Editorial: Traditional agencies are threatened from all sides

Learning your agency's billings figure is heading south is like discovering a nasty rash in a sensitive place. It might be nothing to worry about.

Or it might be a sign of something far more sinister. With more than half of Britain's top 30 shops having experienced such a drop last year, it's little wonder that few of them interpret this as indicative of an epidemic, more a symptom of an industry becoming less reliant on above-the-line advertising for its revenue.

To an extent, they're right. Billings don't necessarily align with an agency's income. Nor will they reflect how well it is tapping into alternative profit sources.

Yet for all its acknowledged imperfections, the latest Nielsen billings table is a cause for some concern. In some cases, the percentage drops are alarmingly high. So much so that they're bound to raise fears that traditional agencies are falling short of client expectations.

It would be easy to say that they brought it on themselves by not recognising the implications of digital communication, and by failing to put it at the heart of what they do. Digital shortcomings may be part of the problem, but they aren't all of it. Traditional agencies are being attacked on many fronts - from digital specialists, from smaller independents, and from client pressure on margins.

This leaves bigger agencies with little wriggle room as clients try to keep operating costs low, and see their procurement specialists as playing a key role in achieving their aims.

It is no surprise that such insecurity is resulting in too many clients not getting the kind of work they believe in. Or that income stagnation is fuelling creative decline.

But this should not provoke total despair.

For a start, the affected agencies are fortunate to be based in London, now playing an increasingly pivotal role in global marketing communications. Rosy adspend forecasts, and the fact that industry employment levels are at a 40-year high, compound the optimism.

But it's no good being in the right place at the right time if you can't seize the moment. For any traditional agency failing to do that, falling billings will be the least of its problems.