CLOSE-UP: LIVE ISSUE/EUROPEAN MEDIA NETWORKS; Has PHD adopted a coherent European strategy?

Will PHD’s expansion plan afford it enough European clout? John Owen reports

Will PHD’s expansion plan afford it enough European clout? John Owen

reports



‘The only business we’ve lost has been because of international

realignments,’ says David Pattison, reflecting on the six years since he

launched Pattison Horswell Durden with Nick Horswell and Jonathan

Durden. ‘I’m not suggesting that having a network would defend that

business completely, but it would be nice to offer it as an option.’



Such is the globalisation of business these days, it came as no real

surprise when it emerged (Campaign, last week) that the UK’s most

successful independent media start-up of the 90s was on the verge of

signing up to an international network.



Since 1990, PHD has grown into a pounds 90 million-billing company,

whose clients are currently domestic-only advertisers. How much more

could it grow with international clients on board?



John Perriss, the chairman of Zenith Media Worldwide, says the move is

sensible. ‘PHD is virtually at the limit of clients who want servicing

in the UK only,’ he reasons. ‘If it’s going to grow, it’s got to offer

more.’



To be fair, it isn’t even that yet. With nothing signed, Pattison is

reluctant to discuss details, but the basic plan is as follows.



Debis Marketing Services, which is owned by the German car manufacturer,

Daimler-Benz, and Media Planning, Spain’s largest media independent, are

in the throes of building an equity-linked network across Europe. PHD

will become the UK part of that network, but - crucially for its

founders - not by selling a stake in the company. Instead, it will set

up a separately branded UK joint venture with the network owners. This

operation will subcontract all UK media planning and buying for its

clients to PHD.



Orion International Media Solutions, the holding company set up to

acquire the network by the German and Spanish partners, has already

acquired a 25 per cent stake in the Dutch operation, MI Media

Independent. Discussions are also ongoing with top-drawer media shops in

France and Italy.



As Pattison observes, this will probably be the last European media

network launch. So it had better be a good one.



The darkest shadow over the venture is cast by Daimler-Benz itself,

which last month recorded losses of pounds 2.7 billion. Last week it

pulled the plug on the Dutch aircraft maker, Fokker, in which it has a

majority shareholding. The Dutch Government was forced to intervene as

Daimler’s chairman, Jurgen Schrempp, proclaimed: ‘Profitability in all

fields of business is the first priority for the group. Any strategies

which do not unequivocally support that priority are unacceptable.’



Given the low margins in media, some believe Debis may also come under

the microscope. ‘It’s a fair point,’ Pattison admits, ‘but I can’t worry

about that. All I can do is make sure I protect PHD in any arrangement I

make.’ Hence the arm’s-length distance of the joint venture deal.



More important for Pattison is the cultural fit with Media Planning and

Debis’s well-regarded German media planning and buying arm, Debis GFMO.



But these credentials have not gone unquestioned. Some suggest that car

manufacturers and banks (a variety of which control Media Planning) are

unlikely to be blessed with the strategic know-how to drive a new

network championing quality media thinking.



But Pattison has no doubts about his prospective partners. ‘We felt

extremely comfortable almost immediately we met them,’ he says, ‘with

both the individuals and with the product they produce.’



The fact remains, however, that this is their network, not PHD’s. Some,

like the CIA chairman, Chris Ingram, believe this is a fundamental

point. ‘Unless PHD is at the top, helping to drive it, the deal is that

PHD is providing the UK resource to somebody else’s network,’ he

declares.



Pattison is aware of the problem. ‘We will only go into it on the

understanding that we have some level of influence over the overall

network,’ he states.



The most likely areas in which PHD will play a role are quality control

and new business, he says. But the choice of partners to expand the

network will be down to Debis and Media Planning - for, as Pattison

points out, ‘it’s not our money that’s buying them’.



And there’s the rub. As all those who have been there before testify,

exerting an influence on partners in which you have no stake is a big

problem. Of course, much will depend on PHD’s relationship with the

Spaniards and the Germans. The fact that they are willing to veer from

their policy of buying into partners to bring PHD on board is a measure

of the respect with which they hold it.



Certainly, Pattison is adamant that PHD will hold the strategic reins

for its own UK-based clients. And, where multinationals have come into

the UK as part of a bigger deal, PHD will have direct contact with the

client’s marketing department in the UK.



But Iain Jacob, international media director at Motive, believes a

strong central management function will be essential to the network.

‘International clients want the whole process to be managed to a degree

which goes beyond co-ordination. They’re looking for added value in

terms of a strategic approach,’ he points out.



PHD’s influence on that centre will only become apparent as the network

becomes operational. On its success will depend the next and most

difficult stage of PHD’s development.



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