LOS ANGELES The first half of 2004 set a blistering pace for new-business activity compared with the previous two years. More billings were in play in major media, creative and full-service reviews in first-half 2004 than in all of 2003 or 2002.
In all, $9.8 billion worth of reviews (for accounts worth $50 million or more) were launched or decided between January and June of this year, more than twice the $4.6 billion recorded in the same period in 2003 and the $4.3 billion in the first six months of 2002. (This analysis is based on Adweek and other reports, and includes 300 accounts put into review during those three years.)
For all of 2003, $9.5 billion was put in play; in all of recession-wracked 2002, $7.2 billion was contested.
The size of the 2004 figure is due in no small part to Procter & Gamble, which last week concluded its blockbuster, estimated $2.5 billion communications-planning review and whose retail-marketing search is ongoing.
P&G awarded the communications-planning business to Publicis Groupe's Starcom MediaVest Group in New York and Chicago and Aegis Group's Carat in New York. The retail-marketing review is for health and beauty products; an estimated $1.6 billion in below-the-line billings will go to a single winner or, more likely, be split among several.
With the economy improving and the ad business stabilizing, clients seem to be getting back to focusing on their marketing plans. "There's pent-up demand that didn't come into play last year," said the head of new business at one major agency. "That's why you're seeing all this activity in the first half of the year, and there's no reason to believe it won't continue in the second half of the year."
Even without P&G, review activity in 2004 trended ahead of the past two years, led by media-only business. Planning and buying reviews accounted for $4.5 billion of the first-half 2004 total. In 2003, only $1.1 billion in media business was up for grabs through June (Coca-Cola, Masterfoods and America Online, with $1 billion in combined billings, all launched reviews in the fourth quarter). The figure for first-half 2002 was $1.9 billion.
Many of the media accounts are being chased by roster shops, with incumbents enjoying a huge advantage and often-as with Coke, Masterfoods, AOL and P&G-holding on to or expanding what they already handle. SMG, for example, increased its percentage of P&G planning business from about two-thirds to around 80 percent with last week's win, which included the company's hot spot, health and beauty products, according to sources.
"On the creative side, a client goes into review because it is unhappy with its agency, so the incumbent is on the defensive," said Irwin Gotlieb, CEO of WPP Group's media arm, GroupM. "Most media reviews are conducted because clients are tidying up their consolidation schemes."
Timing helped this year on the media side as well, said Alec Gerster, CEO of Interpublic Group's Initiative. P&G's planning search, he pointed out, had been a long time coming and was hardly a short-term decision. "It basically reflects Procter's overall trend of moving toward communications-planning assignments around the globe," Gerster said.
However, media agencies' bulked-up resources, enhanced to provide analytic tools, performance management and overall strategic counsel, are also contributing to the trend, Gerster said. "Some of the other reviews could be a function of marketing directors getting more and more familiar with the expanded capabilities," he said.
SMG, building off all-discipline planning capabilities it developed for General Motors and now uses for Coke as well, has added what it calls communication-context planners in Chicago and New York, a process under way for three years that is "starting to pay off," according to MediaVest CEO Laura Desmond.
"What we were looking for was different than in the past. We have a new agenda," said Cindy Tripp, P&G associate director of North America, media and marketing, and a key decision maker in the planning search.
Carat parlayed its communications-planning experience for pharmaceutical client Pfizer to an assignment sources estimated will comprise about 20 percent of P&G's planning duties, including pet care, snacks and beverages, baby care and family care products. The nonroster win is "transformational" for the agency, said CEO David Verklin. "It reinforces where we want to be in our positioning-informational thought leaders."
Through June 2004, more than $1.3 billion of creative-only reviews were logged, led by Verizon Wireless ($300 million) and Kia ($270 million). In all, eight accounts worth $100 million or more were in creative-only review in the period. Through June 2003, Subway ($220 million) and Gateway ($175 million) topped a creative-only list of major reviews, which also totaled just over $1.3 billion. Nine of the reviews were for accounts billing $100 million or more.
Through June 2002, just under $1 billion in creative reviews were held, topped by Reckitt Benckiser's $300 million global search. Only three reviews for $100 million or more were launched during the period.
The past few years also welcomed the newest search trend: holding-company reviews. In 2004, HSBC's $600 million creative and media search was resolved. Samsung's $200 million global holding-company review, begun in first-half 2003, is still ongoing. And in 2002, Bank of America invited holding-company teams to pitch its $160 million business.
"There has been a pickup in the creative side in part because of those same dynamics [powering media searches], the economy and maybe clients thinking there are new creative ideas to reach their customers," said Joanne Davis, president of New York-based consulting firm Joanne Davis Consulting.
Problems remain in the longer term, warned Bill Nicholson, former evp at the American Association of Advertising Agencies and now a consultant. "The velocity of the movement of business is definitely picking up, and the total spend on media is picking up," he said. "The problem is, there are very few new-product introductions, new categories. So a lot of this is trading business."