AGENCY 2001: Top 20 media agencies - Media marriages still on the cards. Agencies have to decide which matters most - size or independence. Andy Fry reports

While this year's league table of media agencies contains many

interesting stories, perhaps the biggest surprise is that the industry

is yet to see the flurry of mergers predicted in the past couple of

years.



Starcom's merger with Motive pushed the new firm to number three in our

chart, and an imminent marriage between Western and Initiative is

likely.



But talk of mergers between Zenith and Optimedia, Mindshare and The

Media Edge, and Starcom Motive and MediaVest, continues to be

speculative. Nevertheless, consolidation in ITV and some key account

moves have brought the prospect of mergers closer.



Once again, Zenith leads the pack, even though it lost the pounds 15m

BMW buying business in a head-to-head pitch against Carat for the car

giant's pounds 100m European account. Despite that, account wins such as

the pounds 14m full service Scottish Widows and the pounds 27.5m press

and radio account for BT Cellnet kept up Zenith's forward momentum.



Lack of European firepower was cited as a key reason for Zenith's BMW

loss, but that may be less relevant now Publicis has acquired one of

Zenith's 50% owners Saatchi & Saatchi. That deal led to suggestions that

Zenith might be merged with Publicis buying arm Optimedia.



Room enough for two



Although such a marriage would ward off the threat of Carat overtaking

Zenith in the billings race, Optimedia chairman Simon Lloyd has rejected

suggestions that a merger is on the cards, claiming there is room for

both brands on a worldwide basis. Currently, a closer relationship looks

unlikely, given Zenith's fury at Publicis' decision to switch pounds

68.7m of global Hewlett-Packard business out of Zenith into

Optimedia.



The shining star of the league table is Carat, which bounded back from

losing pounds 25.5m of Nissan business to Manning Gottlieb Media by

picking up BMW, PSA's Peugeot-Citroen account (with sister agency BBJ)

and, most recently, Renault. It is quite possible Carat will clinch pole

position in next year's table, even excluding the pounds 124m billings

that flow through BBJ.



Carat UK new business director William Corke says the agency's

independence from full-service networks continues to be a strength. But

he believes its planning credentials have been underestimated. Retaining

the Arla Foods account, winning pounds 15m Group Danone and poaching

Burger King's planning from MindShare underline the point that Carat is

not just about scale, he says.



The company's portfolio management skills are endorsed by it winning

pounds 60m of pan-European Louis Vuitton Moet Hennessy (LVMH) business

from Initiative, he adds. And pounds 27m of press billings from Tiny was

also a healthy lift.



In spite of all the talk about mergers, Corke points out that 'having

two front doors' has its advantages. Carat's close relationship with BBJ

has allowed it to get round the potential conflict between its PSA and

Renault business - at least in the short term.



Smooth operators



Starcom Motive's climb up the table is due to its merger - but the good

fit between the two operations and the smooth nature of the merger has

impressed observers. Account wins include the pounds 24m Lego European

task, pounds 7m Dr Martens planning and buying brief and the pounds 7m

P&O Cruises buying account. The agency is also notable for wins such as

HFC Bank's Marbles, CitySnake.com and WAP service provider iTouch.



MediaCom TMB has been bedding down business this year after clinching

the pounds 80m VW task in 1999. MediaCom wins this year include the

pounds 4.7m De Agostini, pounds 4m Greene King and pounds 1m planning

and buying for Bahlsen's biscuit brands.



MediaCom was a major beneficiary of the dotcom boom, with briefs for

ShopSmart.com, Multimap.-com,and the pounds 15m account for Direct

Line's online car dealing service, jamjar.com. Although not included in

this table, MediaCom's UK business is also in line to add billings,

thanks to its US office, which has won pounds 68m global planning and

buying for Unisys.



This year saw a corporate rebranding for Omnicom subsidiary Optimum

Media Direction (OMD), which in last year's table was prefixed by BMP:

13% year-on-year growth made it the second fastest growing business in

the top ten behind Carat.



Unlike Carat's Corke, OMD's new business director, Mark Dickinson, sees

benefits in being plugged into a family of agencies across a variety of

disciplines. He stresses that OMD's business is not reliant on the

success of creative sister agency BMP, but he believes it gives OMD an

edge over its rivals. 'We have a deep-rooted understanding of the

full-service culture which Zenith or Carat don't possess. I think that

makes us less process-driven.'



Family relationships have converted into business. OMD UK's pounds 21m

AXA win was enabled by sister company WWAV's involvement in AXA's FA Cup

sponsorship.



Among OMD's big wins, Dickinson singles out pounds 46m Hasbro and the

pounds 27m centralisation of Reckitt Benckiser. Winning the COI's radio

business in July also confirmed the agency's credentials in that medium

- where it is now clear number one.



Putting the Boots in



Despite a good year, OMD had its own trauma when top-level intervention

by WPP chief Martin Sorrell helped MindShare snatch the pounds 60m Boots

business.



It is a blow, admits Dickinson. 'But the market can be assured that we

will be out there, aggressively going after a new piece of retail

business to replace Boots.'



Although not included in our table, it is worth noting that almost equal

in billings with OMD is 'direct' (in-house buying), which grew by

1%.



MindShare dropped a notch to sixth because of the Starcom Motive deal.

Its setbacks tended to be failures at pitch stage, rather than outright

losses. Accounts it might have been expected to win included the

National Dairy Council, Energizer, Burger King and Marks & Spencer.



But these disappointments have been offset by wins such as the pounds

124m BP Amoco account, pounds 37m of which comes under the UK. MindShare

also secured pounds 7m Bass Restaurants and the media task for Richard

Branson's People's Lottery.



Its failure to pick up M&S was surprising. But when next year's figures

are calculated, this will be offset by a pounds 60m Nike pan-European

account win in October and the pounds 60m Boots account, neither of

which register in the table.



Universal McCann saw a dip in billings after rapid growth in 1998 and

1999. But the fact that it lost less business than Initiative means it

jumps ahead of its IPG-owned rival. Universal's key wins included

Goodyear (pounds 33m) and more Coca-Cola business for Dr Pepper, Oasis

and Canada Dry (pounds 9m), although this was later offset by Coke's

decision to hand all planning and non-TV buying to BBJ.



Like MindShare, Universal promotes the benefits of being part of a

full-service global group, McCann-Erickson Worldwide (MEW).

Repositioning the company for global expansion last autumn, MEW chairman

and chief executive John Dooner said: 'Our goal in launching Universal

McCann globally is to create the next generation of media practice, one

that will elevate the role of media within the brand-building

process.'



Initiative dropped by 12% with the loss of PSA and LVMH to Carat. The

pressure for a merger with IPG sister agency Western (also down 8%) has

become intense, particularly since the two brands have already unified

in a number of countries.



The major stumbling block to a UK merger had been the PSA account's

conflict with Western's Vauxhall business. With that out of the way, a

merger is now imminent.



As a combined force, they might squeeze into the top five next year -

presumably a benefit in a size-obsessed market.



Despite its setbacks, Initiative UK picked up some impressive business,

such as the pounds 13m task of launching an online banking venture

supported by Merrill Lynch and HSBC, and the pounds 5m Selftrade win.

Initiative also clinched two pounds 25m pan-European accounts for drink

brand Energizer and a new Carphone Warehouse e-commerce portal.



Developing brand



New PHD, long regarded as one of the sector's most creative agencies,

saw a dip in billings but did pull off key wins such as British Midland,

BeautySpy, Letsbuyit.com, Lastminute.com and London Transport.



In a climate of merger talks, it was inevitable that Omnicom would

consider merging PHD into the OMD fold. But strong internal resistance

persuaded it to give PHD an enhanced role instead. In March, it was

revealed that under new PHD chief executive David Pattison, the PHD

brand would be developed internationally in parallel to OMD.



MediaVest's year started with the pounds 21m loss of Mars. A pounds 10m

election task for the Tory party was counter-balanced by a pounds 4m COI

planning account on behalf of the Department of Social Security.

MediaVest also picked up pounds 11m Bristol Myers, pounds 5m Associated

New Media and pounds 5m Tetley's and some dotcoms (Kitbag.-com's pounds

3m and Attenda's pounds 5m).



After 10% growth in our league table, MediaVest positioned itself well

for next year by defending key pieces of business including COI's pounds

90m TV buying task and the pounds 45m Scottish Courage account in the

face of stiff competition. The Foster's and John Smith's brands are the

big element of this primarily TV-based task.



There is a sharp drop in billings after MediaVest to Optimedia.

Optimedia's billings for the period under analysis grew by 6% and the

agency managed to retain 11th place, despite being leapfrogged by

Starcom Motive. But it lost pounds 80m of Renault business to Carat in

September (a fact not registered in these figures). Although Optimedia

has most of next year to regain ground, it must work hard to gain on the

sector's Premier League. Wins including pounds 6m Tommy Hilfiger and the

media business for the European Central Bank, for which the value is not

known, the pounds 17m UK Hewlett Packard task (not included in these

billings), and the agency's ongoing aggressive marketing drive should

help it to do just that.



The companies that Optimedia heads in this table fall into two clear

camps: those that have experienced downward momentum and those with

wings on their heels. After a shattering end to the past decade, CIA UK

at number 14 (down four) has stabilised under new chief executive David

Wheldon.



The acquisition of brand strategists Added Value by parent group Tempus

gives CIA an extra string to its bow to help it out of the woods.



Highlights included pounds 7m of Gap business, the pounds 3m World

Online launch, a pounds 15m task for Halifax internet bank IF.com and

the pounds 4.5m HFS campaign picked up by CIA Manchester. On the debit

side, the loss of pounds 20m CGNU to MBS Media was a bitter blow while

there is talk that CIA may see pounds 6m of SmithKline Beecham (SB)

centralised into rival MediaCom TMB.



Above and below CIA are more of this year's star performers. Media

Planning Group (previously known as Mediapolis) at number 12 picked up

the pounds 22m centralised account for Thomson Travel and the pounds 10m

Ask Jeeves business.



A highly impressive year for Manning Gottlieb Media saw it team up with

sister agency OMD to snatch the pounds 125m Nissan European planning and

buying task from Carat. In a strong start to the year, MGM also picked

up National Power's pounds 20m launch of utilities brand Npower. One

blip in an otherwise storming year was the loss of Dr Martens to Starcom

Motive. In addition this year's table does not include the loss of the

Nike account to MindShare.



In any other year, MGM's 25% leap in billings would probably be the best

performance. But Walker Media's 31.5% surge is also highly

impressive.



Christine Walker has lost none of the respect among clients that she

built up while at Zenith. With a team spearheaded by the likes of Phil

Georgiadis and John Horrocks, the company is proof that some clients are

as likely to be swayed as much by quality personnel as by arguments

about market clout. Georgiadis says the agency's growth has been the

result of its focus. 'We have short lines of control between senior

management and our clients and we aren't distracted by discussions about

mergers and international politics.'



Picking up pounds 6m Mothercare.com and pounds 8m Freeserve were good

wins for Walker.



But the agency's pounds 21m Marks & Spencer win was proof that the

company is a force to be reckoned with. Georgiadis is also proud that

the company made it on to the Scottish Courage shortlist - another sign

of progress.



For Georgiadis, the next test of maturity will be how the company

performs when it has to fight to hold on to business that it has been

winning since its launch.



For now, Walker's independence is a real point of difference. But for

all the companies from Optimedia down to Western in this chart, there is

an underlying question about whether their position as smaller agencies

is sustainable in the long-term and to what extent they will need to

grow to survive. Western's last year as a standalone agency saw it pull

in some big recent wins including the pounds 10m launch of US online

retailer Priceline and the pounds 3m Emap Online business.



Speedy recovery



In the last leg of our table, 17th-ranked BBJ, under new managing

director Trista Grant, is recovering fast from the loss of pounds 80m VW

business last year.



Alongside Carat, it won the pounds 74m PSA task and, following Carat's

Renault win, will be looking after the entire account. Dotcom wins

include pounds 7m Lycos, pounds 5m 365 and Moneygator.



com, while pounds 11m Bertelsmann Music is another highlight. As

suggested earlier, BBJ is unlikely to be merged into Carat because it is

a useful foil for the main agency.



Our highest new entry at number 18 is The Allmond Partnership - whose

work on behalf of BT is a core part of its billings.



Another newcomer at 20 is Leeds-based Brilliant, the result of a merger

between DMS and Media Lane. Wins this year led to a 42% boost in

billings and included pounds 3m of business from debt management group

Baines & Ernst, pounds 8m Claims Direct and pounds 2.5m Churchill

Stairlifts.



Squeezed in between TAP and Brilliant at number 19 is sector stalwart

MBS Media, which has inched up five places in the past two years.



In addition to the CGNU centralisation, its big coup this year was the

pounds 4m MGM Home Entertainment job. The purchase of MBS Media by True

North will see it merge with Banks Hoggins O'Shea's inhouse media arm to

create a company with claimed billings of pounds 210 m.



Aside from mergers, one major phenomenon to watch out for in next year's

table will be the impact of retreating dotcom expenditure. This should

curtail the number of odd-sounding account wins in the press. Another

trend to monitor is whether Sorrell's Boots deal triggers a new wave of

top-level package deals.



There is also a chance that Scotland's Feather Brooksbank might break

into next year's table. Having been acquired by Carat and merged with

Carat Manchester in late 1999, it immediately picked up pounds 10m of

planning and buying from the Bank of Scotland. It lurks just outside our

table at number 22.



TOP 20 MEDIA AGENCIES

Sep99-Aug00 Sep98-Aug99 %

(pounds) (pounds) Change

1 Zenith Media 598,250,611 582,061,840 2.8

2 Carat 525,328,491 446,204,245 17.7

3 Starcom Motive 421,874,861 392,113,201 7.6

4 MediaCom TMB 395,581,724 367,377,590 7.7

5 OMD UK 391,007,178 345,391,731 13.2

6 MindShare 383,723,993 363,289,319 5.6

7 Universal McCann 325,830,456 333,175,216 -2.2

8 Initiative Media 307,356,890 352,380,621 -12.8

9 New PHD 296,099,664 302,583,314 -2.1

10 MediaVest UK 292,081,056 263,656,362 10.8

11 Optimedia 225,750,015 212,104,853 6.4

12 Media Planning Group 181,609,295 161,983,726 12.1

13 Manning Gottlieb Media 166,445,512 132,849,956 25.3

14 CIA UK 165,554,878 163,546,415 1.2

15 Walker Media 161,765,471 122,968,988 31.5

16 Western 140,582,544 153,452,996 -8.4

17 BBJ 124,019,001 113,259,353 9.5

18 The Allmond Partnership 88,668,174 92,492,386 -4.1

19 MBS Media 75,485,857 73,410,386 2.8

20 Brilliant 68,033,997 47,640,057 42.8

Source: ACNielsen MMS



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