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.
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
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'.
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.'
6. BMP DDB
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
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.