Economy The agency sector is back on a growth path. However, structural and ranking problems remain.
Balance sheets and prospects. One thing stands out: The industry is
confidence again.
Despite natural disasters and rising energy and commodity prices, the
Swiss economy - more restrained than in the USA and Asia
- recovered. Primarily thanks to private consumption, according to the
State Secretariat for Economic Affairs seco. Not only seco, but also the
UBS economists anticipate a continuation of the moderate
Economic recovery - in figures: average GDP growth
of 1.6 percent.
The Swiss advertising statistics from Media Focus reflect this trend
in the spending measured up to October, which rose significantly by 3.8 percent.
than in the previous year. While Lukas Zihlmann,
Managing Director and Consultant at Media Focus, for the whole of 2005
considers a growth rate of three percent to be quite realistic, dares to
Stephan Wyss, Head of AIS at Wemf, makes a forecast for the coming year.
year: "We will tend to continue at the same level, with
slightly positive fluctuations, depending on the medium. The
Football World Cup will create momentum, especially on TV." Not only the
Early indicators are likely to prove the two market researchers right.
Whether on the agency or client side, with the product managers
optimism is shared everywhere. Jürg Siegrist, Director of the
Swiss Advertisers Association (SWA), whose members make up almost three
quarter of domestic advertising revenue, assesses the situation
also considered to be good: "We expect a positive development. The
Advertising spendings are likely to be in a range of three to five
percent increase."
The same picture on the agency side. "For 2006, we see a slight
increase in advertising expenditure in the overall market," says Daniel Hartmann, CEO
and partner at Bern-based Contexta, which aims to make it easy to
to grow at an above-average rate. Agency founder and
co-owner Dominique von Matt, who can look back on a good 2005.
can. His forecasts are pointing upwards: "In mid-2003, the industry has reached the
bottomed out and has now finally regained its footing.
feet." Unsurprisingly, the answer to the growth question is also
Industry leader Publicis: "We are optimistic," exults CEO Kaspar
Loeb.
However, if you ask where impulse generators are to be expected, the
Positivism, and opinions differ. Loeb is combative:
"We can't rely on external stimuli or on the economy picking up.
We don't have to wait for the economic cycle, we have to offer a product that
makes customers indispensable."
Encouraging signals
Dominique von Matt, on the other hand, points to a shift in the mindset of many
decision-makers, even if there is more going on in their heads
than in their wallets. Another encouraging signal
he said consumer sentiment, which is picking up in Germany and as a result
will also have an impact in Switzerland. "I hope that the
Switzerland is making enough of the better framework conditions," says von Matt.
However, the isolationist strategy of various
political groups get in the way of the upswing.
Lowe's CEO Kurt Schmid, whose agency
This year, the "pleasant and less pleasant" balanced each other out
have: "There is no endogenous growth in advertising. Did the
Travel and consumer goods industry
growth in the 80s, in the 90s this was the case for the
New Economy hype and then the liberalized telecom market and the
e-banking. However, there is currently no such development on the horizon
visible." That is why there may be growth for individual
agencies, but hardly for the industry as a whole. To the same conclusion with
rather negative signs for the agency industry, Frank
Bodin, CEO of Euro RSCG (see interview).
The trend of an increasing number of international
advertising clients who no longer spend their budgets exclusively with the
large network agencies, but rather to experiment with
and agile local agencies with partial budgets in the short term.
entrust. Accordingly, the number of pitches and the number of
participating agencies have increased. On the other hand, the
conditions, together with the advertising budgets, will further erode
experience. Most agency managers are well aware that
2006, not everyone will be baking larger rolls.
Questionable guidance
At this point, the question arises as to who is the biggest,
bakes the most beautiful and filling rolls? And even more urgently: Who
should and can judge that?
For example, the Media Research Group with its controversial agency ranking
(WW 42/05) that it collects from advertising clients? Hardly. The
problem is formulated from a purely subjective point of view, from which
even the most empirical research design and the most precise analyses do not
allow objective conclusions to be drawn. Transparency, traceability and
According to the agency managers, the informative value tends towards zero. Why
the list is hardly useful as a guide.
Then there is the creative ranking (p. 12), in which the agencies
Awards according to a broadly based weighting key.
This list should also be treated with caution. Agency conglomerates
often distort the picture. In addition: The informative value of creative awards
hardly allows any conclusions to be drawn about the efficiency of the measure and the
economic significance of the order. If the
correlate, then - to give an example - the yields of the
largest Swiss agency Publicis between 2003 and 2005 to the
half of the market. But they have not. The opposite is likely
are more in line with the facts.
The subjunctive mood is necessary because the BSW agency ranking is the only
rational classification scale became obsolete in 2003. Since the Sarbane-Oxley Act
the large, local network agencies the announcement of the
gross operating income and meaningful facts such as the
The economic comparison list makes it possible to compare the
also for the remaining agencies not listed on US stock exchanges
does not make sense.
Many see behind the agencies' buttoned-up communication policy
an industry agreement. Peter Hammer, Head of Agencies at
Fachtitel Werbe & Verkaufen: "Some agencies are certainly happy,
that the holding company prohibits them from releasing any figures."
Only for the design and event industry, which is not yet international
is networked, W&V continues to produce sales rankings. The
Auditors at KPMG and PricewaterhouseCoopers are not in a position to
find corresponding points that could explain this behavior,
because they do not comply with the transparency principle and objective of the
correspond.
"The list may be interesting for advertising insiders who show customers
are much less curious than is often claimed. Added to this is the fact that
in certain cases, figures have been published that are subject to rigorous scrutiny.
would not have withstood," says Kaspar Loeb at Publicis, playing the
down the ranking discussion. Unlike in the USA, in the
Switzerland is not good at peddling the argument of size. Publicis
prefers to present itself as "the largest small agency in the
Switzerland", as this reading makes more sense at international level, according to
Loeb.
New edition of the BSW ranking?
The industry association BSW is thinking - despite some negative comments
Reactions to the consultation procedure - again loudly about a
replacement ranking. The new variant is a categorization
in BBE classes. But: "Nothing is known about if and when
decided," says BSW Managing Director Walter Merz. For Lowe boss and
BSW Vice President Kurt Schmid is less concerned about the absence of the
BSW rankings regrettable. There are worse excesses of the
Sarbane-Oxley and the never-ending revisions. Basically
all agency managers go with Contexta boss Daniel Hartmann
agree: "The success of an advertising agency does not depend on a ranking.
off." The logical dependency is in the other direction anyway.
And so the excitement about the rankings is unlikely to have any effect on them.
change. After all, the potential client will also be involved in
The future of the right chemistry as the most important evaluation criterion
leave.
Luca Aloisi
