A Diversified Roster (and Caution) Is the Safest Bet

An Ad Age Editorial

Published on .

With the economy looking worse every day and the benefits of the so-called bailout yet to be seen, agencies and media outlets are rightly worried that they'll be left holding the bag. And that's the sort of trickle-down economics that can crush an agency.

The good news is that agency holding companies benefit from diversity -- in client rosters, in geographic revenue, in types of services. Omnicom Group, for example, generated just 2.8% of revenue from its largest client in 2007. Omnicom didn't specify who its top client was in 2007; its largest client in 2006 was DaimlerChrysler, which last year split into two companies. Omnicom shops have worked with Chrysler since 1926. Omnicom's 100 largest clients accounted for 46.2% of 2007 revenue.

WPP Group's 10 largest clients in 2007, measured by revenue, were British American Tobacco, Ford, GlaxoSmithKline, IBM, Johnson & Johnson, Kraft Foods, Microsoft, Nestlé, Procter & Gamble and Unilever. Together, those clients accounted for about 19% of WPP revenue in 2007. WPP has worked with its top 10 clients an average of about 50 years. No WPP client represented more than 6% of '07 revenue; historically, Ford has been WPP's top client.

Interpublic Group of Cos. said its top 10 clients accounted for about 26% of worldwide revenue in 2007 and 2006. Its largest clients last year were General Motors, Microsoft, Johnson & Johnson, Unilever and Verizon. Historically, GM has been Interpublic's largest client. Interpublic's Campbell-Ewald has worked for Chevrolet since 1922.

Though diversified, each of the top three has a longstanding Detroit tie, and those huge marketers are on a rocky road. Just consider the remarkable statement that GM felt compelled to issue earlier this month: "Bankruptcy protection is not an option GM is considering."

Even in that category, there is a precedent for working through challenging times. Chrysler, backed by federal-loan guarantees, was still struggling in late 1980, when it asked suppliers -- including agencies -- to hold off billing for a month and to make some concessions. Agencies went along with that; Chrysler survived.

Proceed with caution and treat your customers and suppliers as you would expect your customers to treat their customers and suppliers. Everyone's in this thing together, but it doesn't do any good to deny reality: This downturn will have casualties, and companies need to protect themselves even as they serve their clients.
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