The latest RECMA ranking of media agencies holds few surprises, with GroupM and Madison topping the charts as usual. What the report emphasises, however, is the power of the big six – WPP, Publicis, Interpublic Group, OMG, Havas and Aegis (now with Dentsu). Roughly half the global advertising spends are handled by media agency networks controlled by these firms.
In India, it is estimated that over the last decade, ad spends controlled by agency networks have risen from about 40 per cent to 60 per cent. This number could vary wildly across countries.
For instance in Japan, agencies have only 5 per cent share since Dentsu dominates. In Brazil, the world’s sixth largest advertising market, media agencies are barred. In Europe, everybody loves them. More than 80 per cent of all spends go though agencies, according to RECMA.
The Paris-based RECMA claims to be the ‘only research company that publishes evaluations on the worldwide media agency industry.’ The 2011 report is based on data from 61 countries and 865 agencies.
The India numbers on agencies’ control of ad spends are estimates arrived at by using historical data and extrapolating from RECMA numbers. Even without these numbers, there is already a growing worry about the clout of media agencies. For a hugely fragmented industry that is dependent on advertising and fighting a losing battle on ad rates, this is not good news for media owners.
For the media agency industry, however, things couldn’t be better. The total billings of media agencies in India in 2011 was $5.6 billion (Rs 30,000 crore). It would seem, therefore, that the entire money that advertisers spent in 2011 was done through media agencies. But that is incorrect.
The $5.6 billion represents what marketers spent through media agencies on mass media and non-mass media activities. Typically 20-30 per cent of spends across countries are now going to what RECMA calls ‘specialised services.’ These are, usually, below-the-line marketing spends. Since these are based on fees and not on commission, they show up more strongly on revenue numbers.
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What stands out in the global and Indian rankings is the growth of Paris-based Publicis, which is on an acquisition spree.
Its lead network Starcom MediaVest tops the global charts, with sibling ZenithOptimedia at number three.
| INDIA BILLINGS | |||
| Industry shares 2011 in (%) | Agency brands part of the networks / Media branches Independents/non-part of the network | Overall billing 2011 in ($million) | Growth rate in % |
| 18.6 | Mindshare / GroupM | 1,050 | 10 |
| 11.2 | Madison Media / Independent | 630 | 15 |
| 10.1 | Maxus / GroupM | 570 | 25 |
| 8.7 | Lodestar UM / Mediabrands | 490 | 15 |
| 7.6 | Lintas Media Group / Mediabrands | 430 | 0 |
| 6.5 | MediaCom / 51% Madison W. 49% GroupM | 365 | 10 |
| 5.3 | MEC / GroupM | 300 | 5 |
| 5.2 | ZenithOptimedia / VivaKi | 295 | 40 |
| 4.9 | Starcom MediaVest / VivaKi | 275 | 25 |
| 4.7 | OMD / OMG | 265 | 25 |
| 4.2 | Allied Media / Independent | 235 | 15 |
| 2.7 | DDB MudraMax / 51% OMG 49% Mudra | 150 | 25 |
| 2.7 | MPG / Havas Media | 150 | -20 |
| 2.0 | Dentsu Media / Independent | 110 | 7 |
| 1.9 | Carat / Aegis Media | 110 | 10 |
| 1.4 | Motivator / GroupM | 80 | 0 |
| 1.3 | Media Direction / Independent | 75 | -29% |
| 0.6 | TME / Independent (MPG-TME Nov 11 onwards) | 35 | -15 |
| 0.5 | Vizeum / Aegis Media | 30 | 17 |
| Source: RECMA | |||
At the group level though, WPP with revenues of £10 billion (Rs 82,000 crore) maintains its position at number one. The higher growth rate of Publicis, which has revenues of €5.8 billion (Rs 40,000 crore) could mean that it might take over.
The exchange rates are taken at December 2011 levels