CLOSE-UP: LIVE ISSUE/AGENCY RANKING - Smaller creative shops buck recessionary trend

The latest tables continue to offer industry tidings of gloom, Mark Sweney says.

Few agency staff will be surprised that the latest billings figures from Nielsen Media Research reveal that the economic downturn is continuing to rack the industry.

The findings are bad: the past 12 months have witnessed an average billings decline of 3.14 per cent among the UK's ten biggest advertising agencies.

And of the top 20, 11 suffered negative growth.

But there are pockets of glad tidings. Some of the larger agencies have grown owing to client lists composed of motor companies, FMCG advertisers and financial services brands. The value of these groups to agencies is clear - they keep spending even when times are tough.

Of the bigger agencies, Ogilvy & Mather posted the biggest jump up the rankings from sixth to third with the largest increase in billings at 16.72 per cent. Paul Jackson, the chief executive of O&M, says the business was buoyed by billings on the consolidated Ford business, which it secured from Young & Rubicam almost two years ago. He also cited a "marginal increase" on Unilever brand work.

However, the figures do not yet represent the string of more recent account losses the agency has suffered, including the £20 million Argos business.

"We haven't yet felt the impact of the business we have lost, but our growth is compensating for it," Jackson admits. "It has been a year of stabilisation for the company with management changes and a number of pitches and repitches, but, in terms of billings, it hasn't affected us too much."

Another surprise is Lowe's 9.23 per cent billings surge. As with O&M, however, Lowe's major losses, including the resignation of the £43 million Orange account, the loss of the Burger King and the loss of half of its Vauxhall billings to Delaney Lund Knox Warren & Partners, have yet to register.

Lowe's chief executive, Chris Thomas, explains the rise in terms of organic growth from existing clients and the billings for its new client HSBC finally registering. He says: "A range of our clients have increased spend. We have a good consumer base such as Unilever, Tesco and Coca-Cola."

Of the top ten, Publicis, J. Walter Thompson, M&C Saatchi, Abbott Mead Vickers BBDO, Bates and TBWA/London all saw their billings shrink.

Publicis dropped by 3.43 per cent. However, the joint chief executive, Grant Duncan, says the company had a strong year overall, given the conditions.

"Other than the £6 million Woolwich account, which was rationalised into Bartle Bogle Hegarty under Barclays, we have lost no significant business.

It has been a stable year, billings for the £7 million Army account should affect us and there has been a degree of compensation from the packaged goods sector with clients L' Oreal, United Biscuits, Muller and Asda all maintaining strong spends."

The figures reveal one key trend: the rise of the smaller shops at the expense of the medium-sized and large players. The growth in billings among some of the smaller shops is likely to continue with this year's news being dominated by the success of independent agencies including Clemmow Hornby Inge, Mother and DLKW.

Wieden & Kennedy London rose from 60th place to 24th on growth of 254.88 per cent. Mother moved from 36th to 28th and Cheetham Bell JWT climbed from 53rd to 27th.

W&K's leap can be explained by two key factors. The rise comes from a very small base, and its win of the £24 million Honda account last year, for which it produced the high-profile "The power of dreams" campaign.

"The small shops have had a fantastic year and produced strong, brave work," Duncan says. "On the whole, given the conditions, brands tend to show a flight to safety with a conservative streak, but there are always clients who use the climate to be different and radical, which is why the likes of Mother and DLKW have done so well."

This difference in strategy is illustrated by the telecommunications sector. Vodafone rejected WCRS for the safety and cost savings of a global consolidation into the JWT network in much the same way as T-Mobile dumped BBH for Saatchi & Saatchi.

But the more maverick UK telecoms clients swam against the tide. O2 shifted from BBDO's European network to the Vallance Carruthers Coleman Priest start-up, while Orange moved from the Lowe network to Mother.

The flourishing business among the smaller shops is not a new phenomenon, but Simon Bolton, the chief executive of JWT, argues that this year the difference is the proliferation of quality small shops.

"Bigger agencies are having a harder time than ever with the smaller shops getting stronger. Every year you see one small shop get a lot of work, this year the difference is that three or four are doing really well."

Stef Calcraft, a partner at Mother, echoes this sentiment. "What affects small agencies is new business. It is a seismic change in the market, smaller agencies are completely viable and are often a preferable place for advertisers to go to and that didn't use to happen."

Both Duncan and Bolton speculate that the mid-sized agencies are those most likely to have been left out of the picture when clients change agencies.

But the figures show that it's not that clear cut.

The big winners in the middle ranks include BBH, which rose 30.13 per cent, and Partners BDDH, which rose 44.64 per cent. The sector also had major losers including HHCL & Partners with a billings crash of 44.45 per cent.

"Until October, we held the number-one slot in the new-business league. Our success is predominantly made up of wins and not organic growth," Nigel Long, the chairman and chief executive of Partners BDDH, says. The agency took the £40 million Citroen account in January from sister Havas agency Euro RSCG Wnek Gosper.

A key boost for BBH was the account for launching Microsoft's Xbox games console as well as its Barclays win finally kicking in.

HHCL & Partners' managing director, Nick Howarth, points to losses from late last year including Tango, Egg and the AA as a hangover affecting this year. "A poor year in 2001 is affecting us now. Income is holding up as billings are going down but we suffered specifically because of changes in the marketing departments of clients that resulted in reviews."

On the media front, there has been little change in the rankings of the top ten players. Most notable is the rise of Universal McCann, climbing two places from tenth to eighth on the back of the largest percentage increase in billings in the table, of 16.58 per cent. The move came at the expense of MediaVest, which slipped from eighth to tenth with a dip of 7.42 per cent.

Chris Shaw, the chairman of Universal, explains: "We've had organic growth, in particular from L'Oreal, Mastercard and Saab." He also cites wins including Nestle Chilled Desserts and T-Mobile.

MindShare and Starcom Motive also registered significant increases of 11.28 and 13.38 per cent respectively.

However, 14 of the top 30 agencies suffered a downturn in billings. The declines were not felt as heavily in the top ten, where only four agencies suffered a fall - Carat, Zenith Media, MediaVest and PHD.

The main victims were the mid-strength operations. BBJ Communications dipped 11.98 per cent; Walker Media slid by 16.87 per cent and Media Planning Group reported the largest percentage decrease of any agency in the table at 31.9 per cent.

A consolidated media industry means that significant changes in the rankings are rare. However, fluid rankings among the creative agencies are likely in the coming months as 2002's major account moves kick in.

TOP 30 CREATIVE AGENCIES BY BILLINGS

Rank Rank Agency Billings Billings Year-on-

2002 2001 Sept 02 Sept 01 year %

(pounds m) (pounds m) change

1 1 Abbott Mead Vickers BBDO 359.49 385.86 -6.83

2 2 McCann-Erickson 283.32 267.98 5.72

3 6 Ogilvy & Mather 276.11 236.54 16.72

4 3 Lowe 275.19 251.94 9.23

5 7 Saatchi & Saatchi 258.24 233.65 10.52

6 5 Publicis 234.63 242.98 -3.43

7 4 J. Walter Thompson 225.04 248.31 -9.37

8 8 M&C Saatchi 210.30 219.59 -4.23

9 10 Bates UK 176.73 206.47 -14.40

10 12 TBWA/London 166.82 179.53 -7.07

11 9 Rainey Kelly Campbell

Roalfe/Y&R 161.75 218.80 -26.07

12 11 BMP DDB 161.12 202.12 -20.28

13 16 WCRS 158.79 145.53 9.11

14 14 Grey Worldwide 148.37 161.41 -8.08

15 13 Euro RSCG Wnek Gosper 137.48 168.72 -18.51

16 19 Bartle Bogle Hegarty 136.66 105.01 30.13

17 15 D'Arcy 136.04 160.31 -15.13

18 18 Leo Burnett 124.97 105.14 18.86

19 20 Banks Hoggins O'Shea/FCB 89.72 82.93 8.18

20 25 Partners BDDH 72.35 50.02 44.64

21 17 HHCL & Partners 63.07 113.56 -44.45

22 24 Delaney Lund Knox Warren &

Partners 53.72 54.86 -2.08

23 21 Mortimer Whittaker O'Sullivan 53.00 69.01 -23.20

24 60 Wieden & Kennedy 44.60 12.56 254.88

25 22 St Luke's 43.29 60.10 -27.96

26 26 Roose 39.96 40.09 -0.32

27 53 Cheetham Bell JWT 38.38 16.86 127.62

28 36 Mother 35.49 27.46 29.20

29 30 Leagas Delaney London 34.88 37.07 -5.91

30 29 The Leith Agency 33.11 37.35 -11.36

Source: Nielsen Media Research.

TOP 30 MEDIA AGENCIES BY BILLINGS

Rank Rank Agency Billings Billings Year-on-

2002 2001 Sept 02 Sept 01 year %

(pounds m) (pounds m) change

1 1 Carat 557.99 561.46 -0.61

2 2 Zenith Media 535.18 540.87 -1.05

3 3 MediaCom 514.20 474.93 8.26

4 4 MindShare Media UK 473.76 425.71 11.28

5 6 Starcom Motive Partnership 361.11 318.48 13.38

6 7 OMD UK 348.01 293.91 18.40

7 5 Initiative Media London 347.61 322.44 7.8

8 10 Universal McCann London 272.90 234.07 16.58

9 9 PHD 265.76 266.85 -0.40

10 8 MediaVest UK 259.80 280.65 -7.42

11 12 Mediaedge:cia 200.58 185.76 7.98

12 13 Manning Gottlieb OMD 191.80 176.17 8.87

13 11 BBJ Communications 186.83 212.28 -11.98

14 15 Optimedia International 150.86 156.70 -3.72

15 16 Walker Media 127.28 153.12 -16.87

16 14 Media Planning Group 111.91 164.33 -31.90

17 18 The Allmond Partnership 81.56 76.19 7.04

18 20 Feather Brooksbank 77.07 69.54 10.82

19 17 Brandconnection 75.61 83.81 -9.77

20 19 Brilliant Media 69.20 73.40 -5.72

21 25 MediaVest (Manchester) 68.26 56.14 21.59

22 26 BJK&E Media 58.00 51.28 13.10

23 22 Mediaedge:cia Manchester 56.75 59.07 -3.92

24 24 Mediahead 52.14 58.10 -10.24

25 23 John Ayling & Associates 51.98 58.63 -11.33

26 27 Universal McCann (Manchester) 51.24 50.39 1.68

27 28 Zed Media 45.37 41.79 8.56

28 34 All Response Media 37.08 26.63 39.21

29 38 MediaCom North 33.18 21.42 54.93

30 29 WWAV Rapp Collins Media 32.45 34.47 -5.86

Source: Nielsen Media Research.

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