CLOSE-UP: GLOBAL BRIEF; How Bates lost an African link
By STEPHEN ARMSTRONG, campaignlive.co.uk, Friday, 09 August 1996 12:00AM
Stephen Armstrong hears how an agency affiliation went sour in South Africa
Stephen Armstrong hears how an agency affiliation went sour in South
When is an agency affiliate not an agency affiliate? When it’s in South
Africa, as Cordiant has discovered to its cost - of almost pounds 23
million in local billings.
The group has just seen its Bates SA affiliate snatched from under its
nose by an elated Omnicom after two years of negotiations, and, to rub
salt into the wound, Omnicom’s purchase came in the week that the chief
executive of Bates Worldwide, Michael Bungey, was in Johannesburg to
sign the expected deal.
The problem stems from US disinvestment in South Africa during the
apartheid days of the 80s. Bates, like many other agency groups,
operated a type of franchise, with locals owning and running its South
With Bates SA, the local outfit hadn’t made a top job of it, and the
agency was on the brink of liquidation, with restraint payments to its
previous owners adding to an already sizeable debt.
In 1994, the agency was bought by Dave Kelly, James Porter and Darryl
van Zyl. They maintain that Bates Worldwide killed its own chances of
buying Bates SA by dragging its feet in negotiations. According to
Kelly, Bates had repeatedly postponed the deal from October 1995, and in
June, when they thought Bates’ proposal would not have served creditors
well, the South African partners turned to Omnicom.
Omnicom was already in the process of merging its four media buying arms
into a single dependant that will now have roughly 17 per cent of the
market - a greater share than Zenith in the UK. Omnicom’s managing
director in Africa, Josh Dovey, is delighted.
Cordiant will have to content itself with Saatchi and Saatchi Klerck
and Barrett, which the group bought recently, and a possible deal with
the local agency, BLGK, the ninth largest shop in South Africa with
billings of pounds 20 million.
Bates could have learned a lesson from the past. In March 1994, DMB&B
lost its eponymous affiliate to Leo Burnett in a similar way. The new
agency, Sonnenberg Murphy Leo Burnett, is now South Africa’s fifth
This article was first published on campaignlive.co.uk
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