SCOTLAND: THE FUTURE FOR SCOTLAND'S INDEPENDENTS - The top shops have outgrown the home market leaving smaller agencies to pick up the slack. Harriet Marsh finds an industry in confident mood

In September this year, the Leith Agency, arguably Scotland's premier creative brand, opened its first network office, in London.

In September this year, the Leith Agency, arguably Scotland's premier creative brand, opened its first network office, in London.

With the move of the Leith to the English capital, the history of Scottish advertising agencies appears to have come full circle. At the beginning of the 80s, the majority of Scotland's top creative agencies were regional outposts of big London shops. Today only one agency, Citigate Smarts, is a wholly owned subsidiary.

This is in stark contrast to the situation among Scottish media shops.

Following the acquisition of Feathers Brooksbank by Carat last November, Scotland's media scene is now predominantly affiliated to the UK's large media brands.

Faulds, a full-service agency, flies a lone flag as the remaining media independent, with a 12-strong media division.

So the steady drift of some of Scotland's biggest clients towards the south has had less impact on the media agencies, operating as regional outposts , than the independent creative shops.

Last December Bank of Scotland, which now has its marketing department based in the UK, moved its business out of the north to Conquest, part of the WPP network, after Conquest fielded none other than the WPP chairman, Sir Martin Sorrell, at the pitch. Scottish Widows has also shifted its main account out of Scotland as has Scottish Power, which over-rode regional allegiances and appointed Bartle Bogle Hegarty at the end of 1998.

The Royal Bank of Scotland still retains its retail creative account with Faulds, although following its decision to merge with NatWest it is in the process of appointing a London media shop for its pounds 90 million combined media account. The Royal Bank appears to be the only one of the big three Scottish banks to maintain a significant advertising spend with a Scottish creative agency.

The big drinks companies have also been shifting marketing spend out of Scotland, which is widely perceived as a mature market. As a consequence, marketing departments have moved south, and so have the advertising accounts.

'The number of indigenous brands heading south remains a big topic up here,' Phil Adams, managing director at the Leith, says. 'It feels like the impact of devolution has been to make these big Scottish companies feel more parochial. As a consequence it is as if they're all looking outside Scotland to gear up with advisers who reinforce their image as big important companies.'

Whatever the motivations behind it, one consequence is that, among the biggest Scottish agencies, getting a place on UK pitchlists is no longer seen as a bonus, but as a necessity.

'If you are operating in the Scottish market you are fundamentally limited,' John Rowley, the Leith's chief executive, admits.

'Nobody can sensibly argue that Scotland's market allows you to grow continually. A lot of the growth recently, both for us and for Faulds, has come by getting business south of the border.'

In the Leith's case, this has included winning the pounds 7 million Grolsch account in January. In August it picked up the pounds 30 million account for the pan-European launch of the next generation Honda Civic, after pitching against CDP and Hakuhodo. This followed its earlier appointment as lead agency for Honda Motor Europe South in June.

At the end of August, it also scooped the pounds 10 million Carling account.

A significant factor in this win was the existence of the Leith's fledgling London operation. Since winning Carling, the agency has announced an impressive management line-up in London, poaching creative talent from Saatchi & Saatchi and Leo Burnett. It has also added a new slice of business from COI Communications.

'We want to be a national brand,' Rowley says. 'I think we'd got as close as we could be to being this, based in Scotland. However, the existence of the London office certainly helped us win Carling. So now we're entering a new market and we're communicating to clients that the agency is of a size and stature that allows it to cover the UK.'

Faulds also has clients, including AutoTrader and Weight Watchers, based in London and others in Ireland. To date they seem happy that their accounts are run from Scotland, although Dennis Chester, Faulds' managing director, admits this might not always be the case.

'We had an office organised in London when we were repitching for the British Midland account,' he says, 'and we were prepared to use it to expand because we experienced the same pressure that the Leith has had. Clients want you down there.'

The agency did not retain the British Midland business, which went to BBH at the beginning of the year. Undeterred, Chester is quite clear that if the agency is to grow, more of its business must come from outside Scotland. 'If you get to a certain size you have to make the jump. We've had to say half our business will become England-based,' he says. 'We will never abandon Scotland, but even when you have a fair share of good clients in Scotland it is not enough to grow to a certain size.'

Another Scottish agency setting out its stall in London is Yellow M. The agency, which also has an operation in Newcastle, is opening an office to service the newly acquired Conservative Party account. For the present this will operate as a satellite office but the agency's managing director, Ian Wright, admits there is a long-term agenda. 'The ambition is to grow that agency with its own clients and own employees,' he says. 'It will become the third prong in the Yellow M portfolio.'

But, as the more high-profile Scottish agencies increasingly focus their attention on clients south of the border, what will become of some of Scotland's smaller agencies?

Scotland's smaller shops have always experienced mixed fortunes. Over the years some have dropped by the wayside. Often problems are exacerbated by conflict issues because a significant proportion of the region's clients come from the financial, retail, government or new technology sectors.

One Scottish agency going through a lean period is Marr Associates, which recently lost around half its staff. 'I've been in business 18 years and it goes through cycles,' the chairman and creative director, Colin Marr, admits. 'We've taken a series of knocks that have been outside our control such as budgets not being realised and expenditure being cut. The only solution is to shrink to a size that allows you to go on.'

Marr's misfortunes were largely caused by a dotcom client that failed to secure second-stage funding. 'Although there are new growth areas, such as new technology, it doesn't necessarily mean that they are spending money in advertising,' Marr reflects.

Yet as some experience a downturn in fortunes, for others the future is looking brighter. Morgans, formerly the Morgan Partnership, was hit by the loss of the KwikFit account to Faulds in August 1998, but managed to turn the downturn to its advantage. 'People expected it to be the death of us,' the creative director, Angus Walker, says. 'But it gave us the opportunity to review the way we did things. We tried to create a new atmosphere and since then we've got into the D&AD book for the first time, been appointed to work on Hilton Hotels across the UK and had a commercial nominated at Cannes.'

There is also a belief that the success of Faulds and the Leith might work to the advantage of some of the smaller shops. 'Originally everything in the Scottish market was competing with each other,' one agency chief says. 'But now that two have grown considerably, they have moved out of the marketplace and this is leaving new opportunities for smaller, hungrier agencies.'

Yet Scotland's mid-range agencies continue to be dogged by the regional tag. 'It is not going to go away easily because the industry sees London as a bit of a Mecca,' Mark Gorman, partner at 1576, admits. 'You can protest about it too much. We've run good business this year and people find out. We don't have the same opportunities because of our address; for some clients you just have to be based in London.'

Perhaps the biggest burden of the regional label is the barrier it can be to recruiting high-quality staff. Traditionally Scottish agencies have tended to poach employees from each other, not necessarily a good thing.

'In a lot of regional agencies, the real talent sits on the board and has equity. Below them sit a lot of people good at administration but not necessarily good at adding value,' Adams says.

Wright agrees: 'We're trying to build an agency that is not staffed by people who go around from one agency to another within Scotland. We are looking for different people, who will be lively, energetic and challenging and find the best ideas for our clients.'

In recent years Scottish agencies have lured some big names from London. Notable coups include 1576's recruitment of the ex-HHCL partner Ruth Lees, the Union's recruitment of Don Smith, an art director from HHCL, and the Leith's recruitment of the group planning director Carol Ashby from M&C Saatchi. As a result, Gorman says, 'the standards of people in the industry have risen'.

Meanwhile, Adams believes that by launching in London, the Leith has boosted its profile to would-be employees in Scotland. 'Already we are seeing more people of the right calibre interested in the Edinburgh office. The launch of the London office seems to have legitimised the Edinburgh office.'

In Scotland's close-knit advertising community, the mood is upbeat. 'The stock of Scottish advertising is rising,' Gorman says. 'This means those that aren't so good are going to get found out. But generally there are more planners in the marketplace and the strategic work has improved. We're getting better and we're attracting better people.'



YELLOW M

No of employees:     19

Clients include:     The Herald, Dunfermline Lend Lease, the

                     Conservative Party

Most recent wins:    Scottish Power, the Conservative Party

Yellow M, an offshoot of the Newcastle-based agency, launched in

Edinburgh two years ago. This year has proved a good one for the

up-and-coming agency. In May it was rewarded for its work on the

Scottish Conservative Party with an appointment to handle the national

account.

In June this year the agency appointed its first managing director,

poaching Ian Wright, formerly marketing director at Faulds, to fill the

post.

THE BRIDGE

No of employees:     20

Clients include:     The Express, Scottish Blend, Scottish Provident,

                     Historic Scotland

Most recent wins:    Scottish Rugby Union, Scottish Enterprise

The Bridge, based in Glasgow, was launched ten years ago by the

communications group Lopex. A management buyout, led by Brian Cook, saw

the agency achieve independence in 1996. In the past four years it has

grown by more than a third and launched a design division in January.

Its client lists suggests it is still focused on the region, although it

handles the national account for The Express.

1576

No of employees:     25

Clients include:     Direct Holidays, Scottish Tourist Board,

                     Glenmorangie

Most recent wins:    Grampian Foods

Launched in 1994 as a breakaway from the Leith Agency, 1576 hit the

headlines along with the Union as evidence of new advertising muscle

north of the border. Since its launch it has weathered the loss of its

most high-profile client, Direct Line, in 1999 and has established a

solid base in the Scottish advertising industry. It has also launched a

subsidiary and e-commerce company called White Space, which employs 15

people.

THE UNION

No of employees:     50

Clients include:     ScotRail, the Daily Mail in Scotland, Baxters,

                     Miller Homes, Seacat Ferries

Most recent wins:    Intelligent Finance, Stortext, Surveys Online

Launched as a breakaway from Faulds

Advertising in 1996, the Union is currently snapping at the heels of the

Leith Agency to be Scotland''s top creative shop. At the recent Scottish

Advertising Awards it picked up 12 awards for its work for clients

including ScotRail and the Lothian Health Anti-Ageism campaign.

FAULDS ADVERTISING

No of employees:     58

Clients include:     Royal Bank of Scotland, Direct Line Financial

                     Services, KwikFit, the Scottish Office, Autotrader

Most recent wins:    Industrial Development Board, Belfast, Emap Radio,

                     Learn Direct, Weight Watchers

Still Scottish adland''s biggest employer, Faulds has been struggling to

raise its creative game in the past couple of years having been eclipsed

by the Leith Agency. Meanwhile it has been steadily consolidating its

position with a number of new-business wins.

THE LEITH AGENCY

No of employees:     55

Clients include:     Irn-Bru, Tennents, Honda, Standard Life

Most recent wins:    Honda Civic, Grolsch, Carling, Business am

Winner of the Grand Prix at this year''s Scottish Advertising Awards for

its work on Beat 106, the Leith is Scotland''s most successful creative

agency. Some high-profile recent wins have included new business from

existing clients such as Bass (Carling) and Honda (the pan-European

launch of the Honda Civic). Its profile as a UK rather than regional

agency has also been boosted by the launch of a separate London office.





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