Few industries are as brutal as the media agency world when it comes to exposing the cracks in the performance of their star players.
You don’t see many companies in other fields piled together into a league table, showing exactly how far they have forged ahead of their rivals or how much their form has slumped over the previous year.
When it comes to billings tables, agencies can spin a line, but, in the end, they can’t hide the bottom line.
Allan: “A year ago was a really important milestone because we achieved our goal of becoming the number-one agency.”
Which is why, this week, the pool balls may just be zipped into the pockets with extra relish in the MediaCom bar while, over at Carat, a few balls will probably be facing a brutal treatment of a rather different kind.
But what is in a league table other than the chance to gloat over the size of your assets? Should agencies really be beating themselves up too much if they are not the leader of the pack? The latest billings league table from respected monitoring service Nielsen Media Research is expected to show that MediaCom has become the biggest billing agency in the UK, taking over from Carat, which is believed to have dropped out of the top three.
Last year, there was an almighty barney when MediaCom claimed top spot by becoming the biggest agency grouping in the UK. Carat claimed it was still top dog if the figures were worked out in another way.
This time, MediaCom has settled that dispute, having opened up a gap between the two main agencies estimated to approach £100m-worth of billings.
The biggest group this time is expected to be Omnicom’s OMD Group, which would partly be a result of the fact that Nielsen has this year included Manning Gottlieb OMD with its sister company. Nonetheless, both OMD and MGOMD have had impressive growth each in its own right.
The merged media giant some had expected to take top spot as the biggest billing agency was ZenithOptimedia. But it looks to have been pipped to the post by MediaCom and is thought to have failed to make it into the top three in the group line-up.
Different people have different views about how important tables are in the overall scheme of things.
But try telling Steve Allan, chief executive of MediaCom, that coming top of the pile doesn’t matter.
“For us, a year ago was a really important milestone because we achieved our goal of becoming the number-one agency,” says Allan.
“We can all argue about definitions, but when they [Carat] were number one, it seemed to suit them. Now we’ve proved it either way.”
Importance of motivation
Allan says the motivational factor was important last year and not just for his team’s pool-playing prowess: “We thought to ourselves: right, now we’re number one, we’ve got to get a shift on to make sure we’re not taken over.”
But how much of a blow are the Nielsen figures for Carat? The agency’s own estimates claim its billings fell by five per cent in 2003, which would leave it around the £530m figure. Even if Nielsen figures see it fare worse, as is believed, this would still leave Carat way ahead of most UK agencies – although it admits it has had a bad year.
“There isn’t any cause for concern,” says Carat marketing director Jenny Biggam. “If we’d seen a 20% drop, we’d have to have a major restructure. As it is, it’s not a good year, but it’s not been a complete disaster.”
Although there is a code of honour among agencies that you don’t slag off your rivals – in public – if for no other reason than, one day, you might want to get a job with them, rival industry bosses are, privately, less kind to those who fair badly in the billings bunfight.
“Ouch!” is what one agency director predicted Carat’s reaction would be, adding: “I can’t imagine Carat’s morale is particularly good. They obviously need new business badly.”
A rival chief executive added: “I just think Carat needs to make a stronger play in bringing in new business. Whether the senior management has stepped back a bit from new business I don’t know, but, at the end of the day, clients haven’t been choosing them.”
The worrying thing for Carat is that things look like they might get worse before they get better.
The irony of billings figures is that it takes a year for the impact of new business wins, or losses, to kick in and the agency has been pretty quiet on the new business front of late.
Carat suffered in 2003 because it had lost big accounts, such as Britannia, General Mills and Courts, in 2002.
MediaCom shoots to the top in 2003 because it had, as Allan describes, a “stonking 2002”.
Explains Sandra Collins, marketing director of MindShare: “The good or bad news from a pitch comes 12 months later,” MindShare is thought to have entered the top three in the Nielsen table of individual agencies, with the biggest increase in billings – again the result of big wins in 2002, including Hutchison and Gillette.
Collins argues that performance in the tables is important, not least psychologically.
“A lot of it is just morale,” she says. “The morale is much better than it is at the likes of Carat because they’ve lost business.”
She says clients also have their mindset affected by billings: “Clients like to be associated with successful businesses.”
Carat’s Biggam, however, claims that the agency’s falling out of the top three will have no impact on its ability to win big business in the future.
“For existing clients, it doesn’t matter as long as you’re one of the top five or six agencies and you’ve got the structure to deal with the big clients,” she says.
Well placed for a fight
With the buying clout of Aegis behind it, Carat is still one of the world’s big guns and, having restructured last year by merging its press and TV teams into one media department, thinks itself well placed to fight back in the billings department, too.
ZenithOptimedia has, of course, been through much more of a fundamental restructure after its merger and is believed to have suffered one of the worst years, in terms of lost billings, of any of the UK’s agencies.
But will its performance cast a shadow over the merger? Not if ZenithOptimedia chief executive, Antony Young, has his way.
Young this week launched a strong attack on agencies spending time worrying about tables, but said: “If we’re number two in the list, then that’s a good place to be.” The agency also has the billings from its UIP win last year to look forward to when the next tables come out, whether or not their boss spends too much time looking at them.
The jury may still be out on ZenithOptimedia, but OMD and Manning Gottlieb have reason to celebrate this week with OMD Group expected to be number one in group billings, above MediaCom Holdings and Starcom.
With echoes of last year’s row, some will argue the position is false – adding two agencies’ billings figures together – but the psychological importance will not be lost on bosses at OMD and Manning Gottlieb OMD.
Steve Williams, managing director at OMD UK, says: “The bottom line is that the group has been in joint negotiation for the last two or three years. People talk about Group M at WPP, but Omnicom has been getting on with it and doing it in an intelligent way for a long time.”
Williams, whose agency’s impressive array of wins included AA, Sony and Siemens – on top of a strong panEuropean performance – enthuses “both brands have done fantastically.”
Of course, it was only three years ago that OMD was top of the pile of individual agencies in terms of its UK billings, which shows the speed of change.
“I don’t think any agency really romped home last year,” says MediaCom’s Allan. “But the new-business roundabout continues and I would hope we’ll begin to see some real spend recovery. I’m sure we will.”
Positive thinking from Allan, but then, for now at least, he can afford to be positive and maybe allow himself the odd gloat while he’s at the top of the table.