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In the summer of last year, the communications planning agency Naked launched an office in Scandinavia under the leadership of one of the region's star performers, Eddie D'Sa.

His success at OMD Ignition in Denmark, when the agency won more than one Cannes Media Lion, helped to blaze a trail for Nordic clients to demand more creative thinking from an agency with a reputation for innovation.

But the jury is still out on just what sort of splash Naked Nordics is going to make. Other agencies have a mixed view on its prospects. Most agree it has a good chance, but would argue that it faces competition from a flourishing creative media agency scene. Brands from Nokia to the Finnish dairy brand Vailo are showing what can be done by being imaginative with media.

Seven months down the line and Naked is still just D'Sa plus one, but there are plans to recruit two more to the team, and the company has pulled in a number of clients through its Norwegian office. Its highest-profile account is Frisk, Norway's top-selling mint brand, and the agency recently won an assignment for the country's largest advertiser, the telecoms company Telenor. Naked Nordics has also established working relations with the leading Norwegian creative agency, Dinamo, as well as Lowe in Sweden.

But despite having won awards for his creative media work there, D'Sa doesn't see the region as particularly open to creative suggestions. "Clients everywhere are quite risk-averse because of the recession. The way to sell creatively is to be sound," he says.

The region might not be a creative boiling pot, but he believes it does have an edge: "It punches above its weight - there's an entrepreneurial spirit in the region rather than some notion of creativity."

Most of Naked Nordics' work is for the local Norwegian market, but, D'Sa points out, it isn't difficult to work right across the region from a single base. Flights between the region's capitals are short and frequent, as are connections into the cities. Frisk has taken the agency beyond Norway into other territories in the region, such as Sweden and Denmark.

More and more clients are looking for a Nordic pan-regional service. Nordea and Arla Foods have recently pooled their regional business into one agency; Ikea is going through a process of consolidation. Many international clients are looking for a pan-regional approach to their business from just one agency. Added to which, the Baltic countries are also being drawn into the traditional Nordic regional footprint. Naked Nordics is working with a shopping-mall client called Klif, which operates in Poland.

Clients are, of course, looking for some sort of rationalisation in media buying across the region. And, in some areas of the media, the ownership is becoming less fragmented. Jens Welin, the chief executive of Starcom Nordic, believes regional media ownership will increase substantially. "TV, press, everything is consolidating. A good estimate is that it will increase by 30 to 40 per cent over the next five years. Structures and ownership will change, but local media brands will continue to be strong."

But can the regional media agency networks, many of them only built up during the past couple of decades, provide sufficient expertise in each Nordic market to take full advantage of any pan-regional approach?

Mediaedge:cia is the biggest player in the Nordic region. Johan Hedensio, the chief executive of Mediaedge:cia Nordic, reckons that the company has plenty of media clout. It is number one or two in Sweden, Denmark and Norway, and in Finland it has a joint venture with the biggest company in the market. Hedensio's experience is that more and more clients are looking at a pan-Nordic picture: Nestle, Novartis, Colgate-Palmolive, for example, all have a Nordic hub.

Another strong regional network is Aegis. The two networks - Carat and Vizeum - between them account for about 20 per cent of the Nordic market, including clients such as Nivea and Beiersdorf. The chief executive of Aegis Media Nordic, Patrick Stahle, has also witnessed increased demand for some sort of pan-regional service. "Clients are handled in different ways, depending on whether they have a Nordic marketing director or local managers," he says. "But they still want to see best practices across the region."

The managing director of the MediaCom Nordic Group, Jonas Hemmingson, stakes his claim that MediaCom offers "the best, or most experienced, Nordic offering". The company is in the top three in each of the Scandinavian countries. It created a Nordic management in 2002 and services clients such as SAS, Procter & Gamble and GlaxoSmithKline operating on a regional level.

For the most part, pan-regional campaigns are planned from the country where the client has its headquarters. So, Nestle plans from Copenhagen and Sony-Ericsson from Stockholm. But the Swedish market, though not totally dominant in the region, accounts for more than one-third of all business. "If you look at the international clients," Hemmingson says, "they use mainly Stockholm or Copenhagen as their Nordic headquarters."

Oslo isn't quite so much at the heart of things, but is still an important centre. Helsinki, however, is treated rather differently and is not on all agency radars. Finland's language does not have common Scandinavian threads and one independent agency swallows up around one-third of all Finnish business. But, with billings not far off those in Norway, the market is far from being dismissed and most agencies have some presence there.

Although the various Nordic markets have plenty in common, there are some essential differences. "There's no such thing as a Nordic consumer," Hermann Haraldsson, the chief executive of OMD Nordic, says. But he sees plenty of Nordic clients and is under no illusion that "if you want to be a player here you have to be consistently strong in each country".

What all this adds up to is that for Naked and its competitors, there is everything to play for in this healthy, if not huge, market.

THE TOP MEDIA AGENCIES IN THE NORDIC AND BALTIC REGIONS

Rank Media agency 2004 billings 2003 billings Growth Market

estimate (dollars m) (2003 v share

(dollars m) 2004, %) (2004, %)

1 Mediaedge:cia 595 605 -5 18

2 Carat 570 485 20 17

3 MediaCom 525 555 -5 16

4 OMD 460 430 10 14

5 MindShare 235 195 20 7

6 Universal McCann 205 175 20 6

7 Starcom 190 150 30 6

8 Initiative 140 115 20 4

9 Vizeum 120 95 25 4

10 ZenithOptimedia 85 85 0 2

11 MPG 5 - - 0.2

Source: RECMA.