Digital agencies best placed for future growth

15 December 2009

PARIS: Agencies which display the soundest understanding of digital media are the most likely to benefit when the advertising market begins to recover, David Jones, ceo of Euro RSCG, has argued.

Euro RSCG, part of Havas, is the fifth-largest agency network in the world, and the biggest such organisation in terms of the number of global accounts that are registered on its books.

According to Jones, between 60% and 70% of multinational marketers intend either to maintain or increase their expenditure levels in 2010, in a sign that "clients are getting back into focusing more on the future, rather than battening down the hatches."

"We are in an interesting period where most clients are cautiously optimistic and the first quarter will determine whether everyone becomes more optimistic or more cautious," he added.

While most of the major advertising companies will post like-for-like revenue declines in the 8% to 14% range this year, he added, the next 12 months should bring "low single-digit growth", peaking at around 4%, a figure that stands at 5% for 2011.

More specifically, Jones suggested that the rise of social media will have a key future role, amounting to "as big a revolution in the industry as television was."

"Social media is like a digital word-of-mouth ... it has changed the scale, velocity and immediacy of word-of-mouth," he continued.

As such, the ad shops with the most impressive new media credentials are set to prosper in the long term, as brands become even more interested in using this channel to engage their target audience.

"Historically, it has been the pure-play digital companies that have tended to win digital pitches but there is a shift in the industry now: a fully-integrated digital agency can actually win major global digital pitches," said Jones.

Euro RSCG has added digital experts to its existing teams rather than building a separate, specialist network, as has frequently been the case, and won IBM's global new media brief last month.

It contributed 61% of the €1.57 billion ($2.30bn; £1.42bn) in revenues generated by Havas last year, and its parent company has previously stated an intention to boost the share of sales generated by digital to 20% by the end of 2010.

Data sourced from Wall Street Journal; additional content by Warc staff