Agencies prepare for steadying market after rapid growth
The two firms are contained under the umbrella of the Interpublic Group of Companies. For that reason, Lintas General Manager Piotr Gawel downplayed the importance of McCann moving up.
"It all stays within the same family," he said. "We are sister companies in a sense."
While they have a similar parent company, the two firms do compete directly in Poland.
Big accounts such as Swedish travel agency Ving, Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP) and beer brands Warka and Heweliusz helped put McCann over the edge and bump Lintas, which had been the No. 1 agency in terms of revenue for two years, into the second slot. (See The List, page S-6.)
But both firms, along with many of the other agencies listed, saw their revenue last year rise 30-100% as advertising here gained momentum. The industry has been growing at about 30% annually for the last few years, although many executives said they expect that pace to slow in the near future to 20-25% a year.
It seems unlikely, however, that 1998 will be less dynamic than previous years. The industry already witnessed an explosive, 51% growth in the first quarter compared with the same period in 1997, with ad expenditures hitting $273.4 million for that period, according to market research firm Amer Nielsen Research.
As for McCann, the firm's revenue doubled in 1997 to zl. 32.9 million ($10.28 million), overtaking Lintas' 23% growth to zl. 26.6 million ($8.3 million), according to the WBJ's list.
Despite that, advertising executives said they were preparing themselves for a coming market stabilization and were now concentrating more on developing their existing clients and sharpening their creative skills.
"Although the market is developing it is no longer likely to explode, and it is getting more difficult to reach consumers' expectations," Lintas' Gawel said.
But "stable" must be taken in context. The industry is used to the lightning years of the mid-1990s, when revenue skyrocketed as much as 60% at some firms, such as Corporate Profiles DDB, said Szymon Gutkowski, co-owner of the firm. That makes the 30-35% growth Gutkowski expects his firm to see this year seem a little boring.
Gutkowski said that the industry is beginning to mature.
Clients are more demanding, wanting detailed profiles of consumers - political background, religious affiliation, spending patterns - as opposed to the standard name, age, rank and salary level.
The campaigns also need to be more polished than they have been in the past, he said.
"As the advertising market is getting more and more difficult, we will need bold, original campaigns which will generate unexpected results," he said. "Conducting risky campaigns will be a must over the next few years as consumers' needs become more refined."
What may be more accurate, though, is that the Polish consumer is growing more sophisticated. Bombarded with scores of new ads, people have learned to turn the page or tune out when it comes to run-of-the-mill campaigns, executives said.
"Consumers who are bombarded daily with hundreds of ads stop paying attention to them," said Ewa Nowak, an analyst with market research company IQS and QUANT Group.
The one thing that has remained the same is that the market continues to be dominated by large international firms. Small firms have banded together in the last year to try to figure out a way to compete, coming up with a idea common in the Western world - networking. Wroclaw-based AIDA is working to put together the first national network of small and medium-sized advertising agencies, possibly bringing together as many as 100 firms.
Small firms know that to survive they have to match the service and quality multinational firms provide.
The one advantage small firms do have, however, is speed. They can often put together a proposal and price list for a client in a day.
"Big network agencies usually react with a delay," said Slawomir Chmielowski, general director of Pegasus Advertising, which had revenue of $200,000 last year. "By the time they send an offer we are already ready to act."
If small agencies succeed in undercutting the prices charged by the big networks and still deliver innovative creative work, the big houses may have a viable competitor. But they aren't really worried yet.
"We are not afraid of small competitors," Lintas' Gawel said. "They will need more time to upgrade their service quality to be able to compete with us."
"It all stays within the same family," he said. "We are sister companies in a sense."
While they have a similar parent company, the two firms do compete directly in Poland.
Big accounts such as Swedish travel agency Ving, Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP) and beer brands Warka and Heweliusz helped put McCann over the edge and bump Lintas, which had been the No. 1 agency in terms of revenue for two years, into the second slot. (See The List, page S-6.)
But both firms, along with many of the other agencies listed, saw their revenue last year rise 30-100% as advertising here gained momentum. The industry has been growing at about 30% annually for the last few years, although many executives said they expect that pace to slow in the near future to 20-25% a year.
It seems unlikely, however, that 1998 will be less dynamic than previous years. The industry already witnessed an explosive, 51% growth in the first quarter compared with the same period in 1997, with ad expenditures hitting $273.4 million for that period, according to market research firm Amer Nielsen Research.
As for McCann, the firm's revenue doubled in 1997 to zl. 32.9 million ($10.28 million), overtaking Lintas' 23% growth to zl. 26.6 million ($8.3 million), according to the WBJ's list.
Despite that, advertising executives said they were preparing themselves for a coming market stabilization and were now concentrating more on developing their existing clients and sharpening their creative skills.
"Although the market is developing it is no longer likely to explode, and it is getting more difficult to reach consumers' expectations," Lintas' Gawel said.
But "stable" must be taken in context. The industry is used to the lightning years of the mid-1990s, when revenue skyrocketed as much as 60% at some firms, such as Corporate Profiles DDB, said Szymon Gutkowski, co-owner of the firm. That makes the 30-35% growth Gutkowski expects his firm to see this year seem a little boring.
Gutkowski said that the industry is beginning to mature.
Clients are more demanding, wanting detailed profiles of consumers - political background, religious affiliation, spending patterns - as opposed to the standard name, age, rank and salary level.
The campaigns also need to be more polished than they have been in the past, he said.
"As the advertising market is getting more and more difficult, we will need bold, original campaigns which will generate unexpected results," he said. "Conducting risky campaigns will be a must over the next few years as consumers' needs become more refined."
What may be more accurate, though, is that the Polish consumer is growing more sophisticated. Bombarded with scores of new ads, people have learned to turn the page or tune out when it comes to run-of-the-mill campaigns, executives said.
"Consumers who are bombarded daily with hundreds of ads stop paying attention to them," said Ewa Nowak, an analyst with market research company IQS and QUANT Group.
The one thing that has remained the same is that the market continues to be dominated by large international firms. Small firms have banded together in the last year to try to figure out a way to compete, coming up with a idea common in the Western world - networking. Wroclaw-based AIDA is working to put together the first national network of small and medium-sized advertising agencies, possibly bringing together as many as 100 firms.
Small firms know that to survive they have to match the service and quality multinational firms provide.
The one advantage small firms do have, however, is speed. They can often put together a proposal and price list for a client in a day.
"Big network agencies usually react with a delay," said Slawomir Chmielowski, general director of Pegasus Advertising, which had revenue of $200,000 last year. "By the time they send an offer we are already ready to act."
If small agencies succeed in undercutting the prices charged by the big networks and still deliver innovative creative work, the big houses may have a viable competitor. But they aren't really worried yet.
"We are not afraid of small competitors," Lintas' Gawel said. "They will need more time to upgrade their service quality to be able to compete with us."
