MEDIA FORUM: Media shops examine debris from TMB-Grey talks - Grey’s acquisition of the Media Business Group is off. But their reasons for seeking a deal in the first place are still very much on the agenda The media market is a decidedly scary pl

So, Allan Rich isn’t. Well, he’s obviously moderately well-heeled, and has been since he floated his company, the Media Business Group, on the Stock Exchange. But until last week, when talks between his company and Grey broke down, he thought he was about to become even richer.

So, Allan Rich isn’t. Well, he’s obviously moderately well-heeled,

and has been since he floated his company, the Media Business Group, on

the Stock Exchange. But until last week, when talks between his company

and Grey broke down, he thought he was about to become even richer.



Grey and its media subsidiary, MediaCom, are not the first outfits to

seek an accelerated pathway into the super league by buying a

long-established media independent. The deal would have made sense for

both buyer and seller, each hovering, as they do, in the grey (no pun

intended) billings area of just over pounds 200 million. The merger

would have created the UK’s fifth-largest buying point.



Last week, six months of discussions fell apart not because of structure

or ego problems but for the simple reason that - largely because of

international financial market instability - the Media Business Group’s

share price has collapsed. Both sides are trying to make light of the

situation, hinting that they still have audacious master plans for

improving their market ranking. We shall see. But perhaps the most

surprising aspect of the affair is the extent to which its whole purpose

- the acquisition of increased market clout - is still so important.



Hasn’t the argument moved on? In the last couple of years, the emerging

wisdom is that the buying performance of the tenth or even the

15th-biggest buyer is not that different to the performance of number

five. Clout is not an issue these days, surely. We’re all far more

worried about clever strategic thinking and planning expertise.



Apparently not so. Instead, the super league seems to be an increasingly

exclusive club. If this is so, does the future look bleak for those in

the middle ground? Mark Cranmer, the managing director of Motive

Communications, disagrees. ’If you are clear about what you are trying

to deliver for the client, then there is nothing wrong with being in the

full-service or medium-sized specialist position. You have to be clear

about what you offer and why it can deliver a competitive

advantage.’



Cranmer believes that there are problems if you pretend to be what

you’re not. ’Masqueraders’ are those who attempt to convince everyone,

including themselves, that they can offer everything - from the

one-dimensional buying efficiencies at one end of the market to the

extremely personalised service at the other.



He adds: ’I am surprised when people talk about clout, because the

argument has moved on. We don’t feel threatened. We’re not looking over

our shoulder worrying about whether we’re delivering. I still don’t buy

into the notion of there being a real threat to the centre ground.’



Size isn’t important, agrees Glenn Burton, the chairman of Media Buying

Services. ’In my view, it’s well down on the list of reasons to appoint

or stay with a media agency. Great media ideas and buying come from

bright and talented people regardless of the size of their company. If

this wasn’t true, we’d only have one media agency in the land.’



Burton points out that cost savings are commonly cited as the key

motivation for mergers. But he questions whether those savings benefit

clients as much as shareholders. ’Whatever mergers occur - and I’m sure

there will be many - I’m pretty confident that in ten years’ time we’ll

still have large, medium-sized and small media agencies successfully

operating for clients who appreciate their contribution, regardless of

size.’



Mike Sell, the chief executive of Total Media, is even more bullish.



He believes that structural change in the industry is geared to the

demands of a small minority of advertisers. He wonders how long the

majority will remain silent. ’The move towards volume has been driven

primarily by clients who have volume on an international basis - the big

agencies have been restructuring primarily to meet their needs.



’The corollary is that there are an increasing number of UK clients

whose needs aren’t being met. The most visible example of this was CIA

dumping a whole lot of its smaller clients back in November 1997, but it

has been happening on a less public basis right across the board. Those

deemed to be not big enough come to us rather than smaller shops because

the middle ground is fully resourced.’



He adds: ’Middle-sized clients are, after all, the vast majority of the

market. They know that, at the big shops, they subsidise the bigger

advertisers - and in the TV market especially, their demands are

different. The pounds 1 million client doesn’t want big blocks of

airtime. It wants carefully crafted schedules, specific programmes, spot

by spot.’



Wishful thinking? Colin Gottlieb, the managing partner of Manning

Gottlieb Media, believes so. Until not so long ago, MGM was the hottest

of the medium-sized operators. Now it’s part of the Omnicom Group.

Gottlieb agrees that the middle ground will continue to exist - but he

doesn’t believe it will exist independently. This, for him, is the big

issue - and he predicts a bleak future for anyone who isn’t part of one

of advertising’s big tribes.



’The real killer for middle-sized specialists is convergence in terms of

all forms of media communications. It’s not just about media buying any

more - you’ve got to cover all the other areas and you certainly won’t

be able to build proprietary tools. Only the WPPs, the Interpublics and

the Omnicoms can do that.’



Gottlieb insists that people talk a lot of twaddle about the client

being lost at big operations. That’s missing the point, he says. The top

operations don’t operate like that at all.



And he concludes: ’There’s also the question of entre-preneurs. What

about the people who drive forward the business? The answer is that the

big groups will have to be flexible enough to accommodate them - they

will have to allow offshoot specialist companies billing around pounds

100 million.



There, the client can get the best of both worlds. The analogy we have

is with the car business. Ford is a huge car manufacturer but it also

owns Jaguar and Aston Martin. That is the model for the media landscape

of the future.’



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1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).