CLOSE-UP: LIVE ISSUE/CLIENT CONFLICT - What's Carat's secret in managing client conflict? Carat may have held on to both Renault and PSA, but for how long?

So Carat and BBJ have pulled off the seemingly impossible and held on to both the pounds 75 million UK Peugeot-Citroen business and the pounds 360 million pan-European Renault account.

So Carat and BBJ have pulled off the seemingly impossible and held on to both the pounds 75 million UK Peugeot-Citroen business and the pounds 360 million pan-European Renault account.

The Aegis agencies now hold three pieces of major car business (Carat also handles the more high-end BMW in Europe), all of which were won since the start of the year.

Many thought that Carat and BBJ would be forced to resign the PSA account following Carat's triumph in the fiercely contested Renault pitch last month. However, after weeks of discussions, Aegis has convinced both rival French car producers to leave their business with them.

Under the new arrangement, the Renault account will move into Carat from January, with the entire PSA business shifting to BBJ.

This represents a significant climbdown by PSA, since the initial appointment involved splitting the two accounts, with Peugeot going into BBJ and Citroen into Carat. It was an arrangement that suited the two car divisions' desire for autonomy.

Furthermore, sources close to PSA suggest that when Carat and BBJ won the business in early July, Carat assured its new client that it would pull out of the Renault pitch. Instead, Carat decided to go for broke and, within two months, was staring at the most tangled case of client conflict that media agencies have seen in years.

It seems that an understandably upset PSA was, initially, intent on removing the business swiftly from Carat and BBJ. Reports suggested that talks opened with OMD UK, Media Planning and the previous incumbent, Initiative Media, about moving the business. However, the agencies in question continue to deny any such discussions.

Carat admits that PSA was unhappy. Ray Kelly, the chief executive of Carat UK and Northern Europe, says: 'There may have been an issue but it's all sorted out now.'

Kelly adds that the solution was simple because it was able to move the Citroen business into BBJ alongside Peugeot.

However, one source close to PSA says this solution didn't go down too well. 'PSA was very annoyed. It was shuffled into BBJ, which looked very embarrassing. It doesn't like being sidelined for Renault. If it was Ford, it probably wouldn't matter,' the source says.

So Gallic rivalry encouraged some initial seething within PSA. Sources suggest that Renault wasn't particularly happy either. The manufacturer might reasonably have expected the Carat group to resign PSA's smaller UK account in order to take on its own pan-European business. However, insiders suggest that Carat's plans to handle the Renault business from Paris helped smooth things over with the manufacturer.

Kelly claims that Carat's planning capabilities helped it to hold on to the business. 'The reality is that we are a long way ahead of our competitors. There was a conflict issue but both companies (Renault and PSA) were most convinced by us,' he says.

There is probably some truth in this, given that Renault had chosen Carat across 16 countries for its strategic thinking on brand strategy However, while Carat and BBJ may have a strong strategic offering, Aegis's ability to provide buying muscle and to screw its margins down may have also helped it to keep the business.

Some sources believe this helped BBJ to keep PSA. It seems that PSA's UK chiefs were unhappy about leaving the business with Aegis but were overruled by the European chiefs who were impressed by BBJ's competitive offer. A source says: 'Clearly BBJ made PSA an offer too good to refuse.'

Many in the industry were surprised at Renault and PSA agreeing to leave their business in the the same group, but how much of a landmark is this and will it open the doors for other agencies to handle such large competing accounts?

George Michaelides, the managing partner at Michaelides & Bednash, says: 'It has the potential to be a landmark, but if Unilever turns around tomorrow and pulls out of an agency because of a small competing account in Germany, then that will take us back to square one.'

Richard Burdett, the vice-chairman of CIA UK, says: 'Given the historical background, I'm surprised at the PSA decision, but it shows that we can find ways of managing conflict. I've worked at agencies where there has been conflicting business, but it didn't make any difference. Confidentiality was never breached.'

Many think that conflict should not be a problem for clients because they allow advisers other than creative and media agencies to handle competing business. Agencies argue that if lawyers and financial advisers can offer advice to competing companies, then the same rules should apply to them.

Michaelides says: 'I think conflict is an overstated issue. It is an issue that is more about precedent rather than the reality of obtaining the best buying and advice.'

Agencies are obviously eager for change in client attitudes towards conflicting business. They argue that in the commoditised area of media buying, this shouldn't even be an issue, but may raise problems where higher-end media strategy is involved. Aegis was able to work around this by putting the Renault and PSA businesses into separate agencies. However, some are waiting to see how long it manages to hold on to the three car accounts. 'We're making all this noise, but I'd be surprised if the drama has been fully played out yet,' one agency chief says.



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