Worldwide contender throws down gauntlet

By EMMA HALL, campaignlive.co.uk, Friday, 05 November 1999 12:00AM

LEO BURNETT

LEO BURNETT



Leo Burnett has been edging towards a major deal ever since it opened

talks with Dentsu last December.



Discussions about Burnett’s sale of a sizeable minority stake to the

Japanese giant ran into difficulties this summer, but this week’s merger

with MacManus, and Dentsu’s 20 per cent ownership of the new holding

company, BDM, seems to have satisfied both parties.



Earlier this year, The Leo Group was formed as a holding company

comprising Leo Burnett worldwide advertising, Starcom Worldwide and

Bartle Bogle Hegarty, in which it has a 49 per cent stake.



The creation of the Leo Group also paved the way for 51-year-old

Londoner, Roger Haupt, the chief operating officer of Leo Burnett, to

succeed Rick Fizdale as the group chairman and chief executive on 1

January 2000.



Leo Burnett was founded in Chicago in 1935 with eight employees and

three clients - Hoover, Realsilk Hosiery and Minnesota Valley Canning.

It opened its first New York office in 1941 and, by 1947, billings had

reached dollars 10 million. Burnett first expanded out of the US in 1952

when it opened an office in Canada, primarily at Kellogg’s request.



Ten years later, Burnett opened a small office in London, but

international expansion was slow, mainly because of Leo Burnett’s desire

to review every piece of work coming out of the agency.



However, a global roll-out began in earnest in 1969 with the purchase of

the London Press Exchange International Network, which brought Burnett a

total of 32 offices in 23 countries.



Burnett now has 280 operating units in 81 countries worldwide and

employs more than 9,100 people.



Burnett created the Marlboro Man, but has also been responsible for

global brand icons from the Jolly Green Giant to the Pillsbury Dough Boy

and Tony the Tiger.



Leo Burnett has expanded its offering in the UK, headed by Jeff Fergus,

the group president of Europe, Middle East, Africa, and Asia Pacific,

over the past two years. It bought a 30 per cent stake in Hard Reality,

the interactive consultancy, and launched Starcom.



KEY CLIENTS

Delta Airlines

General Motors

H J Heinz

Kellogg

Kraft Foods

McDonald’s

Philip Morris

Pillsbury

Procter & Gamble

UDV



MACMANUS



By John Tylee



D’Arcy staffers across the world could hardly believe their eyes when

they opened their e-mails on Wednesday morning to find a message from

their boss, Roy Bostock.



’I want to share some very exciting news with you,’ Bostock told them,

before going on to announce the impending global alignment of the D’Arcy

and Leo Burnett networks under a single global holding company.



What gobsmacked Bostock’s people was that there should be a merger with

Burnetts rather than with the voraciously acquisitive Interpublic

Group.



Such was the discreet nature of the negotiations that even as late as

Tuesday evening, senior D’Arcy executives were predicting an imminent

deal with Interpublic.



Industry sources claim that parallel negotiations were taking place and

that talks with Interpublic had gone down to the wire before being

abandoned.



The fly in the ointment appears to have been Mars, one of D’Arcy’s most

powerful clients, and one which is almost paranoid about conflict.



Industry sources were this week blaming Interpublic’s failure to land

the MacManus Group on what one described as a ’very aggressive’ stance

by Mars against clashing Nestle business at Interpublic-owned

McCann-Erickson.



A merger with Burnett throws up no such conflict.



For MacManus, the merger climaxes a vital need for extra critical mass

to compete with the broad offerings of Omnicom, Interpublic and WPP.



The move - described as ’the biggest restructuring we have ever faced’

by the chairman of DMB&B, Arthur Selkowitz - was promoted as a

fundamental change in working methods to better serve multinational

clients.



The changes, which included switching David Jones from the London

chairmanship to European client services director, have not met with

wholesale approval.



KEY CLIENTS

Central Office of Information

Chanel

Fiat

Mars Confectionery

McCain Foods

Pedigree Masterfoods

Philips

Reckitt & Colman

Roche

Procter & Gamble



DENTSU.



By Jade Garrett



Dentsu’s grand plan to be a truly global player has been in place for

more than a decade, but translating the dominance it exerts at home in

Japan - where it holds around 40 per cent of the market - has proved

difficult.



In the early 70s Dentsu was the world’s largest advertising agency, but

as growth slowed through the early 80s, the agency was securing just 1

per cent of its revenue from foreign advertising.



Dentsu’s partnership with Young & Rubicam, which began in 1975, led to a

small joint venture in Tokyo in 1975 and has since thrived, with D/Y&R

becoming the third largest multinational agency in Asia, after

McCann-Erickson and J. Walter Thompson with billings that topped dollars

1.1 billion.



Elsewhere, the going has not been as good.



Dentsu’s dominance in its home market has been unchallenged, and the

management has remained confident that the strength of the brand name in

Japan could win and retain business overseas. Commentators have long

considered this attitude to be one of the major stumbling blocks to

growth outside Japan.



No non-Japanese has ever been a candidate for board membership.



HDM, a European partnership with Y&R, and the French agency, Eurocom -

struck in 1987 - briefly gave Dentsu a major European network, but the

alliance dissolved in 1990 when the French moved to build Euro RSCG

Worldwide.



Dentsu joined with CDP to retain its interest in Europe.



Dentsu, headed by its president, Yutaka Narita, made its first inroads

into the Leo Burnett camp at the end of last year when it acquired a 20

per cent stake in the network. It now becomes the largest shareholder in

BDM with a stake that is expected to be around 20 per cent. It plans a

listing on the Tokyo stock exchange in 2001.



KEY CLIENTS

Canon

East Japan Railway

Fuji Photo Film

Japan Airlines

Kirin Brewery

McDonald’s

Procter & Gamble

Siemens

Sony

Toyota



This article was first published on campaignlive.co.uk

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