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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