CLOSE-UP: LIVE ISSUE - AGENCY RANKINGS. Is the ad industry heading for an upturn at last?

Billings for the 2002-2003 year suggest recovery may be on its way.

Is it the first evidence of a full-blown recovery, or just signs of green shoots through the concrete gloom that has enveloped the ad industry in recent years? That's the question posed by the Nielsen Media Research billings for the financial year 2002-2003.

Compared with the previous year there is much to cheer about. Of the top 20 creative agencies, just four experienced a drop in billings. That figure was 16 last year. For media agencies the picture also seemed rosier.

Granted, eight of the top 20 suffered billings declines, compared with 12 the year before, but those who had a good year (including OMD UK, Starcom Motive, Initiative Media and Universal McCann) posted some impressive gains.

The reasons behind the upturn in billings seem to have two or three common factors. Greater levels of new business, spending from existing clients holding steady or improving and, in some cases, consolidation and mergers seem to be the key reasons.

While Abbott Mead Vickers BBDO, the UK's top creative agency by billings, saw its billings eroded by reduced client spend and losses including O2 and British Tourist Authority, there were significant changes beneath AMV with Publicis climbing from sixth to third and M&C Saatchi moving from eighth to sixth. The most serious drop in billings in the top ten came with the combined billings of Leo Burnett and D'Arcy, down 14.57 per cent on what their combined billings would have been a year ago, following D'Arcy losses such as Mars.

Publicis had a strong year in billings terms and can be grouped in a bunch of agencies that added billings through a mixture of new business, client retention and increased spend from existing clients. M&C Saatchi, which picked up the AA and Matalan during 2002, was also one of this group because it saw healthy levels of spend from long-term clients such as British Airways and Dixons. It benefited from having such large clients in the retail sector, which has remained relatively immune to the downturn.