Marketing services sector to enjoy significant growth

NEW YORK: Heads of the top communications holding companies are continuing to project a robust marketing services sector in 2001, leading Cordiant CEO Michael Bungey to wonder whether any of his rivals are still in the advertising business.

NEW YORK: Heads of the top communications holding companies are continuing to project a robust marketing services sector in 2001, leading Cordiant CEO Michael Bungey to wonder whether any of his rivals are still in the advertising business.

NEW YORK: Heads of the top communications holding companies are continuing to project a robust marketing services sector in 2001, leading Cordiant CEO Michael Bungey to wonder whether any of his rivals are still in the advertising business.

Addressing the analyst community at the annual UBS Warburg media conference last week, at which Bungey posed his mischievous question, WPP Group CEO Martin Sorrell and Havas Advertising chairman and CEO Alain de Pouzilhac projected marketing services growth of around 6% and 10% respectively.

However, figures are difficult to quantify since some holding companies include their Internet activities, as well as other below-the-line areas such as PR and direct marketing, in the marketing services sector.

Media-buying agency Universal McCann predicted this week that ad growth was expected to fall from 9.8% in 2000 to 6% in 2001.

Given the downturn in traditional advertising revenues, most parent company chiefs were eager to portray their firms as more reliant on the higher-margin marketing-services sector.

Reviewing WPP's business, Sorrell said the firm would act more like its clients in reducing costs. 'We can improve productivity per head,' he said. Last week, WPP-owned Burson-Marsteller announced it was axing 5% of its staff.

Sorrell also said the company would move toward a matrix management model, drawing talent from all corners of the WPP family in order to service global clients such as Ford. Focusing his speech on improving profitability, Sorrell added that more use would be made of empty office space.

Sorrell indicated that he's still interested in acquiring an investor relations agency and said that there were still plenty in the market.

In contrast, Cordiant Communications Group's Bungey described 2000 as an investment year and said 2001 was likely to focus on organic growth.

Cordiant picked up PR firm Lighthouse this year, but missed out on Abernathy MacGregor Group. The IR agency instead went to Havas Advertising last week in a cash deal worth dollars 47 million, plus a back-end payment which could see it reach dollars 80 million in total.

Signalling a retreat from the market, Cordiant CFO Art D'Angelo, who manages the firms PR assets, said, 'People are paying beyond what we are prepared to pay.'

He said the firm would be shopping for individual IR talent with acquisitions now on the back burner.



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