LIVE ISSUE/NATWEST: NatWest throws down the consolidation gauntlet But can one agency solve the troubled bank’s image problems? By John Tylee.

By JOHN TYLEE, campaignlive.co.uk, Friday, 29 May 1998 12:00AM

At the beginning of 1996 NatWest swam against the tide by splitting the bulk of its business between two agencies. Now it has indicated its readiness to go with the flow.

At the beginning of 1996 NatWest swam against the tide by splitting

the bulk of its business between two agencies. Now it has indicated its

readiness to go with the flow.



Not only is the bank putting its pounds 50 million-plus above- and

below-the line business up for review, threatening the joint tenure of

its two principal shops, Bartle Bogle Hegarty and Ammirati Puris Lintas

(Campaign, last week), but it is not ruling out channelling the entire

account through one agency.



The only surprise about the move is that it hasn’t happened before. The

fad for a la carte - picking marketing specialists and co-ordinating

their work yourself - belongs firmly in the 80s. In the UK, and the

world at large, consolidation is the name of the game.



’The move towards the global consolidation of agency business seems to

be unstoppable and all agency networks are acknowledging the fact by

becoming more flexible and innovative,’ Harry Reid, FCB’s international

president, says. ’It’s reached such an advanced stage that many clients

would find it almost impossible to unpick such arrangements.’



Sholto Douglas-Home, head of advertising for the consumer division of

BT, Britain’s biggest advertiser, agrees. ’The trend is towards

centralisation and there’s a growing appreciation of its

importance.’



In part, the momentum towards the centralisation is a by-product of what

is happening in the commercial world in general. With 500 companies now

controlling 80 per cent of the world’s manufacturing output, it’s

logical to expect the trend to be reflected in agency arrangements.



That NatWest is in urgent need of getting its advertising act together

is beyond question. The smallest of the Big Four high street clearing

banks, it suffered a terrible year in 1997 with a 10 per cent drop in

pre-tax profits. Its decline set in during the recession of the early

90s since when it has been an under-achiever, prompting speculation

earlier this year that it might merge with Barclays.



’NatWest is being outplayed by the opposition, its brand awareness

levels are low and its advertising is all over the shop,’ an agency

insider says.



’It’s very concerned about the situation.’



But whether or not the bank decides to follow the path of Abbey

National, which dumped Barker & Ralston 15 months ago to centralise its

entire pounds 40 million account within Euro RSCG Wnek Gosper, remains

to be seen.



It’s not merely a question of whether such a move would save money. Such

considerations may have kick-started the centralisation movement in the

early 90s, but they are far less relevant today.



’There’s no pressure to save the odd pounds 50,000 any more,’ says Derek

Ralston, the former Barker & Ralston managing director, now a partner at

Mountain View. ’In a growth economy, the aim is to attract the right

kind of customers.’



Consolidation’s big attraction is that it brings consistency to an

organisation’s communications while lessening the burden on its

marketers.



Dealing with one agency makes it easier for a client to build a

dedicated team which thoroughly understands what can be very distinct

requirements.



According to Reid, global clients are also increasingly lured to the

idea of consolidation because they feel better able to control their

local subsidiaries if one agency network is ’policing’ their advertising

across the world. Not that it’s a universal panacea. As Ralston says:

’The agency that can produce press ads for you quickly won’t necessarily

be the right one to do your corporate campaign.’



In the case of NatWest, the pros and cons of consolidation have to be

weighed alongside other more specific concerns. The bank operates a

highly devolved structure with business units which have profit

responsibilities.



’Once the bank created those units it had to give them the freedom to

create those profits,’ an agency executive familiar with the NatWest

business, explains. ’The result is that the bank now has a number of

agencies working directly to those units and advertising which may bear

the bank’s logo but does nothing to communicate NatWest’s brand

credentials.’



The conundrum facing the bank is how to reconcile the demands of

shareholders, who believe the brand message to be crucial, with the

short-term marketing requirements of the business units.



’The bank is coming round to the view that it needs greater central

control even if it pisses off the business units,’ an industry source

says. ’But in putting its business into one agency, will it necessarily

get the direct marketing and sales promotion services it wants?’



So what is the likely outcome? The smart money is on NatWest drawing

back from a single agency appointment while carving up its advertising

cake differently. That could mean a lead agency with responsibility for

the core brand strategy which it will interpret in print and on

television.



But that agency will also have to ensure the other specialist shops sing

from the same hymnsheet.



This article was first published on campaignlive.co.uk

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