Even though the number of accounts placed in review in 2018 declined 5.5 percent from the previous year, those that did change hands led to a 7.5 percent hike in global new business revenue for agencies, according to independent consulting firm R3’s latest report that analyzed 7,000 agency new business wins last year.
According to the report, Publicis Groupe outperformed the other holding companies with a total of $736.4 million in revenue for 2018 thanks to wins such as Mercedes-Benz. The company was followed by WPP with $579.1 million, Omnicom with $340.5 million, Dentsu Aegis Network with $326.3 million and IPG with $301.5 million (those numbers were calculated year-to-date as of December). The report states that total global new business revenue increased to $3.1 billion in 2018 from $2.9 billion in 2017.
“Publicis Groupe pulled off some big wins that drove their results as a holding group, but on top of that, individual agencies such as Publicis and Leo Burnett also performed well,” R3 principal and co-founder Greg Paull said. “It was a year that they achieved the horizontality that other holding groups have talked about.”
“Horizontality,” a buzzword coined by Martin Sorrell, is essentially the process of combining different agencies, or talent across agencies, to service one client. For example, after winning Marriott International’s global media account in March, Publicis created dedicated unit Marriott One Media comprised of SapientRazorfish and Spark Foundry and, in June, Publicis pulled resources from Digitas and Blue 449 to form a dedicated unit for Dunkin’s U.S. media business.
Leo Burnett ranked second among the leading creative agencies in the U.S. in 2018, generating $54.4 million in new business revenue year-to-date as of December. The report also showed Leo Burnett was only surpassed by Omnicom’s Goodby Silverstein & Partners (GS&P), which gained $109.3 million in new business revenue in the U.S. year-to-date as of December. Leo Burnett won creative accounts such as Wingstop and Samsung’s TV business while GS&P most notably won BMW.
On the media side, Hearts & Science ranked first among agencies in the U.S., earning $68 million in new business revenue, year to date as of December, on account wins such as WarnerMedia group. In second place was MediaCom with $55.7 million in new business revenue in the U.S., according to the report.
Global media reviews increased 2.3 percent in 2018 and led to 18.4 percent growth in new business revenue. The report also showed that media wins were driven by the U.S., where 2018 new business revenue (across both media and creative) was up 49.2 percent compared to 2017. In that market, R3 found that BBDO and Starcom led the way with their wins of the $3 billion Ford global creative account and the $950 million Fiat Chrysler Automobiles North American media business, respectively.
According to the report, while there were 10 percent fewer global creative accounts that went into review last year, the value of those accounts was greater than those that changed hands in 2017, leading to a 2.4 percent increase in new business revenue worldwide. Five of the top 10 global wins for creative agencies were in the U.S., although the total amount of creative wins in the U.S. last year declined by 0.6 percent. Four of the top 10 media wins last year were in the U.S. and the total amount of media wins in the U.S. increased by 12.1 percent.
“The generally healthy U.S. economy is encouraging marketers to innovate and optimize their budgets,” Paull added. “They’re doing it by moving towards new and hybrid agency models that allow for more flexibility in media and production costs.”
Paull estimated that the uptick in media reviews was due to the continued heightened scrutiny on transparency, leading clients to reassess contracts with their media partners.