Media Forum: Does ranking matter in media?

Do media agency league tables help to drive consolidation, Alasdair Reid asks.

It seems to have the inevitability of a Cold War arms race. In their more high-minded moments, media agencies tend to argue that their league table placing doesn't really matter in the greater scheme of things. But don't believe a word of it.

Take the latest table from Nielsen Media Research, published in Campaign last week. The theory is that acquisition doesn't have to be followed by consolidation - WPP is not alone in maintaining there are advantages in keeping its various media agencies in separate silos, save for a few functions, such as back office and pooled buying negotiations with media owners.

But in practice, lines begin to be blurred when there's any prospect of leaping up the league table. In this instance, we are talking about Starcom UK Group - also known variously as Starcom Motive and Starcom Mediavest. The individual units, which remain cherished brands, would be poorly placed in the top ten but Starcom UK Group has surged to number two in the chart with billings of £673 million - just behind the chart-topper, MediaCom, which boasts billings of £715 million.

This will doubtless be food for thought at OMD. Its two brands are separately placed in the table at positions seven and nine; jointly, they would have been top of the table with billings of £745 million, so expect combined OMD figures next year in a challenge for the number one spot.

And will the WPP agencies declare jointly? And perhaps the two wings of the Publicis media empire (Starcom and ZenithOptimedia). Just how important is the league table as a driver of consolidation? And is the phenomenon starting to worry advertisers?

Provocatively perhaps, Jim Marshall, the chairman of Starcom UK Group, says focusing only on size and league table position is "one-dimensional" thinking. He states: "It's far more important to understand the culture, the strengths and the track records of the agencies within a group. Combining the figures makes sense for us because we are one organisation and one legal entity, so to do (otherwise) would be to invite confusion. Within the group, our brands (Starcom Motive and Starcom Mediavest) have very differentiated cultures - but wherever it helps us, we will leverage our power in the market to generate the right sorts of exposure for our clients."

Paul Phillips, the AAR's director of advertising and media services, says clients don't pay much attention to league tables. But he can understand why agencies take them so seriously. He explains: "Media agencies are very competitive and if they can do something that will propel them towards the top of the league, they will often be tempted to do it. But, from a client point of view, is there any difference between billings of £650 million and £750 million? I suspect not. You are either a player or you are not a player and if you are on the fringes of that group you can always say you are a player because you are part of a larger buying group - even if the full impact of some of those buying groups has yet to be felt."

Bob Wootton, ISBA's director of media and advertising, tends to agree with that, but he also acknowledges that consolidation is inevitable.

It has its potential downsides. He comments: "At a European level, if you are a multinational advertiser looking to appoint an agency network on a multinational basis, then it's true that your choice can be narrow but, in the UK, the market is still vibrant and competitive enough."

On the other hand, he has slight worries about the future. He states: "In the media agency sector, there are significant economic barriers to entry and we see few start-ups. Compare that with the creative agency sector, where you can see new players winning serious accounts that put them on the map. That sort of cyclical activity keeps the market healthy and breathing."

Steve Allan, the chief executive of MediaCom, echoes much of that. He concludes: "If you look at a more international level, what we're seeing now is that advertisers who have traditionally used multi-agency rosters are now re-examining this and are looking to consolidate into fewer networks. At a local level, what this means is that it will increase the polarisation between small agencies and the larger agencies. With only one notable exception, all of the top-ten agencies in this year's table have shown a year-on-year billings increase. If the table tells us anything, it's that the big are getting bigger."

NO - Jim Marshall, chairman, Starcom UK Group

"Size is recognised as one factor where media companies are concerned and you can't just ignore that. But not everyone worships size. For some, it means something impersonal and if you were obsessed then that could be a danger."

MAYBE - Paul Phillips, director of advertising and media services, AAR

"Media agencies are being asked to do a whole range of things now. It's no longer about buying performance across a narrow spectrum, so billings is perhaps an old-fashioned measure of an agency's abilities."

MAYBE - Bob Wootton, director of media and advertising, ISBA

"They all claim to have significant advantages of scale and consolidated power. Everyone (in the top echelons of the table) uses a range of arguments to prove they are bigger than everybody else."

NO - Steve Allan, chief executive, MediaCom

"Agencies don't win or keep clients by being big, they do it by offering a good service. Clients tend not to appoint league-table positions, they appoint media agency brands - and may do so against any number of considerations."

- Got a view? E-mail us at campaign@haynet.com.

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