LIVE ISSUE/DOES SIZE MATTER?: How small shops still compete with the big boys - Clients are more willing to sign to smaller agencies John Owen finds out why.

It is, perhaps, a telling comment on the advertising industry that the most common answer its leaders give to the question: ’Does size matter?’ is a strictly puerile ’fnarrgh, fnarrgh.’

It is, perhaps, a telling comment on the advertising industry that

the most common answer its leaders give to the question: ’Does size

matter?’ is a strictly puerile ’fnarrgh, fnarrgh.’



But guys (and it is guys), this is a serious question. Once, the thought

of the fledgling Mother working for Coca-Cola, or Rapier Stead & Bowden

landing the pounds 25 million Cable & Wireless business, would have been

ludicrous. But now, it seems, huge clients don’t necessarily always want

to work with huge agencies.



As Stef Calcraft of Mother puts it: ’Size is no-one’s concern. What

matters is what happens in the market to the client’s brand.’



But few agencies can claim to have done as much for their clients’

brands in recent years as Abbott Mead Vickers BBDO - which just also

happens to be the biggest agency in the UK. Further evidence that

biggest might be best-run came with the publication in Campaign two

weeks ago of the annual agency performance survey, compiled by the

specialist accountancy firm, Willott King- ston Smith. It confirmed AMV,

Campaign’s agency of the year for the past two years, as the most

profitable agency in the UK.



That said, the agency with the highest profits per head was BST-BDDP -

ranked during the same period (January-December 1996) at 25th by

billings, just as it was the previous year.



So do those agencies currently shooting up the A. C Nielsen-MEAL table

really have something to celebrate?



This is an interesting time to ask such a question, as the two most

notable risers are the old and new incarnations of the agency that was

once famously obsessed with being the biggest: Saatchi & Saatchi.



Alan Bishop, the chairman of Saatchis, reckons the old agency with the

new management is on course to be number two in this year’s Campaign Top

300, up from fifth in 1996. It grew by 47 per cent between August 1996

and July 1997.



So, too, by a remarkable coincidence, did M&C Saatchi, the new agency

with the old Saatchis management. But which of them cares most about

size these days?



David Kershaw, a partner at M&C Saatchi, admits: ’Size matters only

because it reflects that you’re doing well. We’ve lost our obsession

with it.’



Back at his old haunt in Charlotte Street, however, things haven’t

changed much. ’When I came back here (at the beginning of this year) I

said our objective was to be number one again,’ Bishop says. ’We’re

doing much better than I thought.’



But why, Alan? Why is size so important? ’What clients are interested in

is the depth and variety of resource an agency can offer,’ he says.

’Clients have changing needs.



They want a range of talent in one place that can meet whatever the

needs of the moment are.’



But others maintain that the level of servicing clients receive can

suffer in large agencies, because the senior directors are spread too

thinly. Andrew Robertson, the managing director at AMV, argues that this

doesn’t have to be the case. ’It depends how you structure and resource

a big agency,’ he says. ’We’ve made sure we’re a broad-shouldered agency

with very good, senior people looking after our clients.’



Paul Bainsfair, a founder of BST-BDDP and the co-chairman of the newly

merged BDDP GGT, has worked in both large and small shops. As managing

director of Saatchis in the 80s, he helped run the biggest agency in the

country while, in the early days at BST, he had no clients. Now, he’s

back in the top 20.



So, Paul, does size matter? ’The general view we have is that it does,’

he says. ’At BST, we came up against ’sizeist’ behaviour from clients.

It was clear they saw their business in a certain league because of its

size and felt uncomfortable awarding their account to a small

agency.’



And since many clients are not well versed in the advertising business,

he adds, they tend only to look at the big shops anyway, scrolling down

the top 20 until they find four that don’t have a conflict. But

Bainsfair is clear about one thing: size and profitability are

unrelated. ’It’s just a question of how well run you are.’



Neither are increases in billings necessarily related to

profitability.



Stephen Woodford, the managing director of WCRS, has just seen his

agency’s billings slip by some 15 per cent in the past 12 months. But he

insists: ’Billings are increasingly irrelevant as an indicator of

success. Most of our clients pay us by fees. Touch wood, 1997 will be

the most successful in our history in terms of income and client

tenure.’



Woodford attributes the drop in billings to a variety of factors. BMW

and Bass, two major WCRS clients, haven’t had as many launches as last

year, while Iceland, a big TV client, has gone; but equally, he claims,

the agency has been doing a lot of work both out of the commercial media

and internationally, which, as he points out, ’shows in income but not

in billings’.



The fact that most agencies don’t buy their own media any more makes

billings even less relevant. But, unfortunately for Woodford, they

remain the most visible measurement around. Growth is vital and being

seen to grow makes for a feeling of vitality - not least among agency

staff.



Of course size matters. Just not as much as it used to.



Leader, p23.



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