LIVE ISSUE/TEQUILA PAYNE STRACEY: TBWA declares global ambitions with DM merger - Tequila Payne Stracey will experience little teething trouble, Claire Cozens says

Last week Omnicom announced, after months of speculation, it was merging two of its agencies to form a creatively driven international brand. The new agency leaped straight into the top five UK agencies and took on an unwieldy string of names as its title.

Last week Omnicom announced, after months of speculation, it was

merging two of its agencies to form a creatively driven international

brand. The new agency leaped straight into the top five UK agencies and

took on an unwieldy string of names as its title.



Sound familiar? The merger of TBWA’s two UK below-the-line agencies

resembles the formation of TBWA GGT Simons Palmer back in May. Only this

time the sector is direct marketing and the agency in question is

Tequila Payne Stracey, the below-the-line network formed out of the

smaller, UK-based direct marketing shop, Payne Stracey, and the

fast-growing direct marketing and sales promotion network, Tequila.



The move is designed to beef up TBWA’s below-the-line offering in

London, to turn it into a flagship office for Tequila Worldwide, its

global below-the-line network. Tom Wass, former chairman and chief

executive of Tequila, becomes joint chairman and chief executive of

Tequila Payne Stracey alongside David Payne, the former chairman of

Payne Stracey. Once the merger in London is complete, Wass will develop

the network internationally while Payne will handle the strategic

direction of the UK agency.



The deal clearly makes sense and is the start of a tidying-up process

for Omnicom, which has several below-the-line brands. But the theory

behind it - that below-the-line agencies must provide an international

service in much the same way above-the-line agencies - is less

straightforward.



Mike Greenlees, president and chief executive of TBWA Worldwide, is a

believer in global below-the-line brands. ’They already exist and

OgilvyOne Worldwide is a good example,’ he says. ’Clients are looking at

more international direct marketing and relationship marketing

programmes. They want campaigns that can cross borders. I firmly believe

we will see the development of global through-the-line networks in the

same way we’ve seen with above-the-line networks.’



Tequila Worldwide has offices in 16 countries and is negotiating to

acquire agencies in a further eight. It is represented in Eastern

Europe, Africa, Asia and the US; and while the London agency will act as

a hub, the plan is to create access points to the network in strategic

points around the world. Its international clients include Danone,

Rothmans and Visa.



For Tequila, the merger means added specialist expertise and further

creative clout for its London agency. But for Payne Stracey, it provides

an international network that any agency would have difficulty building

up for itself. Payne Stracey has already carried out pan-European work

for WeightWatchers and can now take on further international work. ’The

internationalisation of the industry is an inevitable consequence of its

coming of age,’ Payne says.



’This deal comes at a time when we were considering how to expand and

take on more international clients. It also means our existing clients

will have access to far greater resources.’



The logic behind the creation of an international network is that as

clients shift their marketing budgets below the line, it no longer makes

financial sense for them to use a diverse roster of direct marketing

agencies across the globe. The block to the development of European

direct marketing campaigns has been cultural, but improvements in

technology and in the cross-fertilisation of information have changed

that.



But Nigel Howlett, chairman of OgilvyOne, warns that cultural

differences still represent a major hurdle in the creation of a

successful international below-the-line brand. ’It is very important

that all the operations have the same mindset - they must have shared

beliefs and aspirations,’ he says.



And even if agencies overcome this hurdle, truly international campaigns

are still very much the exception in direct marketing. ’For a lot of

brands, direct marketing is still very country specific,’ Simon Kershaw,

the creative director of Craik Jones, says. ’In most agencies, you could

count on the fingers of one hand the number of clients that can use the

same creative idea internationally. But as the direct marketing industry

matures, it needs to recognise that globalisation is a major issue for

clients.’



The two agencies are considered a good cultural fit and Tequila Payne

Stracey should suffer few teething problems. Tequila went through a more

painful merger in June last year, when it was brought under the same

roof as Option One, eight months after Option One’s owner, the GGT

Group, acquired Tequila’s French parent, BDDP. There are few major

client conflicts in the latest merger, but Tequila will resign

Chrysler-Jeep in favour of Payne Stracey’s long-standing relationship

with Nissan, and Payne Stracey will part company with Eastern

Electricity because of a conflict with Tequila’s East Midlands

Electricity.



Tequila Payne Stracey in London will be used as a creative base for

developing international campaigns. It will also act as a training

ground for staff who will move into countries where experienced people

are needed.



’Our plan is to be if not the largest network then the most exciting,’

Wass says. ’There are some parts of the world where your clients need

you to be and that fact is driving our expansion plans. But all that is

dependent on the quality of the agency in London, which will act as a

centre of excellence for the network.’



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