential for this is very large, as there are more creative employees working in the main domestic customer sectors of the creative industries alone (namely about 200,000 in the fields of software programming, advertising/marketing conception, graphics/layout/image editing, product design) than in the creative industries themselves (about 140,000).
Close interconnection between creative areas
- A central feature of the creative industries is the close interconnectedness between individual creative enterprises, both within a creative sector and between creative sectors.
- Behind this are various models of business partnerships between creative enterprises as well as agency models with a "general creative entrepreneur". This is because creative professionals often do not directly contact the end users of their creative services, but rather have other creative businesses act as intermediaries.
- Especially the video and film sector and the radio and TV sector sell a large part of their services to other creative industries companies. In total, other creative industries companies account for almost 40% of the total turnover of the creative industries with
corporate customers.
Potential for more private sector demand
Potential for more creative services demand exists
- Despite the overall positive picture of the cooperation between private sector clients and creative industries companies, there are various possibilities for improvement and thus potential for a higher demand for creative services.
- For example, over a quarter of companies in the main client industries did not purchase any creative services in 2013, and the amounts that client companies spend on creative services are quite low.
- As the most important reason for refraining from asking for (further) creative services, the customers of the creative industries enterprises state that they do not see a need for them.
- In contrast, from the point of view of most creative industries companies, the difficulty of customers to correctly assess the benefits of creative services in advance is the main reason.
Benefits of creative services not always transparent for many clients
- It is often difficult for clients of creative services to recognise the benefits of creative services. This leads to customers perceiving the price-performance ratio as unfavourable.
- Here, "educational work" would be necessary to stimulate further demand. The quality and diversity of the creative services on offer are hardly seen as an inhibiting factor by customers.
- Only a small proportion of enterprises in the main customer sectors of the creative industries stated that a lack of supply of creative services or the difficulty of finding suitable providers of creative services were major reasons for not offering them.
Degree of innovation, quality, flexibility and entrepreneurial thinking as competitive factors
- From the point of view of the client companies, in addition to lower-priced offers, above all a higher innovation content of the creative services would stimulate demand. It is also important to offer high quality and flexibility.
- In addition, many client companies are calling for more entrepreneurial thinking on the part of creative professionals. This is also where the creative industries themselves see their main deficit.
- Stronger entrepreneurial thinking means, among other things, better understanding the business models and methods of customers and offering creative services as a contribution to improving the competitiveness of the customer company. In this context, new innovation topics in the customer industries, such as Industry 4.0, should also be taken up. In contrast, the customers do not think much of increased direct marketing efforts by the creative industries companies.
The public sector as a buyer of creative services
Around 1.9 billion euros in creative services demand by the public sector
- Public demand (including public sectors such as energy and water supply, transport, waste disposal, etc.) accounts for about 10% of the total demand for creative services in Austria. In absolute figures, this corresponds to about 1.9 billion euros. Compared to countries with a strong creative industries sector, Austria is thus in the middle of the field. Figures from other countries such as Denmark or New Zealand show that the share of public demand for creative services can also be higher, although international comparisons must always take into account the specific structures of the public sector in each case.
Diversity of public actors causes heterogeneous structure of public demand
- The practice of demand for creative economy services in Austria is very heterogeneous in accordance with the diversity of public actors. The needs of the most diverse public bodies (regional authorities at federal, provincial and municipal level, public authorities, public enterprises) are different and hardly allow for generalisations.
- The provision of information (in the sense of communication with citizens) represents a significant share of the creative economic demand of the public sector. In the course of an ongoing modernisation of public administration (New Public Management), it can be assumed that this importance will increase even further in the future.
Internationally, the creative industries are considered a strategically important sector
- Other countries such as Denmark, Great Britain, New Zealand, the Netherlands and South Korea explicitly take the creative industries into account in their economic policy strategies and see the sector as being of similar strategic importance to other lead industries. The promotion of the creative industries takes place through a variety of different measures, ranging from education policy, innovation and foreign trade policy to the protection of industrial rights and state support for individual submarkets of the creative industries (e.g. film, games, design).
- A particular focus in many countries is government procurement policy to stimulate demand for creative services. The creative industries are often considered as a sub-sector of a strategy of innovation-promoting public procurement. Austria has already taken many measures in this area and has paved the way for further strengthening this instrument with its guiding concept for innovation-promoting public procurement.
Starting points for better use of the demand potential for creative services
There is undoubtedly a potential for more demand for creative services, both in the private sector and in the public sector:
- More than a quarter of the domestic companies from the main customer industries of the creative industries did not demand creative services in 2013.
- Of the companies that purchased creative services externally, almost three quarters spent less than 10,000 euros per year.
- On average, the companies in the customer industries obtain 1.2% of their intermediate inputs from the creative industries. Although this value roughly corresponds to that of other countries, a higher creative share of intermediate inputs seems feasible. This is especially true for client companies that primarily produce creative services themselves and thus do without the expertise of professionals.
- There is also potential in exports. Although the export share of the creative industries is good at 15%, there is still room for improvement in many sectors.
- A promising field for more demand for creative services is the public sector. There is potential here at all levels of local authorities and in many areas of public administration. Especially for the improvement of service quality and the availability of public services, the possibilities of involving the creative industries have only been little used. The same applies to the contribution of the creative industries to innovative forms of fulfilling public tasks (e.g. e-government, architecture, communication services, service design).
In order to make better use of the potential demand, the creative industries themselves, as well as economic policy, can take important steps.
Stronger positioning as an innovation service provider
- On the part of the creative industries, the most important task is a stronger orientation towards innovation. Creative industries companies should see themselves as innovation service providers and, much more often than is the case today, see their offerings as a contribution to the innovation process of their customers.
- It is precisely here that many customers still see potential for improvement. Among other things, it is important to emphasise the importance of creative ideas for strengthening the innovation activities of the client companies as early as the bidding stage.
- However, this requires a thorough understanding of the customers' sales markets and the specific challenges of innovation processes in the customer industries.
