CLOSE-UP: LIVE ISSUE/REGIONAL AGENCIES - Why are northern agencies thriving in slowdown? Regional markets depend less on US multinationals' money, Jenny Watts writes

As the US economy continues to slow and the trickle of 2001

new-business opportunities seems likely to dry up altogether, nerves are

starting to fray among London's advertising community. Away from the

sweaty palms of Soho, however, the ad market in northern England appears

to be deflecting fears of a recession far more effectively than that of

the capital.



The Daily Telegraph reports that the ad revenue flowing into its coffers

from Manchester is remaining buoyant, in contrast to the experience of

newspaper sales desks in London. Media agencies, too, point to strong

performances from their regional branches. 'Northern markets are pretty

vibrant at the moment,' MediaVest's chief executive, Jim Marshall,

says.



'MediaVest Manchester is certainly performing successfully.'



This admirably robust performance from regional ad markets seems partly

to stem from the fact that a significant number of their clients are not

directly linked to the flattening Stateside economy.



The big American multinationals, which tend to operate out of London,

are becoming more cautious in both their spending and review

policies.



Budgets are already being redivided, with above-the-line advertising

taking a far smaller share of the pie.



Agencies north of the Watford Gap traditionally refute suggestions that

their clients are more locally focused, and thus less likely to require

the full-service global offerings of their London counterparts. However,

it remains the case that, though northern agencies often have some

national or international business, their client portfolios will usually

include a large number of more regional companies. Ultimately, these

organisations' budgets are less likely to be defined by what happens in

New York, and more likely to take their lead from the still positive

noises being made around the British economy.



'As you get further away from London, the businesses that work with

regional agencies tend themselves to be more regional and more linked to

the local economy,' TBWA/Europe's chairman, Paul Bainsfair, explains.

'This in turn gives more protection to the north.'



'The UK economy seems to be holding up OK, so local business or European

business continues to be quite healthy,' Marshall adds. 'That could mean

northern agencies are holding up better.'



However, it is not simply the case that northern agencies can look to

more buoyant spend from their existing clients. Companies wanting more

accountability for their increasingly strapped cash may look to northern

shops as the best equipped to provide it. Duncan Slater, the strategic

development director at Attik, points to the social economic history of

Manchester, which built itself around the cotton industry following the

industrial revolution, as spawning a specialism in retail in the

area.



Now that clients need to rely on keeping their activity more direct and

targeted, such specialisms could put Manchester agencies in a good

position to reap the benefits of London belt-tightening. 'Clients are

finding that other disciplines, such as direct marketing and niche

offerings such as trade sales promotion, have a very valid role to play,

particularly since they're so measurable,' David Bell, Cheetham Bell

JWT's chief executive, says.



Bainsfair agrees that London's strength has traditionally lain in

above-the-line advertising, but that a different marketing mix emerges

away from the capital. 'In busy provinces, agencies have historically

been much more integrated and likely to get involved in all aspects of a

client's business,' he says. 'Consequently they're less exposed to the

nervousness we're experiencing in London.'



Then there's the issue of costs. 'The north has always been a more

cost-effective alternative to the south,' Bell argues. He cites the talk

of recession and ever-shrinking ad budgets as reasons why clients might

be finding it more attractive to employ a northern agency.



Other obvious factors in their favour are the reduced overheads and

cheaper geographical locations. 'If you can swallow your pride as a

client - if that's the way they see it - you get cheaper bills and

better service elsewhere than London,' Slater says.



Another major factor in the north's apparent buoyancy is the decline in

the dotcom market. Most of the London agencies invested significantly in

the plethora of dotcom start-ups, which often went out with a very

expensive whimper. Len Sanderson, the managing director of Telegraph

Sales, believes that, in the final analysis, the north's relative

success in 2001 is due to the prosperity experienced in the south last

year. 'There was a huge amount of dotcom and corporate finance

advertising then, which tends to be centralised in London,' he says,

adding that, in a year-on-year comparison, 'the north is only continuing

as it was before.'



In the current ad climate, however, stability is nothing to be sniffed

at. With bigger London agencies holding more multinational clients than

their northern counterparts, the effects of economic slowdown were

always likely to be felt first in the south. However, while the British

economy repels a full blown recession, the northern ad market is likely

to retain its current lustre.



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