Campaign Direct: Issue CHJM Merger - Omnicom unveils merged direct marketing shop/Four key figures behind the CHJM deal discuss the reasons for the surprise merger, Ken Gofton writes

A year ago, with much fanfare, Claydon Heeley announced the launch of a direct marketing offshoot, Jones Mason Barton Antenen, as a joint venture with its sister Omnicom agency, BMP DDB.

A year ago, with much fanfare, Claydon Heeley announced the launch

of a direct marketing offshoot, Jones Mason Barton Antenen, as a joint

venture with its sister Omnicom agency, BMP DDB.



It was to be different. Trouble had been taken to assemble a top team

which included Nigel Jones, the former head of planning at BMP; Claydon

Heeley’s managing director, Edward Mason; Steve Barton, a board director

from OgilvyOne, and Simon Antenen, a senior copywriter at Limbo (now BBH

Unlimited). Jones’s prowess as one of the UK’s top planners was to be a

key selling point.



Just 12 months later, the outfit has been merged into the parent company

to form Claydon Heeley Jones Mason. It is formally aligned to BMP, and

co-owned by Omnicom’s Diversified Agency Services and DDB divisions. The

move raises intriguing questions and threw up many rumours.



Suggestions that Jones Mason has been a sickly child, or that its key

Compaq account is in jeopardy are nonsense, according to its

management.



The new offshoot claims it made a profit in its first year on a gross

income of around pounds 4.5 million, and boasts a dozen clients. Compaq

has increased its spend and will be the biggest client of the combined

agency.



Staff fall-out is another possibility. ’We have headhunters crawling all

over us at the moment, and that’s something we didn’t anticipate,’

CHJM’s chairman, Jon Claydon, says. ’We know we will lose some people

and have to be sanguine. Some will just feel it is not their bag.’ It is

possible that Barton may take this attitude as no specific role has yet

been announced for him. ’We hope he will stay,’ Claydon says.



Barton comments: ’I am excited by the opportunities this brings.’



So was this merger planned from the outset? It seems bizarre to recruit

a top team, launch a new agency and then fold it into another

organisation a year later. So odd, that perhaps it was the intention all

along? ’Absolutely not,’ Michael Birkin, president of Omnicom’s DAS

division, declares.



The background is that BMP needed a presence below the line, but earlier

attempts had failed. The launch of Jones Mason as a joint venture was

almost a last throw of the dice.



’It was expected to continue as conceived,’ James Best, BMP’s group

chairman and president of northern Europe, says. ’But when the idea

surfaced that we could go better and faster, I leapt at the chance. By

then we had done more work with Claydon Heeley and had been impressed

with them. Jones Mason, meanwhile, was off to a roaring start and only

the resources side was holding it back.’



So what does this deal say about the way Omnicom is structured? Buying

Claydon Heeley in 1998 was a coup for Omnicom’s DAS division. Now,

possibly reluctantly, it has surrendered part control to the DDB

network. Birkin, however, says: ’We are all Omnicom and there have been

no turf wars. What’s important is what the agency’s management want to

do and they seem very comfortable with it.’



Omnicom has the reputation of not forcing deals on its agencies. Claydon

says: ’They rarely stipulate anything. They understand that if people

don’t see eye-to-eye, if the cultures don’t fit, if there’s mutual

suspicion, the result is a car crash.’



But there have been a number of UK agency consolidations recently -

Tequila and Payne Stracey, Clarke Hooper and Momentum - with management

casualties.



Omnicom insiders detect a move away from the long-standing strategy of

owning lots of competing agencies, towards bigger units with ’critical

mass’. More consolidations are planned for 2000 and for three

reasons.



First, the market is changing. Ad agencies lacking strength below the

line are thought to be vulnerable. Second, Omnicom favours salaries and

bonuses rather than share options for remunerating its agency chiefs,

with the result, some claim, that motivation ebbs once earn-outs are

complete.



Finally, there are fewer acquisition targets. Omnicom, as a publicly

quoted group, may need to ratchet up its earnings through economies of

scale. ’I understand this,’ one source says. ’What worries me is talk of

’promotional umbrellas’. This sounds like cutting across the culture of

specialised disciplines which did so well in the 80s and 90s, and

putting everything into a below-the-line supermarket.’



So will there be a culture clash? On the positive side, Claydon Heeley

and Jones Mason are sister agencies and Edward Mason moved across from

Claydon Heeley to be a founding director of the new offshoot.



Jones Mason has been characterised as a ’hotshop’, though ’thinking

shop’ may be nearer the mark, given its planning strengths. Claydon

Heeley has the image of being money-focused, but resists the tag.



’Where I take issue with that is that I don’t see how you can prioritise

money over work,’ Claydon declares. ’Clients want the best, and if you

don’t deliver, you’re fired. There’s no contradiction between being very

successful and very creative.’



That’s a view he shares with Nigel Jones, now the joint chief executive

of CHJM, and with Best. Jones says: ’The perception of Claydon Heeley is

completely erroneous. It produces work that any creative agency would be

proud of.’



Yet it is on the money management side where observers see problems.



Sales pro-motion agencies (Claydon Heeley’s roots), traditionally more

reliant on project work, have a reputation for squeezing the time

available for creative work and production more than direct marketing

shops (such as Jones Mason), with their culture of monthly fees.



There’s a risk too, that Jones Mason’s planning-driven approach will be

submerged in the bigger entity. Best is blunt about this: ’That’s a part

of the DNA that makes the difference. As long as Nigel is there and BMP

is there, we want to ensure that it remains part of the unique

proposition.’



It’s been suggested that the merger is a first step towards launching an

international below-the-line network.



That’s not the priority, however. DDB, after all, has other

international below-the-line brands, including Beyond DDM and Rapp

Collins.



Birkin points out that the merging of sales promotion and direct

marketing has not progressed as far in Continental Europe as it has

here. ’We’ve taken the view that there’s still a long way to go in the

UK, and they’re going to have their hands full maximising their

opportunities there,’ he says.



His Omnicom colleague, Ken Kaess, president of DDB Worldwide, broadly

agrees. It will be up to DAS and DDB, as co-owners, to determine how the

new agency evolves. He says: ’If CHJM succeeds as we think it will in

the UK, then it could provide a model for expansion beyond the UK.’



Claydon also concedes that cloning the offer overseas will require a lot

of thought, and it is premature to think about rolling it out while

still bedding down the new organisation here. ’One thing we will not be

doing,’ he insists, ’is simply putting up signs on office doors.’



Edited by Eleanor Trickett



Tel: 0181-267 4901



E-mail: trickett@haynet.com



KEY CLIENTS

Adidas

BAA

BP Amoco

Bradford & Bingley

British Airways

British Gas

Britvic Soft Drinks

Carlsberg-Tetley

Compaq

Credit Suisse

PepsiCo Reuters

Sony Consumer Products/Sony PlayStation

Telewest



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