NEWS ANALYSIS: Agency mergers could prove a headache for media owners. Sales people have little say when agencies join forces. Mark Tungate investigates

By MARK TUNGATE, campaignlive.co.uk, Monday, 06 December 1999 12:00AM

Following the news that Starcom and Motive may rekindle merger talks - with MediaVest thrown into the mix - it seems merger fever is as rife on the agency scene as it is among media owners.

Following the news that Starcom and Motive may rekindle merger

talks - with MediaVest thrown into the mix - it seems merger fever is as

rife on the agency scene as it is among media owners.



But how does the gradual consolidation of the agency sector into a

handful of giant players affect the sales function, if at all?



It certainly causes confusion. One sales executive admits: ’I’m not sure

the average sales person has an accurate picture of who owns who, or of

the various agency affiliations.’



Originally it was felt that agency mergers were necessary to create

clout and drive down rates, but most media owners agree that the market

has matured, so this theory no longer holds sway.



Martin Corke, group sales manager at IPC Music and Sport, comments:

’It’s a case of combining strengths in different areas. One agency may

have expertise in planning, while another might have the buying

power.’



Mike Parker, London sales manager at Channel 4, points out: ’There is no

more discount left in the market. From a psychological view clients

believe that because they are with a bigger agency they will get the

best rates, but it’s not necessarily the case.’



He believes consolidation among the media owners is creating equilibrium

in the market.



’Over the past five years the top ten agencies have taken perhaps 70 per

cent of the market, as opposed to around 40 per cent five years ago. But

that business represents our bedrock. Ironically, it is the more

marginal advertisers that make a difference between a good year and a

bad year. And they tend to be with smaller agencies.’



He adds that most merger decisions are made in the US, with little

thought for how they will affect the UK markets.



His views are echoed by Colin Gottlieb, managing partner of Manning

Gottlieb Media. ’The perceived benefit of mergers is that clients

respond to scale, in that size equals resources and, in the old days,

buying power. So somebody in the States decides that they want the

agency to become number X in Europe.’



Gottlieb says the situation creates ’a potential headache’ for media

owners. ’The problem is: how do they find a way in? Who do they talk

to?



There may be a move towards structures like the new one at Emap (Media

Business, 22 November), which creates routes at different levels, with

Tom Toumazis at the top.’



IPC’s Corke says consolidation has its benefits. ’It creates pressure on

the sales person in that it’s even more important to have a good

relationship with a larger agency, because it has major repercussions on

your market share. But at the same time, having more clients at a single

agency makes communication more efficient.’



Whatever media owners think, consolidation in the agency sector will

continue for some time yet.



This article was first published on campaignlive.co.uk

X

You must log in to use Clip & Save

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Additional Information

Campaign Jobs