Ad agencies’ earnings seen up 22% to $31.2bn in '99
NEW YORK 25 APRIL ADVERTISING agencies' world-wide income soared nearly 22 percent to $31.2bn in ’99, industry bible Advertising Age reported on Monday, citing the strong US economy, the surge in dot-com advertising and continued agency consolidation. Agencies' revenue growth was the strongest in two decades, it said. Advertisers spent a total of $235.5bn last year to build their brands and reach consumers around the world, Ad Age said, releasing its 56th annual rating of ad agencies. According to a report issued last week, $4.6bn of that total was spent to advertise on-line. Citing the influence of what he called "dot-com mania,’’ Advertising Age editor Scott Donaton said: "There are so many of these marketing companies that popped into being which didn't exist before, many of them with pretty healthy advertising budgets. That was a huge new business opportunity for a lot of ad agencies and they picked up a lot of money last year from all of these dot-coms. "This was business that came flooding in the door,’’ he told Reuters. "Unfortunately, a lot of it went flooding back out, but there always seemed to be someone there to replace it. Some of these companies, they had big venture capital budgets and they were prepared to spend a lot of it and spend it very quickly in a very quick turnaround time.’’ Donaton noted that the new companies were often willing to pay a premium for fast turnaround on their work as they sought to stake a claim in the fast-moving on-line marketplace. But he said it often came at the expense of quality. "A lot of this work has been criticised, and rightly so, for being more about making noise than building brands,’’ he said. "I think this year ... there will still be a lot of money spent by these companies to market themselves, but I think it's going to be spent smarter. There will be fewer of these companies, so it may not be as much of a growth factor this year.’’ Ad Age said that more than 300 US ad agencies were bought last year. Omnicom Group Inc, the world's largest advertising organisation, with gross income of $5.74bn, gained more than 20 agencies. The Interpublic Group of Cos Inc, the No 2 ad organisation at $5.08bn, absorbed more than 30 agencies. "Consolidation certainly is continuing. There's less and less to buy,’’ said Donaton. "But we're at the point now where having basically picked the landscape clean of all the small and mid-sized independents, the big giants are starting to hungrily eye each other. That's the next stage of consolidation.’’ The magazine said the top traditional shops in its index of the 500 largest firms boosted their US gross income 22.2 per cent to $18.3bn on billings of $138.6bn. International firms in the index accounted for $12.9bn, up 21 per cent. — Reuters
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