CAMPAIGN REPORT ON TOP 300 AGENCIES: The French Revolution

Last year marked a change in advertising's power base as Publicis and Havas

led Europe's charge to usurp the behemoths of Madison Avenue, John Tylee

writes.



The global communications industry awoke to the dawn of the new

millennium with the Stars and Stripes flying over it triumphant and

unchallenged.



It ended the year with the French tricolour being hoisted up the poll.

Maurice Levy and Alain de Pouzilhac jointly elevated it and, in doing

so, the Publicis president and the Havas chief executive may have

flagged a perceptible shift in the power balance between the network

giants.



The new French Revolution was just one change the industry had to come

to terms with in 2000. Many dotcom ad budgets proved illusory and a

fall-off in spend by some of the UK's biggest advertisers not only

caused billings to falter but gave rise to worries that the economy was

about to catch a cold.



Not that anybody seems to be sneezing on the other side of the

Channel.



After a £1.24 billion swoop for Saatchi & Saatchi and the snaring

of the US creative hotshop Fallon, making Publicis the world's

fifth-largest 'supergroup', let nobody doubt Levy's determination to

give what has been essentially a family owned business the worldwide

respect he thinks it deserves.



Nor, after rising above Madison Avenue's finest to be named ad agency

executive of the year in America's Delaney Report, should anybody

underestimate his growing credibility in a market he is compelled to

conquer but which has been slow to take him seriously.



De Pouzilhac's Havas, just one place above Publicis in the global

pecking order, has been equally aggressive, forking out $27.7

million for Snyder Communications, casting covetous eyes on the UK's

most desirable independent, M&C Saatchi, and failing to dampen

speculation that it would swoop for the troubled True North.



So will 2000 go down as the year US colonisation of global advertising

began to be seriously challenged from Europe? It remains to be seen.



What's certain is that, having recognised earlier than most the fabulous

profits to be made from the European market and having ploughed them

back to fuel growth over a number of years, Levy joined de Pouzilhac in

ensuring 2000 would be remembered as the year it first looked possible

for Europeans to give Americans a serious run for their money.



Now, having moved into the super league without incurring major debt, a

key question for 2001 is whether Levy can transform his acquisitions

from a federation into a company capable of moving advertising's centre

of gravity several degrees away from New York and towards the

Continent.



Maybe. But as consolidation continues at speed - witness last year's

$4.7 billion sale of Young & Rubicam to Martin Sorrell's WPP -

it's evident that, when it comes to agency empire-building, the

advantages enjoyed by the US-centred groups and demonstrated during 2000

will be hard to beat.



Levy and de Pouzilhac are aware that the US is the home of the

multinational clients who fuel global growth. Levy knows too that,

having pulled off the most high-profile agency deal of 2000 in capturing

Saatchis, he will have tough calls to make if he is to retain a place

alongside de Pouzilhac at the top table of global communications

players.



Having set out to buy agencies by the kilo, he has come to realise that

there's no substitute for quality. Fallon and Hal Riney & Partners may

have been important strategic purchases, but the arrival of Saatchis

within the fold raises the stakes considerably and will force some hard

choices.



Clearly, the events of 2000 confirm that constructing a group from the

Old World to challenge those of the new needs a different approach,

particularly as it is being masterminded from Paris.



Havas and the Publicis group must grow out of a non English-speaking

market possessing few truly multinational advertisers to sustain

expansion and - in the case of Publicis - with little creative

credibility beyond its national borders.



Levy has been astute enough to realise these limitations, preferring to

link with local entrepreneurs, allowing them to get on with what they do

best and resisting the temptation to pack the boards of acquired

agencies with French directors.



But if he is to help provide a serious European counterbalance to the

likes of Omnicom and Interpublic, he may have to devolve more and

swallow some of his fierce national and personal pride.



He must grapple with several dilemmas. Should Saatchis, a far more

charismatic global name than Publicis and with powerful multinationals

such as Procter & Gamble on its client list, supercede the French agency

as lead brand?



Will he need to find a powerful figure to take charge of US

operations?



Also, how much longer can he continue spreading himself so thinly by

leading the agency network as well as a group now among the world's top

half dozen?



Of course, Levy and de Pouzilhac aren't alone with their problems and

challenges. They and their rivals will all have seen the signs of

possible slowdown indicated by the dotcom implosion, a fall-off in spend

by some of the biggest mainstream advertisers and an interest rate cut

by the US Federal Reserve which may signal problems ahead for the

economy which drives the global ad industry.



Perhaps that explains the continuing apprehensiveness by agencies about

submitting their income details along with their billings figures for

Campaign's Top 300 Agencies report. However, our new-media agency

listing, incorporated into the Top 300 Report for the first time in

2001, includes only those agencies who declared income.



There'll be no hiding place for the other agencies later this year when

- thanks to the cajoling of agencies by the IPA's president, Rupert

Howell - Campaign will publish the first table to rank them by

revenue.



This may be of some consolation to Lowe Lintas which has slipped from

second to tenth place in the league table. This isn't quite the

catastrophe it appears, since the agency failed to return the

questionnaire asking for its billings details.



This year, ACNielsen MMS's Top 300 ranking is based on agency brands,

rather than groups. This has particularly affected top agencies such as

McCann-Erickson and WWAV which have previously bundled separate regional

agencies into the reckoning.



Only eight of the Top 20 agencies were prepared to divulge what they

earned last year. Some agencies explain their reluctance by claiming

that billings more accurately reflect the scale of their influence on

the advertising scene. The chief executive of one major shop had a

blunter explanation: 'Nobody wants to take their clothes off first.'



Agencies were anxious to cover their perceived nakedness elsewhere

too.



The determination to grab bigger slices of total communications budgets

led to an obsessive interest in below the line and a hunt for new-media

fig leaves to hide their embarrassment in front of clients.



Mark 'life commando' Wnek's interview in The Sunday Times aside, there

wasn't much else to cause the UK industry's collective face to blush and

much to be pleased about in a business whose competitiveness bred a

significant rise in standards. 'The competition has become so fierce

that there's now no longer an agency elite,' Martin Jones, owner of the

AAR, declares.



Several factors combined to make the playing field more level last year.

One was the challenge of the 'grown-up start-ups' which came into their

own as a maturing Miles Calcraft Briginshaw Duffy was joined by Soul,

the Bartle Bogle Hegarty-breakaway, which already has the likes of

Coca-Cola on its client list.



Another was the sharpened-up acts of the traditional advertising

powerhouses.



Ogilvy & Mather confirmed its return from the wilderness by winning Ford

Europe from Y&R while Leo Burnett underlined its determination to shed

its 'boring' tag on the back of outstanding work for McDonald's and

Heinz. Meanwhile, Lowe Lintas pulled off the coup of the year by prising

Orange out of WCRS on its way to becoming Campaign's Agency of the

Year.



But if it was the French who grabbed the headlines in 2000, the year may

have a more prosaic reason to be remembered - namely as the one in which

the industry stopped chasing crocks of gold at the end of the vanishing

dotcom rainbow and started to get real.



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