CLOSE-UP PERSPECTIVE: Logical alliance of APL and Lowe may fall at final hurdles

Few can remember a merger that so many people from two sister agencies have denied at such length. The feasibility studies on Ammirati Puris Lintas merging with its fellow Interpublic network, the Lowe Group, are grinding ahead, the key client has been called to an urgent meeting this week, the creatives are discussing who gets the bigger pool table ... and still there will be no decision for a week.

Few can remember a merger that so many people from two sister

agencies have denied at such length. The feasibility studies on Ammirati

Puris Lintas merging with its fellow Interpublic network, the Lowe

Group, are grinding ahead, the key client has been called to an urgent

meeting this week, the creatives are discussing who gets the bigger pool

table ... and still there will be no decision for a week.



On paper, as I wrote here a few weeks ago, a global merger looks

logical.



APL can’t break out of its position as Unilever’s house agency and Lowe

can’t make the leap to multinational status through organic growth. Both

have suffered business losses and management problems in their New York

offices and APL’s recent loss of most of its Rover Group business

removes the conflict with Lowe’s powerful General Motors Europe client.

Merge the two and IPG could reap the benefits of economies of scale.



Three conflicts spring to mind: Lowe’s GM, Henkel and Sun Microsystems

clients, versus APL’s Toyota, Unilever and Dell. The most important is

Unilever, which is currently contemplating culling 1,200 of its lesser

brands, leaving it with 400 so-called ’power brands’ - and that in

itself will lead to a reallocation of some business.



Unilever could block the merger but it says it wants more creative

advertising and, to date, APL has not provided enough of it. Though

there are few precedents of happy marriages between blue-chip companies

and creative agencies such as Lowes, Unilever may wish to test the

waters. In any case, the chances of it firing APL in the event of a

merger it half-supports going ahead look slim. After 60 years, in one

incarnation or another, as Unilever’s house agency there’s an attachment

between APL and Unilever and an interdependence that shouldn’t be

underestimated.



But who could run the merged network? As far as IPG is concerned,

neither APL’s Martin Puris nor Frank Lowe are in possession of one of

the few halos that currently come in chief-executive size. Puris,

charismatic as he is, has never been considered a great operational man

as his difficulties in hiring a strong, lasting senior team around him

illustrate. The ongoing dollars 340 million lawsuit between APL and

Puris’s once heir-apparent, Rick Hadala, will not have helped his case

or prolonged his enthusiasm for sticking around. Frank Lowe has a much

better track record in hiring and keeping senior talent but he prefers

to operate well away from the hurly-burly of Manhattan and he may not

want to roll up his sleeves and plunge into the political nightmare of

Unilever. His experience with Birds Eye over ten years ago may well have

put him and Unilever off each other for life. Who knows?



caroline.marshall@haynet.com



Have your say at www.campaignlive.com on channel 4.



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