BDDP GGT: BST-BDDP and GGT expect merger strategy to throw up few conflicts

It’s one of the best-kept but least surprising secrets in advertising: the GGT Group agencies that carried Dave Trott’s name, BST-BDDP and GGT Advertising, are merging to create a top 15 shop, BDDP GGT.

It’s one of the best-kept but least surprising secrets in

advertising: the GGT Group agencies that carried Dave Trott’s name,

BST-BDDP and GGT Advertising, are merging to create a top 15 shop, BDDP

GGT.



Usually, agency mergers throw up a handful of account conflicts, but

this deal appears to carry with it cost savings and only one obvious

conflict: BST’s Red Stripe, owned by HP Bulmer, with GGT’s Scottish

Courage brands, Holsten Pils and John Smith’s. ’We are speaking to

Bulmers,’ Paul Bainsfair, joint chairman of the new agency, says. ’But

Bulmers has never had a problem with being in a beer agency.’



Several questions remain. Will BST’s executive creative director, Paul

Leeves, gel with the creative director, Trevor Beattie? What about

media?



How much will Bainsfair and his partner, John Sharkey, make for selling

their stake in BST-BDDP to the GGT Group?



Leeves, who is described as a ’roving creative ambassador’ in the new

set-up, will be a deputy chairman - one of four, no less - reporting to

Bainsfair and Sharkey. He will ’continue to manage relationships with

clients at a senior level,’ Bainsfair says.



Internationally, the GGT Group’s advertising interests consist mainly of

BDDP Advertising Worldwide (which has 95 owned or associate agencies in

35 countries) and its US shops. In the US, GGT and BDDP will remain

separate as a merger there would bring no significant advantages. In

countries where GGT has small agencies compared with BDDP, such as Spain

and France, they will be merged or sold.



The group’s UK marketing services interests have provided a blueprint

for the merger of the two advertising networks. In May, BDDP’s Tequila

absorbed GGT’s Option One to form a top five integrated agency.



A common media buying strategy looks necessary. In the US, media is

bought and planned through Advanswers. The GGT Group’s chairman, Mike

Greenlees, admits that Europe is ’more fragmented’. GGT works mostly

with its joint venture partner, CIA Media Solutions, in the UK, while

BDDP buys mostly through the Media Partnership. Greenlees is looking for

a media partner and will act in ’six to eight months’. Word is that CIA

may be ready to sever its ties with the group.



The price paid by Greenlees for the stake in BST-BDDP controlled by

Bainsfair and Sharkey will not become public until January 1988 (when

GGT publishes its half-year figures). However, the deal values BST at

nine times its average post-tax three-year earnings, a figure we

estimate at pounds 8.7 million.



The merger will be seen as a neat way of making GGT in London more

profitable, thanks to the arrival of some experienced management and the

cost savings that will be made as duplicate departments are pared

down.



Greenlees believes consolidating operations in most markets under the

BDDP brand will please the City. ’I know this will be judged positively

by shareholders, it’s the last piece of the rationalisation jigsaw,’ he

says.



The cultures of the two shops will be thrown into sharp relief when BST

leaves Soho Square to move the short distance into GGT’s Dean Street

home.



GGT is more creatively focused and less profitable, whereas BST, while

lacking creative clout, is one of London’s leanest and most profitable

shops.



A potentially explosive mix maybe, but both sides seem to relish the

marriage. Grant Duncan, managing director of the merged agency, says:

’Improving profitability will be one of our key concerns.’ Bainsfair -

who ran Saatchi & Saatchi with Sharkey during one of its most successful

periods before leaving to start his own agency - points out: ’Now we’re

back in the premier league.’



GGT’s major clients

Cadbury

Do It All

Flextech

French Connection

Heinz

National Canine Defence League

Pretty Polly Scottish Courage

St Ivel Telewest The Big issue

Wrigley Company

BST’s major clients

BBC (TV Licensing)

BBC Worldwide

Classic FM

East Midlands Electricity

Equitable Life HP Bulmer

Kew Gardens

Le Shuttle

Marlboro

Michelin

Philip Morris

Thomas Cook

Waterstone’s



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