28 November 2008
	TOP AGENCIES When the going gets tough . . . By David Furlonger

Banks around the world are being nationalised, economies are in recession, the bottom has fallen out of the global car market. In SA, debt levels are rising along with inflation, while economic growth and consumer spending have slowed. Faced with so many challenges, it's not surprising that marketing and advertising budgets are being cut. SA may have - so far - escaped much of the carnage that has hammered other economies around the world, but it's getting tougher. You wouldn't think it, to look at the budget growth recorded on the following pages by advertising, media and branding agencies. Growth in revenue and billings has sometimes been spectacular. But there are a couple of things to consider. The first is that, once inflation is added into the equation, the growth is nowhere near as impressive. In some cases, it's a real decline. And then one must accept tougher times are coming. The figures in these tables reflect the market until mid-2008 - before the bottom fell out of the world. Agencies confirm clients are getting twitchy (who wouldn't be when, for example, local car sales are in freefall?) and budgets are having to stretch further. It could be argued that this is exactly the time when marketers should not be cutting budgets. Indeed, there is a long-standing argument that difficult periods are when you should be advertising, so that when the market recovers, awareness of your product is at the front of consumers' minds. Visibility and brand awareness is everything. But, of course, that's easy to say when it's not your millions being spent. Regular readers of AdFocus will recognise we are not publishing all the tables we did in the past. The main reason is accuracy. Many of SA's leading advertising agencies are owned by global groups that do not allow their subsidiaries to give financial performance details. So a lot of guesswork (journalists prefer the word "calculation") traditionally goes into compiling the tables. Assumptions are made. Our media and branding tables are based on detailed information provided by agencies. Advertising agencies were less forthcoming, which is why their table is less detailed. The FM does not do guesswork. Some features are clear, however. The big are getting bigger. The Jupiter Drawing Room, in particular, goes from strength to strength, both in terms of revenue and creativity. Ogilvy's creative success is also matched by its growth. Smaller agencies on the business rise naturally include award-winners like KingJames, Joe Public and FoxP2. But lesser-known agencies such as Singh & Sons and Mortimer Harvey are also making their presence felt. Their eventual challenge - like that of high-fliers in the branding category - will be to find staff in a market shorn of many of its skills and lacking depth.