There were the big children in the playground who could look after
themselves perfectly well. Then there were the smaller ones, who were
either too different and weird to get noticed or they had a big brother
to ’get you’. Finally, there were the average-looking, unremarkable
children who, in order to get noticed, ganged up together and strode,
slightly shambolically, around the playground with linked arms.
Which is how there is going to be a new ’top five’ direct marketing
agency. The four UK agencies owned by the highly acquisitive Canadian
network Mosaic are linking arms: the creatively focused direct marketing
agency Stretch the Horizon; the sales promotion agency ZGC; its direct
marketing sister Dialogue ZGC and the brand extension outfit Creative
IQ. None of the four were going anywhere near the top ten on their own,
yet none quite had the oomph that a small agency has to have to be one
of the nicely weird children. It’s a shame to waste a client list
boasting Renault, Coca-Cola and Hewlett-Packard on itty-bitty outfits.
As the large agencies get larger, if you can’t beat them, you have to
join them. Medium-sized is so 90s.
It was some years ago that advertising and media agencies (or their
owners) realised that the globalisation and consolidation of their
clients’ business meant that they had to provide a consistent service
across major markets.
But direct marketing lagged behind. The intimate nature of one-to-one
communications clouded the issue - how can you provide economies of
scale on an international campaign when not only does your marketing
activity vary from country to country but also from customer to
It’s not a marketing question, however, but a business one. As clients
shift more of their budgets below the line, it is less cost-effective to
have a diverse roster of direct marketing agencies. Clients want to buy
their direct marketing in bulk and let the local agencies sort out a
domestic slant on a worldwide masterplan.
So to get this kind of global buying power, the local markets need to
get leaner. Myriad consolidations and mergers on the UK direct marketing
scene (Tequila with Payne Stracey; Grey Direct with Grey Integrated;
Jones Mason Barton Antenen with Claydon Heeley to name recent ones) have
been at least partly to do with beefing up for a global presence.
And the knock-on trend for bigger UK agencies is largely a healthy
It brings them into line with the advertising agencies and provides more
choice for clients wanting a shop of a certain size. They help nurture
talent and ambition, vital for creating entrepreneurs to set up small,
creative agencies. And they force the often complacent medium-sized
agencies to work harder to provide a point of difference.
The smaller agencies do defend their positions. They say that clients
have regular access to senior people and that the agencies have unique
personalities. But do the small agencies want to stay small? There is no
small direct marketing agency around that thinks it can stay that way.
The question is not whether to merge, acquire or be acquired. It’s when.