Magazine article Marketing

It's Survival of the Fittest

Magazine article Marketing

It's Survival of the Fittest

Article excerpt

There's been quite a turnaround in this year's league tables. Ken Gofton takes a look at the winners, the losers and the agencies which seemed content to rest on their laurels

There must be many people who thought they would never see it happen - IMP has been toppled from its seemingly-secure position as the UK's biggest sales promotion consultancy.

And it has all happened in a year which has seen a huge shake-up in our annual listing and raised a great many fascinating questions about exactly where the sector is heading.

Ironies, too. Wunderman Cato Johnson, the Young & Rubicam offshoot which picks up the mantle from IMP, has itself had a static year in turnover terms and acknowledges that the amount of 'pure' sales promotion it does is declining.

Indeed, the only reason that it inherits the crown is because IMP has seen its turnover slashed by a third. Wunderman's managing director John Shaw makes the startling claim that "conventional sales promotion is a dying technique".

Does this mean, then, that the sales promotion industry is struggling? Apparently not. This year's league table is the biggest we have produced and more than half the participants are claiming growth of 20% or more.

"Most of the agencies I know have had a much better year, although the market continues to be extremely competitive," notes Kevin Twittey, chairman of Triangle Communications.

Some dramatic growth rates are reported, with up to a doubling of turnover or more. On the other hand, some major consultancies have stood still or seen a decline. It is this contrast in fortunes which largely explains the many shifts in this year's table.

There is a technical reason too, however. A change in the rules to accommodate more up-to-date information means that, in a minority of cases, we are reporting two years' worth of progress - or lack of it (see the panel on page four on how the table was compiled).

Best to keep two things in mind, then. First, these are authentic figures. In order to participate in this year's table, each company was required to provide validation in the form of its annual report, management accounts, or an auditor's certificate.

Second, a league table is just a snapshot in time: Option One's turnover is shown to be down a fifth - the result of its parent company's decision to switch some of its major direct marketing work into sister agency GGT Direct; HHS has lost ground as a result of its clients pruning their budgets last year - although this year it has scored some notable new business wins; and LGM in 1995 was adjusting to what chairman Graham Green calls the "torrid" experience of being acquired by Woollams Moira Gaskin O'Malley and subsequent restructuring. All three should be expected to bounce back strongly.

So let's take a look at some of the headline news before examining some of the trends and issues in a little more detail and advancing some theories on where the industry might be heading.

* While not disputing IMP's key position in the industry, competitors have long argued that its domination was exaggerated. A good slice of its turnover came from buying merchandise on behalf of clients such as Texaco, on which it earned commission.

Now IMP's chief executive Alan Thompson says the "significant decline" in income last year - of some [pounds]15m - was due to a shift from commission-based to fee-based relationships.

Thompson claims he welcomes this change and sees it reflecting an industry-wide trend. Conversely, it is difficult to believe the agency has not been affected by the promotion of its long-time head John Farrell to be group chairman of DMB&B and the defection of senior people, led by Chris Satterthwaite, to Howell Henry.

* The restructured Carlson slips in at number three and only a smidgen or so around [pounds]1.6m - behind IMP. The group has been represented here in previous years by FKB, which last year ranked sixth with a turnover of [pounds]14. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.