Havas' UK direct marketing operations are many and varied but, last
week, the picture was simplified somewhat with the announcement of the
merger between ehsrealtime and Brann.
If you believe the management of the new agency, there are clear
strategic reasons for the merger but more cynical observers might
suggest that base motivations such as cost-cutting and efficiencies lie
behind the move.
First, the case in defence of EHS Brann's strategic claims. Ehsrealtime
was a large agency, employing about 270 staff, and had a strong heritage
in creative direct marketing fused with Real Time's digital
capabilities.
However, though it dabbled in international work, it had no
international network and its most distant satellite was an office in
Leeds. So it makes sense, doesn't it, to merge a strong London agency
with Brann, which has a worldwide network, especially strong in Europe,
but is less strong in London?
This is the scenario painted by Terry Hunt, the chairman of EHS Brann,
and his new boss Roy Boss, the European president and chief operating
officer of Brann Worldwide. The merger creates an agency with 400 staff
and a turnover exceeding £70 million, which, according to Hunt and
Boss, makes it the largest DM agency in Europe. Erm, not quite.
In the UK alone, WWAV Rapp Collins London is larger on the basis of
turnover (£79 million). However, the deal does give EHS Brann more
muscle in the UK and brings EHS' creative and digital skills to the
network. In Hunt's words: "Brann is a very strong agency in the UK -
strong in Cirencester, less strong in London, so there is a good reason
for the merger; to be strong in London, Cirencester and Leeds. There is
also Brann Worldwide. All of a sudden we get the opportunity to work
with, and influence, an international network."
But now the case for the prosecution. Boss and Hunt have been talking
for more than a year about a possible merger. This seems sensible given
EHS's need to link with a network but on Brann's side talks coincided
with deepening problems with its London agency. Boss admitted that the
London agency, launched in 1996, had never lived up to his initial
expectations. Clearly he had to do something about this and a merger
with a stronger London agency seemed like a good solution. However, you
could take the view that merging a weak London agency with EHS is not
exactly a cocktail to set hearts racing.
The failure of Brann London is the key to this merger. The agency lost a
succession of managing directors (Mike Oliver, Paul Kitcatt and Dennis
Kerslake), who all failed to make a go of the operation. There was a
suspicion that Brann's Bristol- and Cirencester- focused operations,
with their heart in data and telemarketing, held back Brann London
because of mutual suspicion. The truth probably lies closer to
perception of Brann as a process-driven systems supplier that works
against any London-based creative agen-cy carrying its name. Some in the
industry believe that Brann's culture and systems-led approach could
stifle EHS in the same way.
The heads of other top ten DM agencies don't seem too worried by the
creation of EHS Brann. The belief at other agencies is that the deal is
driven by financial, rather than strategic, concerns. Smaller agencies
believe that the deal creates a gap in the middle market and could lead
to more new-business opportunities for them.
Word of redundancies at Brann and a review by BMW of its account with
EHS, because of a conflict with Brann's Peugeot account, is already
circulating. However, in the long term, the move won't weaken EHS in
London and gives Hunt the clout he needs to strengthen the agency. On
balance, the reasons for the merger may not be entirely positive, but it
is the right move.
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