CLOSE-UP: LIVE ISSUE - RECMA REPORT. RECMA reveals no recession for media agencies. Starcom MediaVest heads the billings in latest report from RECMA

The release of the annual RECMA report is traditionally as controversial as it is eagerly anticipated. But following the introduction of the Sarbanes-Oaxley law and the conclusion of several agency mergers, this year it is more controversial than ever.

Sarbanes-Oaxley prevents agencies disclosing revenue and billings figures for such reports as they may be a distortion of the truth and misleading to investors. However, RECMA claims that 80 per cent of the data in the 2002 report was provided before the law was instituted and the remainder was calculated using local trade press and local measuring companies.

Although some agency chiefs say that because of these holes ,the report should be taken with a large pinch of salt (and therefore refused to comment on the record on its findings), it remains the only independent benchmark for measuring the global and regional performances of media agencies.

Somewhat surprisingly, the report claims there seems to have been no global recession or slump in 2002, with worldwide billings growing by 4 per cent in 2002. This is reinforced by figures suggesting that the networks were not frightened of employing new staff.

But on the new-business front, it was all change for the top four global networks as Starcom MediaVest stole the top spot from Initiative Media.

While a seven-point decline in Initiative's billings contributed to Starcom MediaVest's rise, Starcom MediaVest has benefited from a relatively stable existing business portfolio and a series of new-business wins including Alliance & Leicester and an extension on the Procter & Gamble account worth $100 million.

The degree to which Starcom MediaVest's global number-one spot relies on US billings is highlighted by its position as only the ninth-biggest network in Europe. Although strong in the UK, there are parts of its European network - most notably France and Spain - where it barely registers.

At the top of the European tree, Carat seems unassailable having extended its lead over OMD with wins contributing to an uplift of around $150 million.

In Europe, the Aegis group has an impressive distribution and dominates the French domestic market.

The European chart shows much less movement than its global equivalent, however. The top three positions - Carat at number one, OMD at number two followed by Mediaedge:cia - remained unchanged between 2001 and 2002, although ZenithOptimedia and MediaCom have swapped places at fourth and fifth.

OMD suffered a small decline in its EMEA billings - down 0.3 per cent on last year - but has a relatively strong European network. The loss of its Gillette business to MindShare, a hit in the order of $150 million, is reflected in the report and RECMA makes the claim that had it not been for the account walking, then the network would have held the top spot.

Universal McCann has also seen its position slip. RECMA claims this follows a quiet year on the new-business front with the global Brown Forman account representing only $15 million in EMEA.

Mediaedge:cia's position at number three in EMEA may surprise those more aware of the lacklustre performance of the UK office.

Mainardo de Nardis, Mediaedge:cia's global chief executive, claims that across the network, the merger of the former Young & Rubicam and Tempus shops has, on a worldwide basis at least, been relatively painless and these figures vindicate this success.

On a pan-regional basis, Mediaedge:cia has seen some success with Chevron Texaco, DHL and United Airlines among the global clients that centralised into the WPP-owned network. In Italy, the agency is particularly strong.

Following the announcement that Mediaedge:cia was forging closer links with its sister agency MindShare in a bid to exploit synergies and minimise costs, Universal McCann and Initiative Media have a real competitor to their combined Magna negotiation unit. De Nardis stressed that the two WPP networks would remain distinct and with their own profit and loss accounts, but there are clear benefits to be had from exploiting their links.

Globally, MindShare has leapt up the billings table from number four to number two, and is now a mere $400 million from knocking Starcom MediaVest from the top spot. But in EMEA the story is rather different and, despite growing its billings by nearly 8 per cent, it remains in seventh place.

RECMA's figures indicate that MindShare, launched as a network only five years ago, lacks global consistency.

Nick Emery, the worldwide chief strategy and planning officer for MindShare, says the fact that both Gillette and Nike appointed the agency on a global basis proved that there were no patches in its European network. "If you look at our rankings across Europe, then you'll see that we have critical mass in every market," he says.

But Emery said that MindShare was not going to rest on its laurels. "We're looking at acquisitions in all areas. We're going to simplify the structure and make it easier to trade with us." He adds that it's not so much about billings as the excitement and branding of the network. "It will be more Hollywood, less Excel," he explains.

The success of MediaCom in the UK is reflected in its slow ascent up the European rankings, while Media Planning Group managed to grow its billings by 21.4 per cent following EMEA acquisitions.

While not everyone will agree with the figures, they do still carry considerable weight among advertisers. "In our experience of working in all the major markets, the broad conclusions, including the more subjective data, are accurate," Martin Sambrook, the global account director at Media Audits, confirms.

RECMA is an independent evaluation of the global media networks, published annually. More information is available at www.recma.com

MEDIA AGENCIES RANKED WORLDWIDE BY BILLINGS

Rank Rank Network Group 2002 2001 %

2002 2001 (dollars m) chge

1 3 Starcom MediaVest Publicis Groupe 18,400 17,350 6

2 4 MindShare WPP 18,000 17,130 5.1

3 2 OMD Omnicom 17,900 17,680 1.2

4 1 Initiative Media Interpublic 16,850 18,100 -6.9

5 5 Carat Aegis 16,650 15,540 7.1

6 6 ZenithOptimedia Publicis Groupe 16,150 14,940 8.1

7 7 Universal McCann Interpublic 14,950 13,780 8.5

8 8 Mediaedge:cia WPP 13,550 13,170 2.9

9 9 MediaCom Grey Global Group 12,350 10,950 12.8

10 10 MPG Havas 8,550 8,310 2.9

11 11 PHD Omnicom 4,600 4,410 4.4

Total Networks 157,950 151,360 4.4

Rank Rank Network Group European 2002 European

2002 2001 ranking 2002 billings(1)

(dollars m)

1 3 Starcom MediaVest Publicis Groupe 9 4,970

2 4 MindShare WPP 7 6,100

3 2 OMD Omnicom 2 7,740

4 1 Initiative Media Interpublic 6 6,410

5 5 Carat Aegis 1 11,160

6 6 ZenithOptimedia Publicis Groupe 5 6,465

7 7 Universal McCann Interpublic 10 4,885

8 8 Mediaedge:cia WPP 3 7,070

9 9 MediaCom Grey Global Group 4 7,045

10 10 MPG Havas 8 4,985

11 11 PHD Omnicom 11 650

Total Networks 67,480

Source: RECMA Note: 1 included 1st quarter 2003.

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