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Japanese Ad Agency Moves Into Top Spot

May 08, 1987|BRUCE HOROVITZ | Times Staff Writer

Even the advertising world has now been hit by the yen's continued surge against the dollar. The Japanese ad agency Dentsu Inc. has replaced New York-based Young & Rubicam as the world's largest advertising agency, reports Advertising Age, a trade publication.

In 1986--after a two-year reign as the largest ad firm--Young & Rubicam slipped to the No. 2 spot, the magazine said in its survey released Thursday of 970 ad agencies in 72 countries.

Last year, Dentsu--which creates advertising in Japan for clients such as Toyota Motor Co. and Sony Corp.--reported gross income of $681 million and client billings of $5.31 billion. Young & Rubicam posted $628.4 million in gross income and billings of $4.19 million.

Some ad agencies are parts of larger holding companies, and the biggest of these holding companies in 1986 is also foreign owned. Saatchi & Saatchi PLC, a British firm that owns four U.S. ad agencies, including Ted Bates Worldwide and DFS Dorland Worldwide, posted gross income of $1.21 billion in 1986 on billings of $8.26 billion.

"Everyone wants to be the biggest in the world," said Emma Hill, an ad industry analyst at the New York securities firm Wertheim & Co., "but it really doesn't mean all that much." Of course, Dentsu officials don't necessarily agree with that. "It's always nice to be able to tell your clients that you're the largest agency in the world," said Takashi Tanaka, executive vice president of Dentsu/New York, a subsidiary of Dentsu.

Runner Up Faring Well

As for the runner up, well, it's not all that concerned. Young & Rubicam posted a record year in 1986, taking in $540 million in new business while losing about $80 million of its accounts.

It picked up new business from such major advertisers as TWA, Unisys Corp. and Ford Motor's advertising in Germany.

For years, Young & Rubicam and Dentsu have jockeyed for the top slot, with Dentsu ranked No. 1 between 1973 and 1983. When the dollar strengthened in 1985, however, Young & Rubicam prevailed.

But more than the yen is working in Dentsu's favor. "The odd thing about Japanese agencies is that they can have conflicting accounts," said Hill.

Ad agencies in the United States, however, rarely carry clients that sell the same products. Dentsu, which employs 5,500 workers in six countries, handles a good chunk of advertising for Toyota, Nissan and Mitsubishi.

No U.S. ad agency produces ads for more than one large auto maker.

While Young & Rubicam will no longer be able to call itself the world's largest ad firm, it will continue to rank as the largest "independent," or privately held, agency, said Jon Vondracek, vice president of corporate affairs at Young & Rubicam.

"But none of that matters all that much," he said. "After all, our business is advertising, not self-promotion."

WORLD'S TOP FIVE AD AGENCIES

1986 1985 Gross income rank rank Agency in millions 1 3 Dentsu Inc $681.0 2 1 Young & Rubicam 628.4 3 6 Saatchi & Saatchi Compton Worldwide 490.5 4 4 Ted Bates Worldwide 486.0 5 5 J. Walter Thompson Co. 471.0

1986 Billings rank in billions 1 $5.31 2 4.19 3 3.32 4 3.26 5 3.14

Source: Advertising Age

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