DIRECT MARKETING: TESTING TIMES

Ian Darby introduces the top 30 league table of direct marketing agencies in the UK and reports on how the year's economic uncertainties have influenced the way direct marketing works structurally and for its clients.

global events and a torrid spell for many advertising agencies did not necessarily translate into a dismal year for all in direct marketing. Still, the old wisdom of direct marketing doing well, or certainly less badly, in a downturn was tested to its limits.

While there is clearly a time lag - most of the figures provided by Willott Kingston Smith relate to 2001 - the table shows that some of the top agencies are clearly up against it. OgilvyOne and Claydon Heeley Jones Mason were two significant agencies to suffer income reverses. OgilvyOne suffered the loss of its TV Licensing account, while Claydon Heeley lost British Airways and suffered a downturn in spend from its telecommunications and technology clients.

WWAV Rapp Collins and Carlson had modest growth, while Brann, before its merger with ehs:realtime, grew its income by close to 25 per cent. TBWA/ GGT Direct also had a strong year, as did IMP (now rebranded as Arc). Finex was the fastest growing agency, doubling income on the back of key clients including BSkyB and COI Communications.

There were some exciting changes in the agency landscape in the past twelve months, mainly driven by the plans of international networks. The Havas agencies ehs:realtime and Brann merged to form EHS Brann, and Interpublic finally gave DraftWorldwide a presence in London following its merger with Lowe Live to create DraftWorldwide London.

The process of agency consolidation is clearly being driven by an increased need for strong international networks as a result of client demand. There were some more interesting trends at work though.

WWAV Rapp Collins, the fourth-largest agency by income and the largest by turnover, felt that client needs were changing to such a degree that it implemented a radical restructure. Project Eden saw the agency moving to a system of four divisions, almost agencies within agencies, based around groups of clients to provide faster response and more access to senior people.

Adam Coleman, the chief executive of WWAV Rapp Collins London, says: "All businesses are under pressure. Clients have to justify what they spend their money on and need to get to market more quickly. Increasingly, clients are trying to drive costs out of executions, but want added value in delivering strategies and using them to talk to consumers in a timely, relevant and creative way, cutting clutter."

The other large agencies are also sensing new opportunities. Nigel Howlett, the vice-president of OgilvyOne Consulting, says: "We definitely see some major opportunities and the job of ensuring that we 'catch that wave' starts now. Personally, I think the next recovery, and we're not there yet, will see us, the bigger 'one-to-one' agencies, taking a big step up the marcoms food chain providing we configure our offering appropriately."

Howlett argues that "larger corporates are feeling the greatest pressure, as they need an agency that can make transformational changes in the efficiency (allocation) of their marketing spend".

But there is also a trend pulling the other way. Simon Marshall, the managing director of Publicis Dialog, says: "Agencies like us want to play a serious heavy game, but we also have to be quick, nimble and able to respond."

Clients seem to want top levels of service as they themselves find things tougher. Terry Hunt, the chairman of EHS Brann, reflects: "New business, but also existing client negotiations, is increasingly procurement and margin-led negotiation. It's extraordinary how procurement led the industry has become. It used to be that second or third thing down the line we'd talk contract and first you'd solidify relationships with the marketing people. Now no decision is allowed to be made without procurement."

However, at least there is new business around. Hunt says: "It has been a pretty good year for new business. We've won AA, Barclays, the Premier League and Colt. It's not been a dead year, there is this continual move towards clients seeing agency teams as the way to work, agencies who are good in their field working alongside others. We are doing this with both AA and British Gas."

Other agencies have also noticed this trend. Marshall says: "The integration thing is very interesting. Something we seem to be coming up against is that not all clients are asking for an integrated offering. The AA actually went for specialisms from agencies in each category. This is shorthand for clients demanding that agencies think more about what they are focusing on and understanding business issues."

Howlett adds: "Clients are struggling to find significant points of difference to help differentiate between the leading DM agencies. I don't believe they have ever been more accountable for results generated by marcoms spend. They've heard all the claims and the hype. They just want to work with an agency that can demonstrate how it can make a significant difference to their business performance. If there has been a silver lining to the current industry 'cloud', it is a much needed revitalised interest in measurement and evaluation."

Perhaps creative can provide the difference. Simon Kershaw, the creative director at Craik Jones Watson Mitchell Voelkel, believes: "Creativity is way up the client's agenda, up to and including the marketing director. There is a new generation of clients that sees DM on at least an equal footing to advertising."

Kershaw agrees that procurement is taking over the pitch process and that smaller agencies are finding it harder to be noticed when bigger pitches are going on. However, he argues that the general level of creative competence in DM is improving. "There's some great teams coming out New Zealand and South Africa - we've got some here. The training budget is never big enough though. It's always the first thing to be cut in uncertain times."

Howlett says: "While the hot topic at the moment is media-neutral planning, we have been practising 'media-neutral, solution-positive thinking' for the past six years. Our planning department was the first in the industry to have restructured to operate in this way; not just within our own discipline but also when working in partnership with other Ogilvy agency disciplines."

Yet how are agencies finding the overall market? "I think it's tough," Coleman admits. "Anything to do with equity and financial products has been affected. 2002 was always going to be tough but we've held out well. It's not been easy as the industry generally is under pressure."

Marshall points out that two key sectors for direct marketing growth - technology and finance clients - are spending less. "There's more competition for smaller budgets," he adds.

But it's not all doom and gloom. As Hunt says: "I think it's been an interesting year rather than a disastrous one."

TOP 30 DIRECT MARKETING AND SALES PROMOTION AGENCIES BY GROSS INCOME

Rank Company name Year ends Turnover Turnover Chg

latest previous %

pounds pounds

'000 '000

1 Brann 31/12/00 62,042 48,543 27.81

2 Carlson Marketing Group (UK) 31/12/01 43,675 45,521 -4.06

3 OgilvyOne Worldwide 31/12/01 51,233 52,743 -2.86

4 WWAV Rapp Collins 31/12/01 63,443 57,369 10.59

5 Proximity London

(BHWG Proximity) 31/12/01 37,035 31,852 16.27

6 EHS Brann (Evans Hunt Scott

Eurocom and ehs:realtime ) 31/12/00 34,613 34,480 0.39

7 TBWA/GGT Direct 31/12/01 22,397 20,551 8.98

8 IMP 31/12/01 26,816 29,887 -10.28

9 Joshua Agency 30/09/01 35,663 31,769 12.26

10 Haygarth Group 31/03/01 22,918 16,285 40.73

11 The Marketing Store Worldwide 31/12/99 25,106 22,752 10.35

12 The Triangle Group 31/12/01 18,613 22,731 -18.12

13 Tequila Payne Stracey

(trading as Tequila London) 31/12/01 26,352 18,017 46.26

14 Finex Communications Group 28/02/01 20,609 7,641 169.72

15 KLP 31/12/00 23,859 16,651 43.29

16 Lowe Live 31/12/01 18,121 14,598 24.13

17 Black Cat Agency 31/12/01 16,043 11,919 34.60

18 FFWD Precision Marketing 31/12/00 13,549 5,037 168.99

19 Claydon Heeley Jones Mason

(Claydon Heeley International) 31/12/01 12,066 22,295 -45.88

20 G.H.A.Holdings 31/03/01 21,232 14,642 45.01

21 Rapier 31/12/00 13,138 8,697 51.06

22 Craik Jones Watson

Mitchell Voelkel 31/12/01 13,753 14,380 -4.36

23 Dialogue Marketing Partnership 31/12/01 14,212 8,171 73.93

24 Perspectives Red Cell 31/12/01 11,509 11,971 -3.86

25 1995 Ventures 31/12/00 13,868 9,848 40.82

26 Tullo Marshall Warren 31/12/00 11,612 8,916 30.24

27 The Interactive Agency

(Manifesto Marketing Services) 30/11/01 9,221 5,484 68.14

28 WWAV Rapp Collins North 31/12/01 8,986 26,429 -66.00

29 Clark McKay & Walpole 31/12/01 n/a n/a n/a

30 Lowe Broadway 31/12/00 19,169 18,182 5.43

Rank Company name Gross income Gross income Chg

latest previous %

pounds pounds

'000 '000

1 Brann 48,189 38,596 24.85

2 Carlson Marketing Group (UK) 28,618 27,691 3.35

3 OgilvyOne Worldwide 27,292 28,060 -2.74

4 WWAV Rapp Collins 23,134 22,421 3.18

5 Proximity London

(BHWG Proximity) 17,083 17,913 -4.63

6 EHS Brann (Evans Hunt Scott

Eurocom and ehs:realtime ) 17,022 12,678 34.26

7 TBWA/GGT Direct 16,030 13,377 19.83

8 IMP 14,419 13,117 9.93

9 Joshua Agency 13,605 12,645 7.59

10 Haygarth Group 11,891 8,814 34.91

11 The Marketing Store Worldwide 11,862 10,503 12.94

12 The Triangle Group 11,375 11,336 0.34

13 Tequila Payne Stracey

(trading as Tequila London) 10,358 5,697 81.81

14 Finex Communications Group 9,910 4,299 130.52

15 KLP 9,382 8,381 11.94

16 Lowe Live 8,805 8,743 0.71

17 Black Cat Agency 8,748 7,154 22.28

18 FFWD Precision Marketing 8,493 3,676 131.04

19 Claydon Heeley Jones Mason

(Claydon Heeley International) 7,917 14,094 -43.83

20 G.H.A.Holdings 7,871 3,893 102.18

21 Rapier 6,971 4,968 40.32

22 Craik Jones Watson

Mitchell Voelkel 6,951 7,676 -9.45

23 Dialogue Marketing Partnership 6,638 3,992 66.28

24 Perspectives Red Cell 6,570 6,189 6.16

25 1995 Ventures 6,502 3,441 88.96

26 Tullo Marshall Warren 6,152 4,643 32.50

27 The Interactive Agency

(Manifesto Marketing Services) 5,476 3,073 78.20

28 WWAV Rapp Collins North 5,058 4,872 3.82

29 Clark McKay & Walpole 4,860 3,596 35.15

30 Lowe Broadway 4,579 4,281 6.96

Rank Company name Pre-tax profits Pre-tax profits Chg

latest previous %

pounds pounds

'000 '000

1 Brann -2,977 2,537 -217.34

2 Carlson Marketing Group (UK) 2,640 1,316 100.61

3 OgilvyOne Worldwide 4,122 4,620 -10.78

4 WWAV Rapp Collins 4,908 5,128 -4.29

5 Proximity London

(BHWG Proximity) 349 2,540 -86.26

6 EHS Brann (Evans Hunt Scott

Eurocom and ehs:realtime ) 1,824 1,404 29.91

7 TBWA/GGT Direct 1,938 1,379 40.54

8 IMP 1,724 1,180 46.10

9 Joshua Agency -416 427 -197.42

10 Haygarth Group 3,159 2,244 40.78

11 The Marketing Store Worldwide 470 -120 491.67

12 The Triangle Group 1,562 1,902 -17.88

13 Tequila Payne Stracey

(trading as Tequila London) 761 17 4376.47

14 Finex Communications Group -2,282 603 -478.44

15 KLP -517 823 -162.82

16 Lowe Live 1,319 1,863 -29.20

17 Black Cat Agency 1,974 363 443.80

18 FFWD Precision Marketing 1,370 767 78.62

19 Claydon Heeley Jones Mason

(Claydon Heeley International) -710 336 -311.31

20 G.H.A.Holdings 622 56 1,010.71

21 Rapier 1,089 482 125.93

22 Craik Jones Watson

Mitchell Voelkel 950 1,288 -26.24

23 Dialogue Marketing Partnership 2,386 1,499 59.17

24 Perspectives Red Cell 1,323 1,227 7.82

25 1995 Ventures 1,110 690 60.87

26 Tullo Marshall Warren 196 148 32.43

27 The Interactive Agency

(Manifesto Marketing Services) -107 -245 56.33

28 WWAV Rapp Collins North 1,466 1,350 8.59

29 Clark McKay & Walpole 384 71 440.85

30 Lowe Broadway 160 1 15,900.00

Gross Gross

Rank Company name Number of income income Chg

employees per head per head %

latest previous

pounds pounds

'000 '000

1 Brann 998 48,286 42,274 14.22

2 Carlson Marketing Group (UK) 509 56,224 47,335 18.78

3 OgilvyOne Worldwide 328 83,207 85,549 -2.74

4 WWAV Rapp Collins 244 94,811 93,421 1.49

5 Proximity London

(BHWG Proximity) 209 81,737 85,300 -4.18

6 EHS Brann (Evans Hunt Scott

Eurocom and ehs:realtime ) 223 76,332 74,576 2.35

7 TBWA/GGT Direct 182 88,077 91,000 -3.21

8 IMP 165 87,388 79,982 9.26

9 Joshua Agency 200 68,025 61,683 10.28

10 Haygarth Group 127 93,630 82,374 13.66

11 The Marketing Store Worldwide 187 63,433 57,393 10.52

12 The Triangle Group 160 71,094 81,554 -12.83

13 Tequila Payne Stracey

(trading as Tequila London) 104 99,596 36,755 170.97

14 Finex Communications Group 81 122,346 48,852 150.44

15 KLP 185 50,714 60,732 -16.50

16 Lowe Live 90 97,833 102,859 -4.89

17 Black Cat Agency 96 91,125 91,718 -0.65

18 FFWD Precision Marketing 127 66,874 75,020 -10.86

19 Claydon Heeley Jones Mason

(Claydon Heeley International) 113 70,062 90,346 -22.45

20 G.H.A.Holdings n/a n/a n/a n/a

21 Rapier 67 104,045 90,327 15.19

22 Craik Jones Watson

Mitchell Voelkel 59 117,814 147,615 -20.19

23 Dialogue Marketing Partnership 71 93,493 95,048 -1.64

24 Perspectives Red Cell 83 79,157 84,781 -6.63

25 1995 Ventures 68 95,618 67,471 41.72

26 Tullo Marshall Warren 78 78,872 64,486 22.31

27 The Interactive Agency

(Manifesto Marketing Services) 80 68,450 55,873 22.51

28 WWAV Rapp Collins North 58 87,207 85,474 2.03

29 Clark McKay & Walpole 53 91,698 66,593 37.70

30 Lowe Broadway 122 37,533 43,242 -13.20

Source: Willott Kingston Smith annual survey "Financial Performance of

Marketing Services Companies". Results are based on latest statutory

accounts filed at Companies House. Where an accounting period was not 12

months long, results have been prorated to represent a 12-month trading

period.

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