CAMPAIGN REPORT ON TOP 300 AGENCIES: The French Revolution - Last year marked a change in advertising's power base as Publicis and Havas led Europe's charge to usurp the behemoths of Madison Avenue, John Tylee writes

The global communications industry awoke to the dawn of the new millennium with the Stars and Stripes flying over it triumphant and unchallenged.

The global communications industry awoke to the dawn of the new millennium with the Stars and Stripes flying over it triumphant and unchallenged.

It ended the year with the French tricolour being hoisted up the poll. Maurice Levy and Alain de Pouzilhac jointly elevated it and, in doing so, the Publicis president and the Havas chief executive may have flagged a perceptible shift in the power balance between the network giants.

The new French Revolution was just one change the industry had to come to terms with in 2000. Many dotcom ad budgets proved illusory and a fall-off in spend by some of the UK's biggest advertisers not only caused billings to falter but gave rise to worries that the economy was about to catch a cold.

Not that anybody seems to be sneezing on the other side of the Channel.

After a pounds 1.24 billion swoop for Saatchi & Saatchi and the snaring of the US creative hotshop Fallon, making Publicis the world's fifth-largest 'supergroup', let nobody doubt Levy's determination to give what has been essentially a family owned business the worldwide respect he thinks it deserves.

Nor, after rising above Madison Avenue's finest to be named ad agency executive of the year in America's Delaney Report, should anybody underestimate his growing credibility in a market he is compelled to conquer but which has been slow to take him seriously.

De Pouzilhac's Havas, just one place above Publicis in the global pecking order, has been equally aggressive, forking out dollars 27.7 million for Snyder Communications, casting covetous eyes on the UK's most desirable independent, M&C Saatchi, and failing to dampen speculation that it would swoop for the troubled True North.

So will 2000 go down as the year US colonisation of global advertising began to be seriously challenged from Europe? It remains to be seen.

What's certain is that, having recognised earlier than most the fabulous profits to be made from the European market and having ploughed them back to fuel growth over a number of years, Levy joined de Pouzilhac in ensuring 2000 would be remembered as the year it first looked possible for Europeans to give Americans a serious run for their money.

Now, having moved into the super league without incurring major debt, a key question for 2001 is whether Levy can transform his acquisitions from a federation into a company capable of moving advertising's centre of gravity several degrees away from New York and towards the Continent.

Maybe. But as consolidation continues at speed - witness last year's dollars 4.7 billion sale of Young & Rubicam to Martin Sorrell's WPP - it's evident that, when it comes to agency empire-building, the advantages enjoyed by the US-centred groups and demonstrated during 2000 will be hard to beat.

Levy and de Pouzilhac are aware that the US is the home of the multinational clients who fuel global growth. Levy knows too that, having pulled off the most high-profile agency deal of 2000 in capturing Saatchis, he will have tough calls to make if he is to retain a place alongside de Pouzilhac at the top table of global communications players.

Having set out to buy agencies by the kilo, he has come to realise that there's no substitute for quality. Fallon and Hal Riney & Partners may have been important strategic purchases, but the arrival of Saatchis within the fold raises the stakes considerably and will force some hard choices.

Clearly, the events of 2000 confirm that constructing a group from the Old World to challenge those of the new needs a different approach, particularly as it is being masterminded from Paris.

Havas and the Publicis group must grow out of a non English-speaking market possessing few truly multinational advertisers to sustain expansion and - in the case of Publicis - with little creative credibility beyond its national borders.

Levy has been astute enough to realise these limitations, preferring to link with local entrepreneurs, allowing them to get on with what they do best and resisting the temptation to pack the boards of acquired agencies with French directors.

But if he is to help provide a serious European counterbalance to the likes of Omnicom and Interpublic, he may have to devolve more and swallow some of his fierce national and personal pride.

He must grapple with several dilemmas. Should Saatchis, a far more charismatic global name than Publicis and with powerful multinationals such as Procter & Gamble on its client list, supercede the French agency as lead brand?

Will he need to find a powerful figure to take charge of US operations?

Also, how much longer can he continue spreading himself so thinly by leading the agency network as well as a group now among the world's top half dozen?

Of course, Levy and de Pouzilhac aren't alone with their problems and challenges. They and their rivals will all have seen the signs of possible slowdown indicated by the dotcom implosion, a fall-off in spend by some of the biggest mainstream advertisers and an interest rate cut by the US Federal Reserve which may signal problems ahead for the economy which drives the global ad industry.

Perhaps that explains the continuing apprehensiveness by agencies about submitting their income details along with their billings figures for Campaign's Top 300 Agencies report. However, our new-media agency listing, incorporated into the Top 300 Report for the first time in 2001, includes only those agencies who declared income.

There'll be no hiding place for the other agencies later this year when - thanks to the cajoling of agencies by the IPA's president, Rupert Howell - Campaign will publish the first table to rank them by revenue.

This may be of some consolation to Lowe Lintas which has slipped from second to tenth place in the league table. This isn't quite the catastrophe it appears, since the agency failed to return the questionnaire asking for its billings details.

This year, ACNielsen MMS's Top 300 ranking is based on agency brands, rather than groups. This has particularly affected top agencies such as McCann-Erickson and WWAV which have previously bundled separate regional agencies into the reckoning.

Only eight of the Top 20 agencies were prepared to divulge what they earned last year. Some agencies explain their reluctance by claiming that billings more accurately reflect the scale of their influence on the advertising scene. The chief executive of one major shop had a blunter explanation: 'Nobody wants to take their clothes off first.'

Agencies were anxious to cover their perceived nakedness elsewhere too.

The determination to grab bigger slices of total communications budgets led to an obsessive interest in below the line and a hunt for new-media fig leaves to hide their embarrassment in front of clients.

Mark 'life commando' Wnek's interview in The Sunday Times aside, there wasn't much else to cause the UK industry's collective face to blush and much to be pleased about in a business whose competitiveness bred a significant rise in standards. 'The competition has become so fierce that there's now no longer an agency elite,' Martin Jones, owner of the AAR, declares.

Several factors combined to make the playing field more level last year. One was the challenge of the 'grown-up start-ups' which came into their own as a maturing Miles Calcraft Briginshaw Duffy was joined by Soul, the Bartle Bogle Hegarty-breakaway, which already has the likes of Coca-Cola on its client list.

Another was the sharpened-up acts of the traditional advertising powerhouses.

Ogilvy & Mather confirmed its return from the wilderness by winning Ford Europe from Y&R while Leo Burnett underlined its determination to shed its 'boring' tag on the back of outstanding work for McDonald's and Heinz. Meanwhile, Lowe Lintas pulled off the coup of the year by prising Orange out of WCRS on its way to becoming Campaign's Agency of the Year.

But if it was the French who grabbed the headlines in 2000, the year may have a more prosaic reason to be remembered - namely as the one in which the industry stopped chasing crocks of gold at the end of the vanishing dotcom rainbow and started to get real.