28 November 2008
	MEDIA AGENCY OF THE YEAR - MEDIAEDGE:CIA The winning edge By David Furlonger Despite narrowing margins, the top agencies have plenty to shout abouthaving only recently moved into the hot seat at Mediaedge:cia, MD Wicus Swanepoel is still deciding what changes are necessary at the company. One thing he won't want to tamper with is the winning mentality.

Mediaedge:cia is this year's AdFocus Media Agency of the Year. During the period under review, from July 2007 to June 2008, annualised billings grew from R1,04bn to R1,49bn. Major account gains included Pick n Pay, Brandhouse and Nashua Electronics. True to its name, the company really did have an edge. But its win was no foregone conclusion. Finalists in this category were particularly strong this year. Industry giant OMD came into the reckoning after another outstanding year during which it added R503m in new accounts. Other finalists were Starcom, MediaShop, Nota Bene and last year's winner, Universal McCann. Swanepoel moved to Mediaedge in August from stablemate Nota Bene. So the award-winning period was under his predecessor, Mike Nussey. The snaring of the Pick n Pay account, worth about R400m, in March this year was a major coup for Mediaedge. The retail chain is now the agency's biggest client, ahead of Nedbank. Liquor group Brandhouse, which signed with Mediaedge in October 2007, is worth another R200m. Other new clients include American Swiss Jewellers, Energizer-Schick, Nashua Electronics and the new Silverstar Casino on the West Rand. In total, the new accounts are worth R700m in annualised billings. Despite the loss of a couple of existing accounts, including Visa credit cards, it was a successful year for the agency. That in itself brings challenges, says Swanepoel. "Landing a client as big as Pick n Pay inevitably puts pressure on the agency infrastructure." More people need to be hired. If not handled sensitively, their arrival could change the culture of the agency, which employs only 53 people. That's assuming, of course, that suitable people can be found. "There is quite a skills shortage in the market at the moment," says Swanepoel. Where possible, he would prefer to develop skills in-house. "There are some very talented people within this company." Though he says Mediaedge is "doing fine", Swanepoel adds that, like any new MD, he has ideas about improving the company. "There are a lot of things we can do better and I see great opportunities for the future." He has identified some areas of the business that need attention but is loath to go into detail. "There are some things that will change but it's too soon to say what. I've only been here a few weeks so I'm not going to rush into things." Like other agencies, Mediaedge has to cope with a media market in which many advertisers are cutting budgets in the face of a slowdown in consumer spending. Media agencies' margins are narrowing. "Clients are reducing spend and some are asking to renegotiate fees," he says. "Those that import products are feeling the pinch most. It's affecting the media sector quite badly." Still, with 44 clients and 37% growth in revenue over the review period, Mediaedge is a long way from penury. Top accounts, in addition to those already mentioned, include Edcon and Famous Brands. The agency opened a Cape Town office in September 2007, initially to handle the existing Caltex business and new Brandhouse work. But, as Swanepoel notes: "This presence will now enable us to grow our business in the Western Cape." OMD also had an outstanding year: seven pitches and seven wins - including the Visa and Danone accounts lost by Mediaedge. Others were Distell, AVI, Liberty Life, De Beers and the National Lottery. With media billings of R3,8bn in the review period and nearly 250 clients - including blue-chip companies such as Standard Bank and Mercedes-Benz - OMD continues to impress with its seemingly unstoppable growth. CEO Josh Dovey may also bemoan current tough market conditions, but he does so from a position of strength. The same may be said of MediaShop MD Harry Herber. As he added plaintively to his questionnaire answer recording billings growth of 10,7%: "It was off a really big base!" "There are a lot of things we can do better and I see great opportunities for the future" - WICUS SWANEPOEL Billings grew to R3,1bn from R2,8bn the previous year. New accounts between July 2007 and June 2008 included Eskom, Hi-Fi Corp, kulula.com and Spur. A flurry of small accounts took the client base to 285. There were no "Wow!" newcomers this year, and MediaShop's biggest clients remain SABC, Absa, Shoprite Checkers, Cell C and Draftfcb. Starcom, on the other hand, started the year with a bang, with the addition of SA Airways to its portfolio. Though the agency had done work for the airline previously, the appointment became official in July 2008. Other newcomers included Samsung, Canon, Siemens and the National Empowerment Fund. The agency also retained the SA Post Office account at the three-yearly pitch. The loss of a couple of accounts put the brakes on slightly, but Starcom still increased billings by R150m, or 16%, to nearly R600m. The biggest accounts are Procter & Gamble (P&G), Samsung, SAA, SA Post Office and tiling warehouse group CTM. An extra bonus for Starcom during the year was a gold award from the Advertising Media Association of SA (Amasa), for its strategy on behalf of P&G. If awards were based on the quality and presentation of submissions, media communications and strategy agency Nota Bene would win nearly every time. Its submissions are always innovative and well prepared. Not surprisingly, it has amassed a cabinet-full of trophies and citations in recent years. Of course, there's plenty behind the gloss. The agency gained more than R1bn in new business last year. Unlike media-buying big brother Mediaedge, Nota Bene is a specialist communication channel agency involved in strategy, innovation and implementation. That's an open-ended definition, which is why the agency last year found itself managing the development of a student cellphone game for antacid Eno's, and strategising themed parties for Smirnoff Spin. Mediaedge and Nota Bene have some major clients in common, such as Nedbank, Brandhouse, Edcon and Famous Brands. Nota Bene won six out of six pitches last year. New accounts included the consolidated Unilever business, as well as Virgin Active and Cadbury's chocolate. And what of last year's Media Agency of the Year, Universal McCann? It was unrealistic to expect another stellar year like the one that gained it the award, and so it proved. But it still enjoyed growth, with new accounts like Southern Comfort, Jack Daniel's and the City of Johannesburg. And with blue-chip accounts such as General Motors, Telkom, L'Oréal, MasterCard and United International Pictures still safely in the bank, the agency is likely to continue its upward path. The one disappointment was the loss of the Nestlé Africa account last December when the company relocated its African headquarters to Kenya. Despite this, Universal proudly records "organic growth 9,8%, billings growth 42%, income growth 5%, client retention 91%". Less impressive is the staff turnover rate of 62%. That's high - though not outrageously so in an industry where 30% turnover rates are commonplace. In many other industries, human resources' heads would roll if staff came and went at such a rate. Given the skills shortage facing the media sector, it is an issue that companies need to confront urgently.