What have Scottish & Newcastle, Allied Domecq and Thames Water got
in common? It’s not about the quality of the booze. In fact, Imperial
Tobacco, Associated British Foods, Powergen and Hanson also feature in
this little clique.
Sure, they’re solid British companies, vertebrae in the backbone of the
economy. And between them they spend hundreds of millions of pounds on
advertising and represent some of the most coveted ad accounts. You’ve
probably worked on at least one of them.
But what binds these stellar British businesses this week is a somewhat
less illustrious characteristic. As Campaign went to press, each of
these companies was about to topple out of the FTSE Top 100 index. In
the FTSE’s latest quarterly overhaul, the old economy is making way for
In come companies such as Freeserve, Cable & Wireless, Psion, Thus and
Baltimore Technologies - businesses on which we’re now officially
betting our economic future.
It’s the biggest shake-up in the FTSE’s 16-year history and the
implications of the overhaul are fascinating. Out go solid, profitable
companies; in march high-tech stocks with no track record of viability.
All of this adds up to yet another imperative for investors to shun the
old economy in search of new technology homes for their money.
What it all means for the advertising industry is a question agencies
have already been asking themselves. The rash of dotcom business has
become a fact of agency life, and agencies are well on the road to
changing the nature of their businesses to suit - even though many are
only just working out how to exploit the new technologies
But while the dotcom boom has so far been seen by the industry as a new
fillip to top-up margins, the new economy’s impact on existing clients
and their ad budgets hasn’t been thought through.
The companies exiting the Top 100 had combined profits of more than
pounds 3.5 billion last year; the new entrants notched up just pounds
516 million. But when ad stalwarts such as Allied Domecq and Scottish &
Newcastle are no longer investors’ darlings, the reverberations will be
felt across their entire business base and this is sure to have some
real implications for the advertising industry.
While dropping out of the Top 100 is hardly a death blow, the financial
implications may well throw a searchlight on those companies’ marketing
In times of economic recession, the ad industry has rallied with case
studies and effectiveness research to prove the need for continued
investment in advertising to sustain brands over the long term. Now
agencies must not allow their own dotcoms bonanza to distract them from
underlining the value of advertising for old economy clients languishing
out of the investment limelight.
Campaign’s editor, Caroline Marshall, is on maternity leave.