LIVE ISSUE/AGENCY MERGERS: RPM3 hopes to be more than the sum of its parts - Agency mergers often end in rocky marriages. Mairi Clark weighs up the risks

A mixture of surprise and cynicism met the announcement that Butler Lutos Sutton Wilkinson was to merge with Cowan Kemsley Taylor to create an agency with claimed billings of pounds 60 million (Campaign, last week).

A mixture of surprise and cynicism met the announcement that Butler

Lutos Sutton Wilkinson was to merge with Cowan Kemsley Taylor to create

an agency with claimed billings of pounds 60 million (Campaign, last

week).



While some sceptics pass off the two agencies’ coming together as ’two

times nothing equals nothing’, others are less pessimistic about the

benefits of two modest-sized agencies joining forces.



The question confronting agencies facing the merger dilemma is whether

or not the marriage will be greater than the sum of its parts.



Certainly, combining forces with the right partner can provide scale

that might otherwise take years to achieve. ’To grow organically and get

into the Top 20 would take forever,’ an agency executive who has gone

through the merger process comments. ’Either acquiring or joining up

with someone is the only route.’



Sometimes, agency marriages mean compromises have to be made. Some

suggest the very idea of merger is a myth. ’A merger may be described by

the people involved as a meeting of two minds but it is in fact

something else,’ one agency chief claims. ’It’s always a takeover of one

by the other.’



In the case of Simons Palmer Clemmow Johnson, its merger earlier this

year with TBWA provided the obvious advantage of instant access to an

international network. Indeed, Paul Simons, chief executive of TBWA

Simons Palmer, stresses the importance of knowing why you are looking to

merge rather than merging for the sake of it.



’It’s like being in a relationship when you’re younger. You go out with

several people but you decide you’re not quite right for each other. You

can’t generalise,’ he says.



The newly christened RPM3’s stated goal is to offer its clients a

broader base of talent, both creative and planning, the latter being a

recognised weakness at Butler Lutos. Both parties insist the agencies

have not so much merged as reinvented themselves as a new agency with a

new philosophy.



Matthew Lutos, the creative director, says the idea of creating a new

agency arose when Butler Lutos carried out an audit to gauge people’s

perceptions of the agency.



’It was clear that we needed to have more talent and offer our clients

more,’ he says.



The agency has already made its way on to a pitch-list alongside BDDP

GGT, Lowe Howard-Spink, Bartle Bogle Hegarty and BMP DDB. Does that mean

RPM3 views those shops as its most obvious rivals? Paul Cowan, managing

director of the agency, believes its regular challengers will be

slightly smaller. ’I would imagine ourselves alongside the likes of

Walsh Trott Chick Smith, Duckworth Finn Grubb Waters and HHCL &

Partners, among others.



I want to position the agency as bright, dynamic and innovative, but I

want us to take on the smaller, quirky clients as well as bigger

brands.’



The agency’s success may depend on how quickly it recognises what it

does best rather than making a headlong rush to be trendy.



Hugh Burkitt, Court Burkitt & Partners’ chairman, engineered the merger

of the then Burkitt Weinreich Bryant and Edwards Martin Thornton to

create Court Burkitt. He believes too many people in the industry think

trendy is good.



’The ’two times nothing equals nothing’ opinion is exactly what you’d

expect to hear from an industry luncher at the Ivy,’ he says. ’Everyone

talks about agencies being fashionable and unfashionable, but the only

opinion that actually matters is that of the client. I doubt any

agency’s clients have a view of an agency before a merger. But if Butler

Lutos and CKT can identify their key strengths, they will do well.’



Nevertheless, the agency bridal path can be strewn with pitfalls. Leon

Jaume, the Ogilvy & Mather deputy creative director, was involved in

FCA’s merging of his agency, Mavity Gilmore Jaume, with Brooks Legon

Bloomfield in the late 80s. It is not something he remembers fondly.



’It was probably the worst time in my advertising life,’ he recalls.



’Many agencies have very strong personalities and ours were no

different. It’s like trying to merge two football teams. Who’s going to

be manager? What colours will you wear and who plays what position?’



His verdict: ’If there was the international element, then fine, but

generally I’d give mergers the thumbs down. They hurt, they very seldom

work and, although they may give you a short-term shot in the arm, what

about long term?’



The 1993 merger of Leagas Shafron Davis with Ayer was an outstanding

example of short-term gain at the expense of long-term benefit. Looking

back, Ron Leagas, the Leagas Shafron Davis chairman, believes the fit

has to be exactly right or agencies will founder.



’I think you can get speedier results if you merge with the right

partner,’ he says. ’What we thought we’d get, we didn’t, because of the

subsequent changes of ownership, so we pulled out. People at the time

said it was a business masterstroke, but I wouldn’t say that. In many

cases the benefits are temporary.’



He adds: ’If you can find two agencies that have very different

strengths, then it can go quite a long way, but that’s difficult to do.

People who run their own shows tend to want things a certain way and any

relationship needs an area of compatibility.’



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