ANNUAL AGENCY RANKING;EURO NETWORKS TURN THE CORNER;PUBLICIS ZIPS TO NO. 1 SLOT IN YEAR OF MOSTLY DOUBLE-DIGIT GAINS

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[london] Agency networks in Europe saw light at the end of a darkened ad tunnel in 1995 as double-digit growth for most networks reversed declines that typified the previous year.

Euro RSCG, previously Europe's No. 1 network, and Publicis FCB Communications, formerly ranked No. 2, have swapped places this year following a restructuring that divided Euro RSCG into four different entities. Two of the four rank among Europe's elite in this report.

In 1994, 14 of Europe's top 20 networks reported a drop in gross income compared with only three out of an expanded ranking of 25 networks in '95. Nine networks-led by DDB Needham Worldwide, up 27.3% in gross income-achieved growth above 20%.

Growth wasn't confined to any particular country, either. Eu-rope's top six countries by ad billings-U.K., Germany, France, Spain, Italy and the Netherlands-rose a collective 18.5% in total billings.

IN GROWTH'S FAVOR

Growth among the 25 networks, expressed in dollars, was abetted by favorable exchange rates and by a boost in equity positions in local agencies among several networks. Advertising Age International ascribes to a network the portion of a local shop's gross income equal to the equity stake held in the shop.

Despite a year of turmoil, Saatchi & Saatchi Worldwide Advertising fell only one place to No. 12 but otherwise survived the December '94 ouster of holding company Chairman Maurice Saatchi. A string of account defections to Mr. Saatchi's new M&C Saatchi agency included the $90 million worldwide British Airways account, Gallaher, Mirror Group Newspapers, Britain's governing Conservative Party and Dixons, a consumer electronics chain that is the U.K.'s largest retail account. The Saatchi network still managed 6.9% growth in gross income in Europe.

"The problems affected only the U.K. agency, not the international network. The U.K. office made every effort to recoup revenues last year and keep many clients," said Derek Bowden, Saatchi's CEO for Europe, Middle East and Africa.

WPP UNIT SLIPS

The poorest performing networks in the ranking were WPP Group's Conquest Europe, FCA!/BMZ Group and GGT Group, with gross income declines of 4.6%, 1.5% and 0.8%, respectively.

FCA!'s drop is not entirely surprising because 1995 was a year of consolidation and change for the network, which merged operations with BMZ. The merger was designed to create a stronger second structure behind Publicis FCB, which purchased FCA! in 1994. The union caused some conflicts that affected billings.

"We had to resign Skoda in Germany because BMZ is a Toyota agency," said Philippe Calleux, president of FCA!/BMZ. "There were not many [conflicts], but enough that it lowered our results. Now that is behind us, and we will be profitable once again by this time next year."

Agency networks in general benefited from the beginning of a long-awaited recovery in French ad spending, supported by a reversal in the fortunes of the franc, up 10.7% in '95 after plunging 9.7% in '94.

TOUGH YEAR FOR FRENCH

The French ad community has been devastated by the Sapin Law, which regulates media buying. Introduced in April 1993, the law ended agencies' standard 15% commission and outlawed traditional volume-based kickbacks, thereby cutting deeply into agencies' '94 returns and provoking a wave of firings and fierce cost cutting.

"We did not see the recovery that some had hoped for, but 1995 results are the first indication the downward spiral of the last four or five years may have been turned back," said Jacques Bille, VP of the French Association of Advertising Agencies. "It is certainly a welcome change."

RESTRUCTURING CREATES CHANGE

Publicis reported $498.6 million in gross income, a 15.2% leap from '94 when it ranked No. 2 and reported a 5.7% drop in gross income from the previous year. Publicis FCB clinched the coveted No. 1 slot by default after Euro RSCG undertook a major restructuring in a bid to win more business. In January 1996, Euro RSCG created an umbrella holding company called Havas Advertising with four separate groups, the largest still called Euro RSCG.

Euro RSCG, which handles global accounts for Havas, registered 12.7% growth to $478.9 million gross income from Europe, just $20 million behind the Publicis take. Publicis FCB in this report is credited with 100% of returns from its Publicis/FCB network, shared 51%/49%, respectively, with True North Communications.

Havas' only other true agency network, Campus, finished 19th at $83 million gross income, up 10.4%, from its collection of seven agencies paced by top billers WCRS, London, and Ruiz Nicoli, Madrid. Headed by WCRS Chairman Robin Wight, Campus functions as a rival network pursuing accounts that compete with Euro RSCG's client list.

A third group, called Havas Diversified Agencies, is a collection of 21 specialty shops in Europe and the U.S. AAI did not include this highly diverse group, which had equity gross income of $183 million worldwide, up 7.9%. Some $123.1 million of that came from Europe. Havas' remaining segment is Mediapolis, which is headed by Didier Colmet-Daage, CEO.

McCANN HOLDS ONTO 3RD

McCann-Erickson Worldwide, at $432.1 million gross income, remained third, its 20.3% growth in gross income countering a '94 decline of 3.5%.

"There are not that many new markets for McCann to go into, so last year's good results had more to do with new local business," said Mark Gault, managing director at McCann-Erickson, London.

Ogilvy & Mather Worldwide attributed its robust performance to the European portion of IBM Corp.'s $400 million global account, won in '94 but only contributing to the full year's billings last year. O&M also filled gaps in Europe with new offices in Estonia, Cyprus and Latvia.

At Young & Rubicam, gross income rose 22% to $395.8 million, ranking it No. 5.

"It really came together for us in 1995," said Fernan Montero, chairman-CEO at Young & Rubicam Europe. "We've brought in new levels of financial discipline. We also decided to build a network approach to new business. It's paid off; it's kicking in."

New accounts included consumer electronics marketer Ericsson and Swissair, which Y&R managed to shunt into Advico Y&R in Zurich and Y&R's Wunderman Cato Johnson unit to avoid conflict with Lufthansa German Airlines, handled out of Y&R's Frankfurt office. Y&R closed unprofitable regional offices in France and Germany.

J. Walter Thompson Co. dropped two slots to No. 9 despite a 13.7% rise in income to $351.4 million, compared with a 3.4% drop in 1994.

"On a local basis, however, many JWT offices did very well," said Allen Thomas, JWT Europe's chairman. That included the $31 million privatization of Eni, Italy's state oil company, and the $22.5 million Cable Communications Association business in the U.K.

Contributing: Bruce Crumley, Paris.

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