Close-Up: Can DLKW Lowe bridge their cultural divides to build a new agency brand?

With the pending deal, IPG must pray it can overcome its poor buying track record.

What a difference a decade makes. At the end of the 90s, Greg Delaney, Mark Lund, Tom Knox and Richard Warren shunned the opportunity to kick-start a global network's flagging London office to set up on their own.

At the end of the noughties and with FCB's rejected advances a distant memory, the remaining three founders of Delaney Lund Knox Warren are about to jump into bed with Lowe.

This may seem a curious about-turn given that FCB's problems of the time pale in comparison with Lowe London, whose recent history has been bedevilled by power struggles, revolving door management and client defections.

So why would DLKW go willingly into an arranged marriage that will see it merge with an enfeebled agency 16 places below it in the Top 30 rankings? (Always assuming that the shareholders of DLKW's Creston parent rubber stamp the £28 million sale later this month.)

The answer is that needs have changed as the world has moved on since FCB got cold-shouldered. DLKW is eager to build on its limited amount of international business and Creston gets to clear its debts. As for Lowe, the addition of DLKW might provide the fillip needed to transform its London operation from its Achilles heel into its flagship.

Undoubtedly, DLKW finds itself in a very different scenario than the one confronting it during its previous incarnation as Delaney Fletcher Bozell when the then True North merged its FCB and Bozell subsidiaries.

While a marriage of Delaney Fletcher and FCB would have provoked massive client conflicts, a merger resulting in the creation of DLKW Lowe throws up none. Indeed, the agencies share a common client in General Motors.

And while FCB's earlier acquisition of Banks Hoggins O'Shea threatened to create a cumbersome management structure, Lowe London has a managerial vacuum in urgent need of filling.

Furthermore, according to Knox, the old FCB could never have rivalled Lowe's network of strong agencies in emerging markets. This, he suggests, is now being matched in the US where the recent merger between Lowe and Deutsch results in a much stronger offering.

JOINING IPG

What remains to be seen is how DLKW will fare as a full family member of Lowe's IPG parent. Not that the two parties are unknown to each other. IPG inherited a 26 per cent stake in DLKW when it took over True North - the agency bought it back before selling to Creston - and Michael Roth, IPG's chairman, met the DLKW management in London before giving the Lowe deal his blessing.

The worry is IPG's poor track record of buying, integrating and aligning agencies, the botched 1999 merger of Lowe and Ammirati Puris Lintas being the worst example. Those with first-hand experience of it claim this because of its preoccupation with McCann Erickson, its financial engine room.

"Roth doesn't get involved with clients in the same way as Sir Martin Sorrell does at WPP," the former boss of an agency that was bought by IPG says. "He leaves all that to the people at McCann. This means that the other IPG operating companies, including Lowe, are made to seem like second-class citizens."

Not that this has deterred Michael Wall. Arriving as Lowe's global chief executive last September, he began exploring possible solutions to Lowe London's lack of critical mass and to bring it into line with successful network shops in Latin America and Asia.

The agency was crying out for a robust and stable management and to be grounded in a market in which local clients - Twinings, John Lewis and Tesco among them - had deserted it. Moreover, Lowe London has always been critical to the Unilever business that accounts for a huge percentage of its global income.

It was against that background that Steve Gatfield, Wall's predecessor, opened conversations about DLKW with Don Elgie, Creston's chief executive, 14 months ago. Initially, they were about a joint venture but, when Wall took over, they moved on to the prospect of DLKW joining IPG.

Elgie was happy to do a deal if the price was right. Although the disposal will leave Creston debt free, he dismisses any suggestion that it was a "fire sale".

"This has nothing to do with debt and everything to do with the way the market is moving," he says. "The offline ad market has dropped 21 per cent since 2007. DLKW is well run but it's in a declining market."

Lowe, he claims, has got what it needs, allowing Creston to concentrate on two new internal projects - a marketing and brands consultancy that will include communications planning, and an "incubator" pinpointing new channels and trends.

INTERNATIONAL AMBITIONS

For their part, the DLKW founders say their restlessness within Creston was growing. The agency wanted to build on its limited amount of international business but was frustrated at being denied entry to pitchlists because it had no international affiliations. "We wanted the opportunity to play on a larger stage," Knox acknowledges.

And with Lowe, the DLKW founders think they've found the place to be able to do that. "We get to paint on a bigger canvas with more financial resources as well as good network support, while Lowe gets a strongly managed UK hub," Delaney declares. "Weaknesses in this deal are hard to find."

So hard, it seems, that Delaney and his partners are backing their faith in its success by taking personal stakes in the merged agency. "It's an indication of how much thought we've given this," he asserts. "We're not incentivised to make as much money as we can and shove off."

Whether such faith is justified remains to be seen although early reaction to the impending deal is upbeat. "Lowe London is perceived by the industry as being on its last legs," a Lowe insider says. "It desperately lacks the strong and stable leadership that DLKW can provide. The place is a vipers' nest and those vipers need to be culled."

The big question is whether there's sufficient cultural and creative synergy between DLKW, synonymous with hard-working ads starring Howard, the singing Halifax counter clerk, and Lowe London, famous for multi-award-winning TV spots such as "ice-skating priests" for Stella Artois.

Some believe any divide will quickly be bridged given that George Prest, DLKW's executive creative director, and Simon Morris, its head of art, who will retain their roles within the merged operation, are both one-time members of the Lowe creative department. Indeed, Prest was once mooted as a possible successor to Lowe's former creative chief, Ed Morris.

"George was never told he was the creative director-in-waiting, perhaps because he wasn't quite ready for it," a former Lowe London senior manager recalls. "But he certainly would be now. What's more, Simon has all Lowe's classic craft skills embedded in him."

Wall says: "Both agencies have reputations for doing great work on populist brands. People talk about Lowe London as if it was a creative boutique - but look at all the populist ads it did for Tesco and Heineken."

If all goes to plan, Wall envisages an agency that, in five years time, will be substantial both physically and in reputation based on a balance of local and international business. Most importantly, he hopes it will be shining rather than a tarnished example of what Lowe Worldwide has to offer.

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