CLOSE-UP: LIVE ISSUE - AGENCY RANKINGS. Is the ad industry heading for an upturn at last?

Billings for the 2002-2003 year suggest recovery may be on its way.

Is it the first evidence of a full-blown recovery, or just signs of green shoots through the concrete gloom that has enveloped the ad industry in recent years? That's the question posed by the Nielsen Media Research billings for the financial year 2002-2003.

Compared with the previous year there is much to cheer about. Of the top 20 creative agencies, just four experienced a drop in billings. That figure was 16 last year. For media agencies the picture also seemed rosier.

Granted, eight of the top 20 suffered billings declines, compared with 12 the year before, but those who had a good year (including OMD UK, Starcom Motive, Initiative Media and Universal McCann) posted some impressive gains.

The reasons behind the upturn in billings seem to have two or three common factors. Greater levels of new business, spending from existing clients holding steady or improving and, in some cases, consolidation and mergers seem to be the key reasons.

While Abbott Mead Vickers BBDO, the UK's top creative agency by billings, saw its billings eroded by reduced client spend and losses including O2 and British Tourist Authority, there were significant changes beneath AMV with Publicis climbing from sixth to third and M&C Saatchi moving from eighth to sixth. The most serious drop in billings in the top ten came with the combined billings of Leo Burnett and D'Arcy, down 14.57 per cent on what their combined billings would have been a year ago, following D'Arcy losses such as Mars.

Publicis had a strong year in billings terms and can be grouped in a bunch of agencies that added billings through a mixture of new business, client retention and increased spend from existing clients. M&C Saatchi, which picked up the AA and Matalan during 2002, was also one of this group because it saw healthy levels of spend from long-term clients such as British Airways and Dixons. It benefited from having such large clients in the retail sector, which has remained relatively immune to the downturn.

Commenting on Publicis' year, the joint chief executive Grant Duncan says: "Most of our clients remained robust despite the economic climate and most kept their spend up. These included Asda, MFI and Renault, with the car market in 2002 being relatively buoyant."

Other agencies were able to post spectacular growth almost solely on the back of large new-business wins. Partners BDDH rose from 23rd in the rankings to 19th after a successful new-business year that included the £40 million Citroen account. Delaney Lund Knox Warren & Partners added 50 per cent to its billings by winning accounts from Vauxhall, moving into the top 20 for the first time.

Unlike last year's figures, which showed creative agencies in general decline as clients cut their spend, the billings drops this year at Ogilvy & Mather, Leo Burnett and Bates UK seemed more to do with isolated account losses than a general malaise in the industry.

The majority of the top ten media agencies also experienced a good year.

While the formation of ZenithOptimedia means there is a new number one agency, another strong year for MediaCom saw it leapfrog Carat. Good levels of spend from existing clients, plus wins including Wrigley's, Clairol and Virgin One, boosted billings.

Smaller agencies were also able to show that they could win business.

Manning Gottlieb OMD, Walker Media and Universal McCann Manchester all grew their billings by healthy amounts.

Nick Manning, the chief executive of Manning Gottlieb OMD, says: "We hardly ever lose anything and we won AA, Columbia TriStar and Safeway so it's a combination of that, not losing anything and the clients we already had started spending money."

So do the figures herald a new dawn for the industry? Lorna Tilbian, an analyst at Numis, is in no doubt: "The US market has been so strong lately and the backdrop of the IPA Bellwether report, talking about marketers upping spend, is encouraging. I expect we'll soon see Wall Street cheering and saying things are great. The bear market is over."

TOP 30 CREATIVE AGENCIES

Rank Rank Agency Billings Billings Year-on

03 02 Mar 03 Mar 02 -year

(pounds m) (pounds m) % chg

1 1 Abbott Mead Vickers BBDO 348.69 398.53 -12.50

2 2 McCann-Erickson Advertising 297.17 294.97 0.74

3 6 Publicis 277.65 235.75 17.77

4 3 Ogilvy & Mather 270.12 280.49 -3.69

5 5 Lowe 265.54 253.43 4.77

6 8 M&C Saatchi 262.09 213.87 22.54

7 7 J. Walter Thompson 262.07 235.02 11.50

8 4 Leo Burnett 231.45 270.94 -14.57

9 10 Saatchi & Saatchi 221.72 198.46 11.71

10 11 TBWA/London 191.33 180.05 6.26

11 12 Rainey Kelly Campbell Roalfe/Y&R 179.87 174.64 2.99

12 13 BMP DDB 174.00 173.98 0.01

13 9 Bates UK 170.58 204.82 -16.71

14 15 WCRS 155.47 142.64 8.98

15 16 Grey Worldwide 154.88 142.32 8.82

16 14 Euro RSCG Wnek Gosper 154.75 152.13 1.71

17 18 Bartle Bogle Hegarty 132.38 102.85 28.70

18 19 Banks Hoggins O'Shea/FCB 88.18 86.76 1.64

19 23 Partners BDDH 88.14 47.20 86.71

20 22 Delaney Lund Knox Warren 73.23 48.22 51.85

21 17 HHCL/Red Cell 70.54 109.21 -35.40

22 20 Mortimer Whittaker O'Sullivan 62.77 59.89 4.80

23 57 Wieden & Kennedy 60.20 14.08 327.31

24 25 Mother 43.73 43.63 0.22

25 32 Cheethambell JWT 40.79 31.60 29.10

26 38 Publicity Bureau 39.66 27.83 42.51

27 24 Leith Agency 37.31 44.18 -15.55

28 40 Leagas Delaney London 36.60 27.64 32.39

29 31 BDH/TBWA 33.54 34.11 -1.66

30 28 St Luke's Communications 33.52 34.88 -3.90

Source: Nielsen Media Research.

TOP 30 MEDIA AGENCIES

Rank Rank Agency Billings Billings Year-on

03 02 Mar 03 Mar 02 -year

(pounds m) (pounds m) % chg

1 1 ZenithOptimedia 671.30 668.61 0.40

2 3 MediaCom 582.88 505.01 15.42

3 2 Carat 572.85 593.76 -3.52

4 4 MindShare Media UK 488.82 484.07 0.98

5 8 OMD UK 447.63 284.52 57.32

6 6 Starcom Motive Partnership 381.47 307.07 24.22

7 5 Initiative Media London 380.36 322.82 17.82

8 10 Universal McCann London 307.77 248.03 24.08

9 7 PHD 289.36 285.31 1.41

10 9 MediaVest UK 252.02 279.12 -9.70

11 13 Manning Gottlieb OMD 220.86 191.98 15.04

12 11 BBJ Communications 202.80 210.44 -3.62

13 12 Mediaedge:cia 200.20 197.11 1.56

14 14 Walker Media 152.36 140.52 8.42

15 15 Media Planning Group 109.45 118.97 -8.00

16 16 Brandconnection 78.15 86.68 -9.84

17 17 The Allmond Partnership 76.45 78.81 -2.98

18 19 MediaVest (Manchester) 70.83 71.00 -0.23

19 20 Brilliant Media 70.36 68.18 3.19

20 18 Feather Brooksbank 67.67 78.01 -13.25

21 25 Universal McCann Manchester 60.02 52.70 13.89

22 24 Mediaedge:cia Manchester 59.09 53.67 10.10

23 21 BJK&E Media 56.28 59.17 -4.87

24 23 John Ayling & Associates 55.06 53.75 2.42

25 22 Mediahead 51.21 57.22 -10.50

26 29 All Response Media 40.09 33.79 18.63

27 32 MediaCom North 39.91 28.55 39.78

28 33 BLM Media 39.01 28.02 39.23

29 28 Media Campaign Services 36.04 39.35 -8.41

30 30 WWAV Rapp Collins Media 35.18 33.20 5.94

Source: Nielsen Media Research.