Ad agencies look to each other for growth
Founders of TBWA Warszawa brought these and three other international clients with them from Warsaw agency Market Link, where they had handled TBWA's international clients in Poland. TBWA, a $2.5 billion a year company, has offices in 33 countries and generally works with local agencies.
When Market Link parent company International Trading and Investments Corp. (ITI) discarded a joint-venture option with TBWA, managing director Waldemar Duszynski and four of his crew from Market Link picked up the opportunity. He took with him Market Link's client services director, art director, a copywriter and an account executive.
"We have good contact with TBWA, we have the knowledge and the contacts in Poland and the experience," Duszynski, managing director of TBWA Polska, said in the agency's spiffy offices in a modern two-story house in Mokot-w.
Despite the presence of about 600 advertising agencies in Poland, Duszynski is convinced his agency can fill a niche "I'm sure there is still space for us." His goal: To rank among the country's top 20 agencies in terms of 1995 billings
It will be a tough road.
In the early 1980s and late 1990s most of the world's top multinational agencies set up shop in Poland and have built a solid client base with the country's top foreign investors who are also the top advertising spenders. The ad agency field today ranges from hundreds of one- and two-person shops - to the multinat giants like Lintas and Leo Burnett.
The growth of the large foreign giants was largely fueled by an explosion of media spending the early 1990s.
Billings at most international agencies jumped 200%-300% a year, as companies like Coca-Cola and Pepsi poured millions into building up their brands in Poland.
Advertising expenditures in all media here shot up from $200 million in 1993 to $450 million in 1994 to $600 million last year, according to local advertising executives. Television takes the biggest chunk of these sales revenues, from $168 million in 1993 to $352 million last year, according to industry figures.
"There were no market norms" for spending in the early years, David Williams, managing director of Bates Saatchi & Saatchi, said in explaining the early years of billings growth."
While media spending is still growing, it is leveling off as large clients tighten their advertising belts.
"Almost all of our clients have stabilized their budgets," said Williams.
"A lot of products have gone through the initial brand hoop," said Marek Schejbal, new managing director of Ogilvy & Mather Poland. "Now companies are shifting toward building brand loyalty."
And now that companies have more options to choose where to advertise their products, prices are coming down as well, noted Malgorzata Grzyb, media director at Leo Burnett Advertising. "People's marketing budgets aren't going to keep increasing indefinitely," Grzyb said. "With media fragmentation happening anyway, that will reduce inflation. There are more options so people are able to choose more effective media or negotiate one media versus another."
"Much more real levels of expenditure can be expected," said Williams of Bates Saatchi & Saatchi. "The key word now is strategic efficiency and financial efficiency."
Already, agencies are preparing for the fight. BBDO Warszawa for example, is building up its public relations activities, while ailing international agency DDB Needham decided to merge last year with local star Corporate Profiles. And J. Walter Thompson/Parintex set up a strategic planning department as well as its own in-house advertising training program. Bates and Saatchi & Saatchi, which had been operating under the same umbrella, also decided to join forces recently and will be under one roof this summer.
"The strategic thinking is that we can be twice as strong," said Williams, who thinks the market is headed for a shakeout.
"I think you will see more strategic alliances because the marketplace can only sustain, longer term, a certain number of key players," Williams said. "The employee base is not so large that the market can sustain an infinite number of average agencies."
Though most agencies reported a growth in billings between 1994 and 1995, stellar performances were rare. Leo Burnett Advertising, the country's No. 2 agency in terms of 1995 billings, actually reported $38 million in billings in both 1994 and 1995, meaning a decrease in real terms.
While the high-budget clients may be deflating the billings balloon, an increasing number of Polish clients are starting to pump more revenues into the system. And though they don't spend as much as their foreign counterparts, many advertising executives say that's where the growth will be.
ITI, for example, recently netted a $1 million account with Polish tire maker Debica. Leo Burnett last year won a $3-$5 million account with Polish brewer Lech, making up for losing Elbrewery the previous year.
Frederic Winckler, general manager of J. Walter Thompson/Parintex, said that his agency is also involved in a number of new-product launches for existing clients, such as a new shampoo brand from Unilever and new brands for Kraft Jacobs.
He also sees areas outside advertising as growth possibilities, such as public relations activities and direct promotions. "That's going to be a key part in growing our business," Winckler said.
And with clients more open to switching agencies, there's much more of an opportunity to win clients away from competitors, Winckler said, emphasizing that his agency's billings are indeed growing. "There's a lot of switching happening within the business. That's where a lot of growth will be coming from."
When Market Link parent company International Trading and Investments Corp. (ITI) discarded a joint-venture option with TBWA, managing director Waldemar Duszynski and four of his crew from Market Link picked up the opportunity. He took with him Market Link's client services director, art director, a copywriter and an account executive.
"We have good contact with TBWA, we have the knowledge and the contacts in Poland and the experience," Duszynski, managing director of TBWA Polska, said in the agency's spiffy offices in a modern two-story house in Mokot-w.
Despite the presence of about 600 advertising agencies in Poland, Duszynski is convinced his agency can fill a niche "I'm sure there is still space for us." His goal: To rank among the country's top 20 agencies in terms of 1995 billings
It will be a tough road.
In the early 1980s and late 1990s most of the world's top multinational agencies set up shop in Poland and have built a solid client base with the country's top foreign investors who are also the top advertising spenders. The ad agency field today ranges from hundreds of one- and two-person shops - to the multinat giants like Lintas and Leo Burnett.
The growth of the large foreign giants was largely fueled by an explosion of media spending the early 1990s.
Billings at most international agencies jumped 200%-300% a year, as companies like Coca-Cola and Pepsi poured millions into building up their brands in Poland.
Advertising expenditures in all media here shot up from $200 million in 1993 to $450 million in 1994 to $600 million last year, according to local advertising executives. Television takes the biggest chunk of these sales revenues, from $168 million in 1993 to $352 million last year, according to industry figures.
"There were no market norms" for spending in the early years, David Williams, managing director of Bates Saatchi & Saatchi, said in explaining the early years of billings growth."
While media spending is still growing, it is leveling off as large clients tighten their advertising belts.
"Almost all of our clients have stabilized their budgets," said Williams.
"A lot of products have gone through the initial brand hoop," said Marek Schejbal, new managing director of Ogilvy & Mather Poland. "Now companies are shifting toward building brand loyalty."
And now that companies have more options to choose where to advertise their products, prices are coming down as well, noted Malgorzata Grzyb, media director at Leo Burnett Advertising. "People's marketing budgets aren't going to keep increasing indefinitely," Grzyb said. "With media fragmentation happening anyway, that will reduce inflation. There are more options so people are able to choose more effective media or negotiate one media versus another."
"Much more real levels of expenditure can be expected," said Williams of Bates Saatchi & Saatchi. "The key word now is strategic efficiency and financial efficiency."
Already, agencies are preparing for the fight. BBDO Warszawa for example, is building up its public relations activities, while ailing international agency DDB Needham decided to merge last year with local star Corporate Profiles. And J. Walter Thompson/Parintex set up a strategic planning department as well as its own in-house advertising training program. Bates and Saatchi & Saatchi, which had been operating under the same umbrella, also decided to join forces recently and will be under one roof this summer.
"The strategic thinking is that we can be twice as strong," said Williams, who thinks the market is headed for a shakeout.
"I think you will see more strategic alliances because the marketplace can only sustain, longer term, a certain number of key players," Williams said. "The employee base is not so large that the market can sustain an infinite number of average agencies."
Though most agencies reported a growth in billings between 1994 and 1995, stellar performances were rare. Leo Burnett Advertising, the country's No. 2 agency in terms of 1995 billings, actually reported $38 million in billings in both 1994 and 1995, meaning a decrease in real terms.
While the high-budget clients may be deflating the billings balloon, an increasing number of Polish clients are starting to pump more revenues into the system. And though they don't spend as much as their foreign counterparts, many advertising executives say that's where the growth will be.
ITI, for example, recently netted a $1 million account with Polish tire maker Debica. Leo Burnett last year won a $3-$5 million account with Polish brewer Lech, making up for losing Elbrewery the previous year.
Frederic Winckler, general manager of J. Walter Thompson/Parintex, said that his agency is also involved in a number of new-product launches for existing clients, such as a new shampoo brand from Unilever and new brands for Kraft Jacobs.
He also sees areas outside advertising as growth possibilities, such as public relations activities and direct promotions. "That's going to be a key part in growing our business," Winckler said.
And with clients more open to switching agencies, there's much more of an opportunity to win clients away from competitors, Winckler said, emphasizing that his agency's billings are indeed growing. "There's a lot of switching happening within the business. That's where a lot of growth will be coming from."
