The total fee-income of the Top 100 entries has leapt up by nearly a quarter on last year – 275m to 343m. We can all draw considerable satisfaction from this since it confirms what we all know – that the market for design is extremely buoyant and shows every sign of continuing this way. We should all be approaching the new millennium in a hugely positive frame of mind.
Most of the UK’s leading design businesses benefited from this buoyant market and growth rates of between 20-30 per cent were very much the norm. To some extent businesses whose growth fell below this level need to be asking themselves why. It is interesting to note also that the standard and quality of work being produced is higher than in recent years. My own experience tells me that higher quality leads to higher growth – we are no different to any other service businesses in this respect.
Good times always lead to a spate of takeover activity and consequently a number of companies have secured themselves a place in the top 25 by merging with or acquiring others. Notable examples of this are Interbrand Newell and
Sorrell, The Brand Union, Rodney Fitch/Wickens Tutt Southgate, CLK.MPL and The Coleman Group Worldwide. History tells us that the majority of mergers fail for one reason or another and it will be interesting to monitor the progress of these new entities. I have found that successful marriages are underpinned by two things – a huge respect for each other and a significant benefit for clients. If these two ingredients can’t be identified at the start, then success is unlikely to follow.
Strong organic growth can be seen across all the design disciplines with the possible exception of product design which has always been a tough area to compete in. Growth has propelled many firms up the table and the biggest increases are shown below.
Many of the turbo-charged performances are the result of re-inventing established brands that have perhaps grown tired over the years. Companies need this every so often in order to re-vitalise themselves and to restructure their businesses for the future. The Partners is a good example of a business that had grown organically and had a good reputation in the market place. It re-structured some two years ago and experienced 44 per cent growth this year which has propelled it from 33rd to 25th place. Siebert Head is another example of a company that is not sitting back on its laurels. It grew by 24 per cent last year and has just started to refocus and re-energise its business.
Conran Design Group thoroughly deserves its position at the head of the growth chart since it re-invented its own business some two years ago also and last year saw the fruit of this. It has been able to capture the benefits of an extremely strong brand by bringing in a strong new management team to run the show. This was a refreshingly bold move to bring together a strong design heritage with a new vibrant and energetic perspective. There is certainly a lot of scope for more of this in the industry since many of the old established design brands seem to have lost their way. The opportunity for the many up-and-coming 30-somethings has never been greater.
The other nine leaders here are all companies that have grown organically by doing good work and servicing their clients well. Gyro has come from nowhere and has used an office move to Chelsea Harbour to turbo-charge its own growth. Ziggurat and The Sandom Partnership are both packaging businesses that are experiencing considerable success. John Sandom seems to be carving a nice niche for himself and his clients in Windsor. 20/20 seems to be going from strength to strength since Rune Gustafson joined a couple of years ago – another example of a strategic investment paying off.
Wolff Olins and Fitch are examples of established brands that are certainly not standing still. The management buyout at Wolff Olins has a similar ring to it as the CDG changes. It increased fees during the year by 2.2m or 25 per cent, which is an amazing performance. I suspect that the combination of high-profile brand, experience and highly leveraged buyout is the highly combustible fuel that has led to this growth. Strong businesses tend to change things before they break.
It is good to see old Fitch coming back so strongly and the UK growth (25.8 per cent) far outstripping US growth (7 per cent) in 1997, making the UK a significant profit-generator for the first time in years.
The table of biggest fee decreases is an interesting one this year. It is headed by Coley Porter Bell which experienced a staggering 42 per cent decrease in fee income from 7.1m to 4.1m. The lessons here are all about client reliance – either avoid big clients or make sure that you keep them happy.
Design House and Basten Greenhill Andrews had very little growth last year and appear to be in a holding pattern, whereas Lloyd Northover Citigate grew by an impressive 39 per cent last year. The coming together of Lloyd Northover and Citigate some four years ago was extremely successful and a good example of a deal where both parties respected each other (one doing corporate identity and the other doing annual reports) and where there was a clear client benefit. Perhaps the adrenaline has stopped flowing here, unlike Wolff Olins, and it needs another shot in the arm. With its strong international presence, it is certainly well placed for a quick burst of acceleration. I suspect that the decrease in Rodney Fitch/Wickens Tutt Southgate was due to consolidation following their merger since the idea of combining branding with consumer expertise is a compelling one. Remember, it can typically take up to two years for post merger benefits to flow through.
It was encouraging this year to see that the high levels of efficiency we saw last year have remained with us with companies on average seeing 69 000 fee income per head.
Enterprise Identity Group is extremely impressive as a business, and its performance has been in stark contrast with sister company CPB which shares the same systems. This puts the importance of good systems into perspective. Though we call this an efficiency table, it is about much more than having good systems and controlling staff numbers. It measures how effective you are at motivating your staff and your clients and it is a measure of how strong your brand is and how good your work is. Enterprise Identity Group has come top because it is good at getting, doing and controlling big identity projects. If it has a weakness, it is that it appears a tad boring.
It was great to see that the Top 10 efficiency table is not dominated entirely by corporate identity specialists, but also has a good smattering of packaging businesses with PI Design and The Sandom Partnership. Scott Stern Associates and Black Sun were in the Top 10 last year and have remained there. It was good to see Tatham Pearce making something of a comeback.
The outlook for 1998 continues to look exciting and the climate for change is very good. We are continuing to see strong organic growth and more and more consultancies are looking to re-invent themselves in order to stay ahead of their clients and their competition. The gap between leaders and laggards now looks more marked than ever and this is likely to mean the disappearance of some of the design brands appearing in the Top 100 today.