IPA figures reveal fallout from recession

LONDON - The true impact of the worst advertising recession for a decade is reflected in new IPA figures showing substantial drops in the incomes of Britain's leading agencies.

The slashing of client ad budgets last year to protect balance sheets resulted in millions of pounds being lopped from agency income figures.

Even Saatchi & Saatchi, which has become the UK's top ranking agency group by income, did so on declared figures which were more than £4m down on 2000.

It's a pattern repeated among most of the leading shops, which suffered as big-spending telecoms and IT companies trimmed their costs and dotcoms collapsed. Of the leading players, only Abbott Mead Vickers BBDO reveals an income figure largely unchanged between 2000 and last year.

But IPA executives, while acknowledging that agencies have been badly hit by the economic downturn, have warned against drawing too many stark conclusions at the differences in some of the figures.

A prime example is McCann-Erickson, whose income shows an apparent drop of £30m from last year when it topped the rankings. However, the group's 2001 figures differ from those of the previous year by excluding contributions from its regional operations, which now appear in their own right.

"We've deliberately not compared agencies' income figures for 2001 to those of 2000," Ian Finlayson, the IPA's finance director, explained. "It's a complex situation with some groups including their subsidiaries while others regard those subsidiaries as companies in their own right. It's not a problem as long as people understand that we're not comparing like with like."

The publication of the second annual income league tables is part of an ongoing effort by the IPA to convince its own members and outsiders that income rather than billings present the most accurate picture of the industry.

However, IPA chiefs recognise that many media specialists still need convincing that billings are not the best indicator of the scale of their activities. Zenith, Carat and CIA are among the major media players conspicuous by their absence from the latest tables in which MindShare tops the media rankings with an income of £24m. WWAV Rapp Collins heads the direct marketing table with £29.4m.

Bruce Haines, the IPA president, said: "While billings is still a valid measure for media agencies, it's important we also have a gross income ranking so that industry observers have a true sense of our size and income streams."

The IPA argues that billings are not an accurate picture of agencies because they don't include fee income from non-media related consultancy services. Returns filed at Companies House may be equally misleading because corporate structures, year- ends and reporting structures differ across the industry.

The figures for the income rankings include agency commission, service fees and other fees for 2001 from advertising, media, business to business, sales promotion, direct marketing and recruitment. Gross income from agency acquisitions during the year is included as if for a full year.

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John Tylee, recommends

IPA

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