UK ad agencies agree to ranking by income

Britain's leading agencies have agreed to come clean and allow their rankings to be determined by income instead of billings.

Their decision removes a major stumbling block in attempts to assess agencies' true performance as the commission system declines and billings become irrelevant.

From now on, an agency's income will determine the size of its annual subscription to the IPA, the agency trade body. Agencies still have scope to massage their figures but Rupert Howell, the IPA's president, said: 'The more agencies puff themselves up, the more they pay.'

Although the agreement is confined to the top 20 shops, Howell expects other agencies to fall into line. He believes it would be reasonable to expect agencies to provide an estimate of their income figure for 2000 in time for the agency ranking lists published by Campaign in its 23 February issue.

He said it was also likely that media agencies would come on board even though billings figures remained an important measure for them.

Agreement among IPA shops could have been reached a year ago but was thwarted because agency groups with media dependents were able to include them in their figures. Since then, major media operations such as Leo Burnett's Starcom Motive and the BBDO-owned BMP OMD have become IPA members in their own right.

Many agencies have been concerned that while billings figures make the industry seem large, publication of income figures might seem to diminish its importance.

Howell said: 'There are hardly any countries left that still rank agencies by billings.'

Paul Simons, Ogilvy & Mather's group chairman, said: 'Because income usually represents about 10 per cent of billings, agencies have been worried about perceptions of their scale. Yet clients understand the difference.'

Richard Hytner, the Publicis chief executive, said: 'As long as billings and income figures appear side by side, we are happy to participate.'