Heavy consolidation activity over the years has left the industry top heavy and perhaps a wee bit sluggish as evidenced by the revenue power and mixed growth of the top 5 U.S. agency brands: They control 19.6% of the $9.28 billion in traditional advertising led by JWT at 5.1% of the market (see pie). JWT's revenue, too, was down 1.5% for the year, McCann Erickson's grew 0.1% and Leo Burnett's 3.3%, while BBDO and Ogilvy advanced 12.7% and 11.5%, respectively. Even more telling, though, is the top 25 agency brands account for 52% of U.S. traditional agency business. And of those 25, 21 are owned by five holding companies that with all their U.S. agencies control 57.4% of the U.S. market. That group is led by Interpublic Group of Cos. at a U.S. share in traditional advertising of 18% to runner-up WPP Group's 14.9%. Given that media has become commoditized where volume equals power, that market is far more compact. The top five shown in the pie claim 48.4% of $91.05 billion in U.S. media billings led by OMD at 11.4% share. And the top 10 control 81% of the market. These media behemoths when spun off by agency parents initially handled the media side of the agency's AOR clients. Now, the greater share of their billings falls outside that traditional relationship.
The world's top four marketing organizations claimed 58% of $12.02 bil in U.S. advertising and media in 2005, according to the 2006 Agency Report. The next Agency Report is May 7, 2007.
1 Omnicom Group
Some $448.9 million in revenue separated Omnicom from No. 2 WPP Group in 2005, and through the first three quarters of 2006, that amount has narrowed to $329 million.
U.S. agency brands
8 FCB Worldwide
Illustrating the growing power of marketing services in the ad mix, DraftFCB became the new name for creative agency FCB Worldwide after it merged mid-year 2006 with Interpublic sibling Draft, a Chicago-based marketing services network.
U.S. agency brands
19 Arnold Worldwide
Agency brand that grew the most in the top 25 was Arnold even though it lost Volkswagen at year-end (so go the vagaries of agency business). Not shown is big loser Lowe Worldwide, 17th in the previous year. It fell to No. 27 as revenue declined 25%. Lowe in 2007 is being shrunk from 83 to 36 offices with a concentration on eight key markets.
specialty Agencies: Specialty shops-direct, sales promotion, internet, healthcare and multicultural- amassed $10.5 billion in revenue, 42% of all U.S. marketing communications in 2005.
5 Vidal Partnership
Hispanic shop with the biggest revenue growth at 84.2% was Vidal, thanks to consolidation of Sprint Nextel Corp. work and several Kraft brands in '05 and a full-year on Nissan and Home Depot accounts. From 2003 to 2005, Vidal doubled its staff to 190.
Overall leader in revenue among multicultural shops is GlobalHue at $74 million in 2005, an estimated $36.3 million in Hispanic business, $34.8 million African-American and $2.9 million Asian-American. Agency head Don Coleman in mid-2006 bought back the 49% held by Interpublic. He now is sole owner.
marketing services shops
8 Euro RSCG 4D
Of the top 10 marketing services shops, Euro RSCG 4D was the most well-rounded, drawing 53% of its business from direct marketing, 27% from sales promotion and 20% from interactive.
top five u.s. agencies by share of discipline
Traditional advertising agencies versus media specialist companies based on 2005 returns
agency family trees
Holdings of the top five marketing organizations with revenue greater than $25 million, color coded by discipline. *Minority owned.
top 25 marketing organizations
Marketing organizations are ranked by worldwide revenue (in millions) in 2005. Revenue supplied by companies via Ad Age questionnaire or taken from public documents. *Estimate. 1WPP shown pro forma as if it owned Grey Global Group and Communications Group, both acquired in 2005, for two consecutive years. From Agency Report (AA, May 1).
top 25 u.s. agency brands
Rankings for U.S. agency brands is by U.S. revenue (in millions) for 2005. Revenue either supplied by companies or estimated (*) by Ad Age. Revenue is the sum of commissions on media billings, markup on materials and services and agency fees. Parent groups shown may own less than a majority of the shop. From Agency Report (AA, May 1).
Top 10 core agencies worldwide
Core agencies ranked by worldwide core-level revenue for 2005 (in millions) from advertising only. Figures exclude revenue from non-advertising operations such as direct marketing, sales promotion, interactive, healthcare and media buying and planning.
top 10 worldwide media specialists
Media specialist companies are ranked by projected billings (in millions) by Recma Institute, Paris. Billings are based on media billings from TNS Media Intelligence from July 2004 to June 2005, and billings equivalents for media planning and diversified services. Recma also allocates local buying not monitored by TNS. From Agency Report (AA, May 1).
Top 10 u.s. independent agencies
Independent agencies ranked by U.S. revenue (in millions) for 2005. *Indicates figures are Ad Age estimates. Independent agencies are not owned in any part by a marketing organization. They also are identified as creative ad agencies as opposed to marketing services or healthcare agencies.
top 10 u.s.media specialists
Media specialist companies are ranked by billings (in millions) projections made in November 2005 for calendar 2005 by Recma Institute, Paris. Recma collects, analyzes, and publishes intelligence on the media agency sector on a worldwide basis. From Agency Report (AA, May 1).
top multicultural agencies
Multicultural agencies ranked by 2005 U.S. revenue (in millions) attributed to the specialty. *Ad Age estimates. Parent names in brackets indicate an affiliation with one of the top marketing organizations, which in most cases, is a minority stake. 1Ad Age estimates total GlobalHue U.S. revenue for 2005 at $74 million, up 17.5% from $63 million in 2004.
Top u.s. HEALTHCARE agencies
Healthcare agencies ranked by U.S. revenue (in millions) for 2005. *Ad Age estimate. Marketing organization totals include multiple shops and are Ad Age constructs. "Independent" agencies are those not owned by any of the top five marketing organizations.
top 10 u.s. marketing services agencies
Marketing services agencies ranked by U.S. revenue (in millions) in 2005 from all forms of marketing services-direct, sales promotion, interactive.
top 10 u.s. direct marketing agencies
Direct marketing agencies ranked by U.S. revenue (in millions) in 2005 from direct marketing activities only.
top 10 u.s. sales promotion agencies
Sales promotion agencies are ranked by U.S. revenue (in millions) in 2005 from sales promotion activities only.
top 10 u.s. interactive agencies
Interactive agencies ranked by U.S. revenue (in millions) for 2005 based on returns from interactive activities only.