CLOSE-UP: LIVE ISSUE/INCOME LEAGUE - Is the IPA's new league a fair reflection of adland? Industry opinion is divided over the league's relevance, Francesca Newland writes

There's been a lot of sniping comments since Campaign published the

IPA's income league table on its front page last week. Most resent

McCann-Erickson's newly identified dominance, and others are

understandably upset to see their agencies fall several places because

they have not included income from subsidiary operations in their

submissions to the IPA.

For this reason it is important to identify exactly what each agency did

include in its income figures. The format is far from standard. Agencies

including Abbott Mead Vickers BBDO, Lowe Lintas, BMP DDB and Ogilvy &

Mather only included income from their London advertising agency, while

the others incorporated income from their direct or digital


The figure for Saatchi & Saatchi, for instance, includes income from its

media planning services.

Despite these inconsistencies, there is no doubt that the decline of

commission-based remuneration and the consecutive rise of international

business has made the income figures a better indicator of agency


But the income league still has one rather large failing. Unlike the

billings table, its figures are not externally audited. The only factor

to prevent agencies from inventing giant figures is the knowledge that

their IPA subscription fee will rise accordingly. The IPA should rub its

hands together in anticipation of increased subscriptions.

Next year, more agencies are likely to include income from all their

subsidiary operations - there is still an element of having been caught

unawares in the 2000 league. Such a trend will lend uniformity to the

table and silence the majority of its critics.

1. McCann-Erickson

Income pounds 74.0 million (1st)

Billings pounds 218.01 million (9th)

McCann's dramatic hike up the income league can, in part, be explained

by the fact that only billings from its London agency are included in

the billings table. In contrast, the income figure incorporates its

London, Manchester, Birmingham, Belfast, Bristol, Windsor and Scotland

agencies. The figure, more than pounds 17 million above the number-two

agency, also incorporates income from its below-the-line unit, MRM.

Unlike other networks, the figure will not, however, incorporate income

for work done in other markets. McCann's local agencies receive the

income for work done in each market. Ben Langdon, the chairman and chief

executive of McCann UK & Ireland, says: 'If you ask clients what

reflects the size of their business, it's how much they earn. The income

table is based on what agencies earn. Billings only give an indication

of what a client spends on media.'

2. Saatchi & Saatchi

Income pounds 56.9 million (2nd)

Billings pounds 223.49 million (7th)

No doubt senior management at Saatchis is sitting back and sighing with

satisfaction with the income league which, unlike the billings table,

ranks it well above its old enemy M&C Saatchi. Saatchis' figure reflects

its positioning as a communications agency and therefore includes income

derived from below-the-line services.

The agency also handles a substantial amount of media planning for its

clients such as Procter & Gamble and COI Communications. Income from

Team Saatchi, which billed pounds 6.85 million in 2000, is also

incorporated. Tamara Ingram, the chairman of Saatchis, says: 'I don't

think income is the only measure of an agency's success. But revenue is

more interesting than billings.'

3. J. Walter Thompson

Income pounds 44.1 million (3rd)

Billings pounds 282.60 million (3rd)

JWT's new chief executive, Simon Bolton, is used to income figures,

having just arrived in London from San Francisco. He prefers the income

league: 'This business is more and more about accountability. Clients

want transparency.

We might have lost the fairy tale aspect of billings, but that's got to

be a good thing.' The agency's figure includes JWT Manchester, Black Cat

and digital@JWT, but Bolton predicts the income figure will rise next

year following JWT Manchester's merger with Cheetham Bell and the

acquisition of the below-the-line agency Black Cat in February.

The London agency does benefit from work done for foreign markets, but

Bolton says the proportion is 'fairly small'.

4. TBWA/London

Income pounds 37.6 million (4th)

Billings pounds 198.99 million (12th)

Like McCann, TBWA has stormed up the league mainly because its

Manchester subsidiary has been included in the income table, but was

listed separately in the billings league. BDH/TBWA billed pounds 31.52

million in 2000, which, had it been added to TBWA/London's pounds 198.99

million, would have secured it sixth place in the billings league.

The income figure also includes Maher Bird Associates, which billed

pounds 8.12 million in 2000. However, the pounds 37.6 million excludes

GGT Direct, or any other below-the-line disciplines. TBWA's president of

Northern Europe, Paul Bainsfair, says: 'This way of comparing agencies

tends to give a clearer picture of agency size.'

5. Abbott Mead Vickers BBDO

Income pounds 37.4 million (5th)

Billings pounds 410.40 million (1st)

AMV's dramatic fall from first place on the billings league to fifth on

the income league deserves explanation. The income figure includes the

flagship ad agency and AMV Advance, but incorporates none of AMV's

affiliated direct agencies, such as BHWG.

Graham Brown, the vice-chairman of AMV, was unsurprisingly sceptical

about the value of the new league as a true indicator of agency size:

'It's apples and pears. If we included our group figures we would exceed

pounds 100 million. We submitted what the IPA asked for. You have to

decide exactly what basis you set income on and everyone must do the

same thing. Hopefully it will be more rigorous and done on a fairer

basis next year.'


Income pounds 35.5 million (6th)

Billings pounds 288.03 million (2nd)

The figure for BMP DDB incorporates the income from the advertising

agency only. Ross Barr, the joint managing director, is not convinced

the figures are very useful. He says: 'They should break out individual

offices. I can't think of any sensible question to which they (income

figures) provide an answer. Any league table is flawed in some way. They

need to be more detailed. One big flaw is that it's not independently

audited, which the billings figures were.' BMP's income figure does

benefit from income from overseas, particularly for its Volkwagen, Felix

and American Airlines clients. Barr says the agency's remuneration is

both fee- and commission-based.

7. Ogilvy & Mather

Income pounds 34.8 million (7th)

Billings pounds 219.66 million (8th)

The pounds 34.8 million incorporates billings for the advertising agency

only. It excludes OgilvyOne, which with an income of pounds 17.7 million

was the 20th biggest income-earning agency, and Ogilvy Interactive. Its

biggest clients are Ford, Unilever, Glaxo SmithKline and Argos. The

majority of O&M's clients pay on a fee basis, but, importantly, these

exclude SmithKline and Unilever.

However, Paul Simons, the group chairman and chief executive of Ogilvy

UK, says that negotiations are already underway with both companies to

shift to a fee-based payment system. Simons prefers the income-based

league table: 'I love reading it. It's so revealing - you begin to see

through the bullshit. The figure for the group last year is pounds 82


8. M&C Saatchi

Income pounds 34.7 million (8th)

Billings pounds 237.00 million (5th)

M&C's income figure includes its Lida, EMC Saatchi, M&C Saatchi Arts and

The Immediate Sales Company affiliates. Nick Hurrell, the joint chief

executive of M&C, says the agency has a mixture of commission-paying and

fee-paying clients. Its income figure benefits from revenue derived from

work for British Airways in other markets, particularly in the US.

Hurrell adds: 'We simply have described our business accounting

according to the brief supplied by the IPA. It's a photograph of our

business and we're happy with the figure as an accurate reflection of

our business.'

9. Lowe Lintas

Income pounds 31.3 million (9th)

Billings pounds 207.63 million (10th)

The pounds 31.3 million only includes the London ad agency. Chris

Thomas, the chief executive of Lowe Lintas, says: 'In principal the

income league is a good system as long as the basis of comparison is the

same. It's as meaningless as the billings table at the moment.' Most of

the agency's clients pay on a fee basis and the remainder are moving

that way. Thomas admits that some of Lowe's income does come from work

done for other European markets, but adds that this can cut out both

ways, with, for instance, Magnum's advertising run out of Italy.

10. Leo Burnett

Income pounds 30.8 million (10th)

Billings pounds 118.07 million (18th)

Burnett's income figure includes contributions from four ancillary

companies: Leonardo, Hard Reality, Stars Digital (its print studio) and

The Lab (a brand consultancy). About pounds 25 million of the income

comes from the advertising agency. Its rise from 18th to tenth place is

indicative of the amount of work the London agency does for its clients

in other countries - a pattern led by its relationship with Procter &

Gamble. Stephen Whyte, the chief executive of Burnett, says: 'As many of

the London offices of the major multinationals are net exporters rather

than importers within their networks, I would expect those agencies to

occupy higher positions in a revenue league table.' He says only one

Burnett client still pays on a commission basis, but they are in

negotiations to move to fees.


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