Europe isn't on the same sunshine road to economic recovery as the US, but it isn't all gloom either. The heads of the European agency networks vary in their opinions, but their message is generally positive, from a grim, yet cautious, optimism to hopes for a bigger and bigger lift in the next couple of years.
Forecasts for the region suggest 3 or even 4 per cent economic growth this year. And even the Madrid bombings haven't significantly dampened spirits.
At least two new networks are entering the fray. Well, WPP's Red Cell isn't completely new, but it intends to be reincarnated as a European force over the next couple of years. As does M&C Saatchi, which is planning to raise money through a partial flotation in order to make strides in Europe, with start-up agencies pencilled in for France, Italy, Germany and Spain.
The big networks are now, by and large, well-established across the territory.
Although it is now impossible to rank agencies by revenue because of the legal restrictions on reporting income after the Sarbanes-Oxley Act was passed in the US, the top-billing list of agencies probably includes McCann-Erickson, J. Walter Thompson, Ogilvy & Mather, Euro RSCG, BBDO, TBWA, DDB and Publicis - in no particular order.
To keep near the top of the list during the recent years of slug-like and even negative growth in European markets, the game has been largely about winning market share.
Red Cell's strategy is to ignore the general network trend towards "big is best", but rather to think small is beautiful. "(WPP's group chief executive) Sir Martin Sorrell's vision is to have a network based on the quality of product, rather than the scale of operation," Amanda Walsh, the network's new European chief executive, says. She will have the unenviable task of integrating 15 former Bates offices into the network after WPP's takeover of Bates' Cordiant parent.
Assuming that the economy is on an upswing, Walsh's life will be made easier. But some observers remain unconvinced, and Germany, which accounts for almost a quarter of the European market, has been severely in the doldrums. According to Michael Maedel, the president, worldwide, at JWT: "Continental Europe is still stuck in recession ... the UK is somewhat better, but Germany is facing enormous difficulties." Despite this, JWT has managed an against-the-odds good year, largely on the back of business from Reckitt Benckiser and Vodafone. From his global perch, Maedel compares it with other markets that are a lot happier. "There's growth coming out of Asia-Pacific - China and India, plus Thailand and Taiwan - while the US is doing reasonably well," he says.
Ian Creasey, the regional president for Europe at Lowe Worldwide, has just moved across from Asia. He's a shade less pessimistic than Maedel about the European markets, citing economic forecasts of up to 2 per cent growth this year for the German market. He points to the oft-quoted theory that adspend is the first thing to be cut in hard times, but quicker to climb when markets are on the up. Asia's recession started earlier than those of Europe and the US. "I get the feeling," he says, "that Europe's just behind that ... providing the dollar doesn't get any weaker."
The strong euro has not helped Europe's recovery by keeping exports down.
This has been particularly hard for agency networks where Europe plays a lead part. At Euro RSCG, Europe accounts for almost 50 per cent of its business. For TBWA, Europe is also its biggest geographical income sector, although, since it reports in dollars, the exchange rate has given the company an extra shine.
Paul Bainsfair, the president, northern Europe, at TBWA, observes that it's not just the German market that has been depressed. "The Nordic region has been very disappointing economically," he says. Markets close to Germany, including Austria and Switzerland, have also been depressed, he adds.
Tough times have made for tough clients. "There's a stronger and stronger downward pressure from clients during negotiation," Pierre Lecosse, the chairman and chief executive of Euro RSCG Europe, says. "We have to charge for added value, otherwise the risk is that we make our business weaker."
There's been one growth area across the Continent, namely the rise of the pan-European brief. As clients centralise their own operations, with cost-savings frequently a driving force, they also begin looking to centralise their agencies.
Valerie Accary is the managing director of multinational clients for BBDO Europe. "More and more clients are international - either domestic exporters or pure multinationals," she says.
"They really want an answer coming from a worldwide level. They want strong centralisation and leadership, but better access to networks locally. This is the future," she claims.
Recent cross-territory wins have included Braun going to BBDO, Seat to Grey, Bell and Lexus to Saatchi & Saatchi and Electrolux to Lowe Worldwide.
At the moment, HSBC is engaged in a review, which involves IPG, WPP and Omnicom agencies, while McDonald's is looking to centralise its account in the Nordic region.
With centralisation in play, one of the victims of the European adscape has been the middle-sized agency. "There's a polarisation, with larger agency networks and the occasional agency hotshop doing better. Medium-sized agencies are under pressure," Maedel says.
At one of the few independent European networks, Armando Testa, the chairman and chief executive, Marco Testa, is wary that he is battling for attention.
"In this world, all the rules are dictated by the Stock Exchange and advertising is too often considered as a mere commodity. Unfortunately, also, many clients tend to only keep an eye on the quarterly results rather than watch the build-up of strong brand images over the years," he says.
Of course, the European market is not all about wrestling for market share. There are also growing economies, particularly within the former Eastern bloc, some of which are heading for European Union status later this year. There's growth - from a small base - in markets such as Poland, Hungary and the Czech Republic. Then there's Russia, where annual economic growth stands at 7 per cent.
The recent European economic dip has, of course, seen agencies across the territory restructuring and coming out generally leaner and more efficient.
At Euro RSCG, which had a poor 2003, Lecosse is very clear about the agency's housekeeping. "We have reorganised ourselves during the last months of 2003 to be prepared for the recovery in 2004 and for changes in the market," he says. The network has put new management in place in ten countries.
Euro RSCG is the appointed agency for the Euro 2004 football championship in Portugal. The event promises to boost the region's adspend this year.
Lecosse reflects the general opinion when he says he believes that any uplift from this or the Athens Olympic Games (assuming Greece is ready on time) will be largely confined to the host country and its near neighbours in southern Europe.
There is one unpredictable factor that could counteract any positives: the threat of terrorism. Following the Iraq war and with tragedies such as the recent Madrid bombings, there's an ever-present fear. Consumer confidence seems to have been holding out, but no-one can tell what will happen.
Assuming there is a boom, even if it's only a little one, it seems that everyone is convinced that advertising will benefit, but that integrated communications will benefit even more. All the networks are keenly aware of the need to be able to "do integrated".
At Saatchi & Saatchi, Richard Hytner, the new European chairman charged with bolstering a patchy network, is making a big play for point of sale.
Once considered low profile, it's now getting a bigger billing. "Some marketers are realising the huge value of doing this with as much energy and creativity as conventional media channels," Hytner says.
Creasey spells it out: "Everybody feels that if there's going to be a 3 to 4 per cent growth in adspend, then there's probably going to be a 4 or 5 per cent growth in the integrated market."
And will 2004 be rosier for ad agencies? According to Carolyn Carter, the president, Grey Global Group, EMEA: "The watchword for three years was profit protection. Now it's growth."
PARIS AND LONDON LEAD THE WAY FOR EUROPEAN CREATIVE
Despite a recession usually throwing a wet blanket over creativity, some clients have continued to back strong creative strategies across Europe. Even the traditionally conservative clients are talking about more colour.
Grey's president for Europe, the Middle East and Africa, Carolyn Carter, says: "Over the past two years, Procter & Gamble has said it wants to raise the bar on creativity."
During 2002 and 2003, the star networks on a creative front have been TBWA and BBDO. According to The Gunn Report, they are the two most-awarded agency networks across Europe for those years taken together.
BBDO's managing director of multinational clients for BBDO Europe, Valerie Accary, concedes that, although there are strong campaigns consistently coming out of several markets, "the ones that are really universal are coming out of Paris and London". Although a recent ad out of BBDO in Norway for Netcom, called "angry child", demonstrates the strengths of other offices.
TBWA's northern Europe president, Paul Bainsfair, tells a similar story: "Paris was a star performer last year and, with Trevor Beattie as the creative director, TBWA\London is one of the most talked-about agencies." The press ad from Paris for PlayStation, "rebirth", took last year's Cannes Grand Prix for Press and Poster, and Bainsfair singles out Whiskas as a recent strong piece of pan-European work from London. But TBWA also has strong work coming out of Holland and Sweden and, in Germany, the agency is proud to be ranked just below the local creative shops Jung Von Matt and Springer & Jacoby, which brought us "poppy seeds" for Dat Backhus Bakery.
Following close behind in The Gunn Report's two-year reckoning of awards are DDB and Leo Burnett in third and fourth.
Although Euro RSCG won points for "the sculptor" for Peugeot 206, which came out of Italy, it has clearly felt a need to address a creative deficit in the network. In the past few months, it has hired new creative directors for Spain, Italy, Munich, Belgium and London.
J. Walter Thompson, Grey, Publicis and FCB just miss the running in The Gunn Report's European top ten. JWT has just appointed a new European chief creative officer, Craig Davis. According to JWT's worldwide president, Michael Maedel: "It's a move in the right kind of direction ... to be more spectacular."
Lowe, McCann-Erickson and Saatchi & Saatchi have all turned in a respectable number of award-winning campaigns during the past couple of years. McCann's press and poster work for Medicos Sin Fronteras out of Madrid brought it plenty of attention in 2003.
Ian Creasey, the regional president for Europe at Lowe Worldwide, cites strong creative work for Stella Artois, which picks up on the UK theme of "reassuringly expensive", but has been changed for various markets.
"Increasingly clients are taking a more pan-European approach," he says. "They are looking to develop ideas that run across borders."
EUROPE'S MOST-AWARDED NETWORKS
Rank Agency Points
1 TBWA 130
2 BBDO 112
3 DDB 109
4 Leo Burnett 102
5 Saatchi & Saatchi 73
6 McCann-Erickson 64
7 Lowe 63
8 Young & Rubicam 40
9 Euro RSCG 33
10 Ogilvy & Mather 27
Source: The Gunn Report, 2002 and 2003.