PERSPECTIVE: Billings boom may mask poor returns at many agencies

Remember the bad old days when you couldn’t move for talk of falling share prices and predictions of impending recession? Last autumn seems a long time ago now, doesn’t it?

Remember the bad old days when you couldn’t move for talk of

falling share prices and predictions of impending recession? Last autumn

seems a long time ago now, doesn’t it?



A quick glance at the latest MMS billings figures, published in this

week’s issue, will inform you that the British advertising industry -

usually a pretty good barometer for the economy as a whole - couldn’t be

further from hard times. This impression is supported by Advertising

Association figures released last week which show that UK adspend hit

record levels in 1998.



So if you’re not growing at the moment, you’ve got real problems. Step

forward CIA Medianetwork. The full extent of its disastrous 1998 is

beginning to filter through in the latest figures, which record billings

for the 12 months to the end of March 1999. Unfortunately, though, even

a fall of more than pounds 70 million, which takes the company to the

very periphery of the top ten, doesn’t fully reflect the losses it

suffered last year. By my reckoning, the latest figures still include

six months of Somerfield and at least eight months of Lloyds TSB spend -

both of which weighed in at more than pounds 10 million for the whole

year.



BT’s pounds 100 million business went early in the year, so doesn’t skew

the figures much.



It is hard to stomach such a steep decline at any time. It must be even

tougher when you look around and see so many of your competitors

registering double-digit growth. Indeed, it would be far easier to list

the agencies that didn’t achieve this feat than those which did. OK, so

MediaVest - which lost Dixons - had a rough ride too, but when a top ten

agency like Initiative can put on 40 per cent growth and only jump one

place (from ninth to eighth), you don’t need to know any more about the

state of the market. Even Western grew by 21 per cent, after recording a

net new-business loss of pounds 10 million in 1998.



The growth is clearly organic and is reflected in the creative agency

figures, where Saatchi & Saatchi (which lost Camelot and Schweppes in

1998) and Ogilvy & Mather (Ford and Guinness) were the only top ten

agencies not to grow. The failure of these agencies - ranked second and

third last time out - goes some way to explaining the extraordinary lead

Abbott Mead Vickers BBDO has opened up at the top. Can anyone remember a

time when the UK’s largest agency was pounds 100 million bigger than its

nearest rival?



Of course, the advertising industry is mature enough these days not to

be obsessed with size. What matters, we now recognise, is not the sheer

volume of money being spent by clients, but how you make that money

translate into your bottom line. Which leaves me wondering just how many

agencies’ income figures have risen at the same rate as their billings.

Somehow, in the face of all this good news, that seems like a rude

question.



john.owen@haynet.com.



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