Cheil clings to precarious leadership in ads

By Kim Da-ye

It had seemed that the most sought-after advertising agency Cheil Worldwide would never be toppled, much like how its sister company Samsung Electronics reigns as the nation’s largest conglomerate.

That No.1 status, however, is in jeopardy as Innocean Worldwide, the current No.2 in terms of billing, is catching up fast, supported by its parent company Hyundai Motor Group, which showed growth abroad last year.

According to the Korea Federation of Advertising Associations (KFAA), Innocean reported its billings ballooned to 2.7 trillion won in 2010 ― up 56 percent from a year ago.

Cheil initially reported its revenue only, triggering speculation that its billing might have been dwarfed by Innocean’s. Cheil later said it made 2.92 trillion won in billing, surpassing that of Innocean by over 200 billion won.

In the advertising industry billings indicates the total amount an ad agency charges its clients including expenses to purchase media, as well as agency commission and production costs.

As a listed company, Cheil disclosed earnings of 614.6 billion won in revenue ― up from 540.28 in 2009. Its operating profit also rose from 47.46 billion won to 55.84 billion won.

Related data for Innocean remains undisclosed.

While Cheil and Innocean reported to KFAA different financial information in an apparent psychological warfare, making it impossible to compare them, last year’s figures attest the competition is fiercer than ever before.

Cheil recorded 2.2 trillion won of billings in 2009 ― 18 percent down from a year earlier ― while Innocean grew 105 percent to 1.7 trillion won. Their overseas billings were nearly similar as Cheil made 1.30 trillion won and Innocean marked 1.29 trillion won.

Innocean, however, failed to expand its portfolio outside Hyundai Motor Group.

Most of the orders came from the automaker’s affiliates and allies including Hyundai Motor, Kia Motor, Hyundai Mobis, Glovis, Hyundai Heavy Industries and KCC. None Hyundai affiliates were Kooksoondang, Gmarket and Korea Electric Power Corporation.

Cheil did not give this year KFAA the client list, but last year, it executed ads for Korean Air, Shinhan Financial Group, AmorePacific, GM Daewoo, KT and NHN.

A press official from Cheil said it began reporting its revenue instead of the billings in the second half last year because that is the common practice among global ad agencies.

“Ranking by revenue is a standard in advanced advertising markets, and we hope Cheil leads such the trend here in Korea,” she said.

Meanwhile, the KFAA data showed that Korea’s largest ad agencies were affiliates of the conglomerates including HS Ad of LG, SK Marketing & Company of SK Group, Daehong Communications of Lotte Group and Hancomm of Hanwha Group. It raised concerns of unfair trading between conglomerates and their affiliates.

Samsung Electronics Chairman Lee Kun-hee’s second daughter Lee Seo-hyun is Cheil’s vice president while Hyundai Motor Group Chairman Chung Mong-koo’s eldest daughter Chung Sung-yi is an advisor for Innocean.

제일기획 광고사 1위 위태?

부동 1위 광고회사 제일기획의 입지가 흔들리고 있다. 현대자동차그룹이 밀고 있는 이노션이 바짝 뒤쫓고 있기 때문이다.

매년 광고회사 순위를 매기는 한국광고단체연합회에 따르면 이노션의 광고취급액은 작년보다 56퍼센트 증가해 2.7조원을 기록했다.

광고취급액은 광고주에게 총 청구한 제작비, 수수료, 지면, TV광고 시간 구입에 지불한 요금을 의미한다.

제일기획은 선진 광고시장의 기준대로 작년 하반기부터는 취급액대신 매출액을 밝히겠다고 나서, 취급액에서 이노션에 밀린 것이 아니냐는 의혹을 낳았지만, 곧 2.9조원 가량의 취급액을 밝혔다.

취급액만 보면 제일기획과 이노션이 막상막하지만, 포트폴리오는 제일기획이 훨씬 다양하다. 이노션의 광고주들은 대부분 현대자동차그룹계열사 혹은 우호세력들이기 때문이다.