PERSPECTIVE: Agencies shouldn’t ignore older clients as dotcoms flourish

What have Scottish & Newcastle, Allied Domecq and Thames Water got in common? It’s not about the quality of the booze. In fact, Imperial Tobacco, Associated British Foods, Powergen and Hanson also feature in this little clique.

What have Scottish & Newcastle, Allied Domecq and Thames Water got

in common? It’s not about the quality of the booze. In fact, Imperial

Tobacco, Associated British Foods, Powergen and Hanson also feature in

this little clique.



Sure, they’re solid British companies, vertebrae in the backbone of the

economy. And between them they spend hundreds of millions of pounds on

advertising and represent some of the most coveted ad accounts. You’ve

probably worked on at least one of them.



But what binds these stellar British businesses this week is a somewhat

less illustrious characteristic. As Campaign went to press, each of

these companies was about to topple out of the FTSE Top 100 index. In

the FTSE’s latest quarterly overhaul, the old economy is making way for

the new.



In come companies such as Freeserve, Cable & Wireless, Psion, Thus and

Baltimore Technologies - businesses on which we’re now officially

betting our economic future.



It’s the biggest shake-up in the FTSE’s 16-year history and the

implications of the overhaul are fascinating. Out go solid, profitable

companies; in march high-tech stocks with no track record of viability.

All of this adds up to yet another imperative for investors to shun the

old economy in search of new technology homes for their money.



What it all means for the advertising industry is a question agencies

have already been asking themselves. The rash of dotcom business has

become a fact of agency life, and agencies are well on the road to

changing the nature of their businesses to suit - even though many are

only just working out how to exploit the new technologies

themselves.



But while the dotcom boom has so far been seen by the industry as a new

fillip to top-up margins, the new economy’s impact on existing clients

and their ad budgets hasn’t been thought through.



The companies exiting the Top 100 had combined profits of more than

pounds 3.5 billion last year; the new entrants notched up just pounds

516 million. But when ad stalwarts such as Allied Domecq and Scottish &

Newcastle are no longer investors’ darlings, the reverberations will be

felt across their entire business base and this is sure to have some

real implications for the advertising industry.



While dropping out of the Top 100 is hardly a death blow, the financial

implications may well throw a searchlight on those companies’ marketing

budgets.



In times of economic recession, the ad industry has rallied with case

studies and effectiveness research to prove the need for continued

investment in advertising to sustain brands over the long term. Now

agencies must not allow their own dotcoms bonanza to distract them from

underlining the value of advertising for old economy clients languishing

out of the investment limelight.





Campaign’s editor, Caroline Marshall, is on maternity leave.



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