CLOSE-UP: LIVE ISSUE/SPIN-OFF SHOPS; What is the point of specialist spin-off agencies?

John Owen reports on why secondary shops seem to have such a short lifespan

John Owen reports on why secondary shops seem to have such a short

lifespan



It’s a familiar scenario. A large agency gives birth to a spin-off that

provides ‘a more fleet of foot approach’, ‘a more open structure’, ‘a

greater focus’ - or any other number of benefits its more cumbersome

parent supposedly cannot offer.



The fledgling struggles to break free, to feed itself on independently

won business gains. It usually survives for anything between one and

three years. Then it is consumed by its parent, either in rage at the

offspring’s inadequacy or in jealousy at its unexpected success.



The demise of Grey London’s ‘fashion’ agency, the Chelsea Partnership,

last week was one of these sad ends (Campaign, 31 May). Set up in

September 1993 to explore whether a market existed for a specialist

agency in high-end fashion and beauty advertising, the agency failed to

find one. Its client base barely grew beyond its initial Procter and

Gamble fragrances business, most of which passed back into the main Grey

agency in April.



Most agency spin-offs have higher hopes. The Interpublic Group’s Gotham

Agency is still going strong. As are Team Saatchi and BMP4. But what is

the key to their survival?



According to Chris Powell, the chief executive of BMP4’s parent, BMP

DDB, a spin-off’s chances of survival are determined largely by the

rationale for its creation. ‘The ones that don’t work are those that are

set up to avoid client conflict,’ he says. ‘There’s no reason for any

other client to have any interest in them. There is no competitive point

to them being there.’



In fact, most spin-offs are set up to service one particularly important

client of the main agency. For the transitory H. K. McCann, spun out of

McCann-Erickson in 1993, it was Coca-Cola, for the Gotham Agency it was

Maybelline in the US and Yardley in the UK.



Likewise, Lintas-i, last year’s very short-lived Lintas shop born out of

Kevin Morley Marketing, existed almost solely to handle the Rover

account. Lintas-i was unable to house client conflict, however - losing

the Jeyes account because of Lintas’s Unilever.



Some smaller agencies do successfully accommodate client conflicts: Team

Saatchi, for example, services Sun Life Assurance while Saatchi and

Saatchi has Norwich Union, although there is no guarantee clients will

be happy with such a division.



To succeed in the long term, spin-offs must do more than house conflicts

or appease single clients. Both BMP4 and Team Saatchi claim to have

broader functions.



Team Saatchi, created when Saatchi Business Communications and Equator,

the Saatchi group’s sales promotion arm, amalgamated last year, is now

more than the sum of its parts. ‘We have a different way of working [to

the main agency],’ Michael Parker, Team Saatchi’s chief executive, says.

‘We were set up as a total communications agency. We have developed a

new kind of team approach and offer ‘Saatchiness’ to clients who don’t

want to be part of a big agency.’



By ‘Saatchiness’, Parker means one thing: creativity. But, by adopting

the parental name, the agency also invites criticism that it is merely a

subsidiary company or the ‘integrated arm’ of Saatchis.



In fact, Parker argues, the main agency is perfectly capable of offering

integrated solutions to its clients without recourse to a subsidiary.

Team Saatchi does not share any clients with the main agency, it has its

own profit-and-loss accountability and it does not report formally to

Jennifer Laing, Saatchi and Saatchi’s chairman.



But the name suggests otherwise - as does that of BMP4, which exists to

house clients that would not feel at ease within its parent, BMP DDB.

Virginia Creer, BMP4’s managing director, has had enough of the name

problem. ‘The name BMP4 suggests we’re a subsidiary or a below-the-line

agency. We’re not happy with that so we’re very likely to change the

name,’ she declares.



Whatever you say about the Gotham Agency, its name is at least different

from Ammirati Puris Lintas or Lowe Howard-Spink. Set up out of Lintas in

New York in 1994, the London office has been housed at another

Interpublic agency, Lowes, since its launch at the beginning of last

year.



Gotham specialises in fragrance and fashion clients. Its debut UK client

was Yardley. Unlike the Chelsea Partnership, however, Gotham has won

other accounts, including Scottish Equitable.



Nigel Sharrocks, managing director of Grey London, believes spin-offs

are often created as much around people as clients. Certainly, that was

the case with the Chelsea Partnership, he says. ‘It was really built

around Maryann [Baryone, the chief executive] and her skills.’



The path they all must learn to tread is perhaps best exemplified by an

agency which isn’t, in fact, a spin-off. But, under less enlightened

management, Leagas Delaney could have been treated like one. The hands-

off approach of its parent, Abbott Mead Vickers, has allowed the agency

to flourish in the ten years since acquisition.



As Bruce Haines, the chief executive of Leagas Delaney, puts it: ‘AMV

has always bought into companies with their own developed sense of self.

Companies like Gotham are opportunist agencies, started to sweep up

different types of business. That’s a valid way of increasing revenue.

The net effect of the AMV way is the same, but each group company has

its own, very individual, well-defined way of doing business.’



Topics