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
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
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
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