CLOSE-UP: LIVE ISSUE - INTEGRATION. Are ad agencies muscling in on direct affiliates' success?

Ad shops are counting on direct partners like never before.

It's the eternal conundrum: the advertising world is shrinking and fragmenting. Clients are seeking powerful total communications solutions.

Where does that leave ad agencies? How do they marry above and below the line thinking without diluting either discipline?

The convergence of above- and below-the-line solutions has been troubling all of the network powerhouses for some time. In many cases, an integrated outlook has been delivered. However, the recession appears to have forced the two disciplines even closer together.

Last month, Havas' Euro RSCG UK became Euro RSCG Partners and brought all of its direct, digital, PR and above-the-line communications under one management team led by the group chairman, Mark Wnek, and the group chief executive, Chris Pinnington.

Even more recently, WPP's Young & Rubicam and Wunderman's European operations were brought together under one chief executive, William Eccleshare, as part of a wide-ranging restructure.

Add to this Chris Thomas' appointment as the chief executive of Omnicom's Proximity London, a move expected to enable the direct agency to work more closely with its above-the-line affiliate Abbott Mead Vickers BBDO, and there's definitely a trend appearing.

According to Eccleshare, the realignment is being driven by client demand.

He believes clients are increasingly recognising that they need to ensure the quality of thinking across all brand communication disciplines is consistent.

And getting that consistency means that there is a clear need to bring direct agencies into a closer working relationship with advertising agencies while sharing the talent pool between the two.

He says: "I think there is a whole generation of people growing up who don't accept the whole old- fashioned boundaries between above and below the line."

Martin Jones, the advertising director at the AAR, also sees client demand as a key driver of the trend: "Part of the reason I think the two are coming closer together is because direct marketing is so measurable with regard to its effect on people. And, in times of recession, there is pressure on a client to be able to justify their expenditure."

But should we accept so readily that the coming together of above and below the line is solely for the greater good of the client?

The fact that the industry is going through a recession cannot be neglected. Eccleshare states: "To some extent it is recession-driven, but in our case this is driven by client need and we would have been making the changes recession or not."

Although most communications streams suffer in a recession, ad agencies fare worse than their below-the-line counterparts because clients often divert their budgets to the less expensive medium. Many observers, particularly those who work in direct marketing, believe the recession is forcing formerly aloof ad agencies to huddle closely to their direct partners to weather the storm.

AMV appears to be a good example of this. The agency has been hit hard by the recession and last year competed in numerous unsuccessful pitches.

The bad run was broken, however, by a pitch it won in conjunction with Proximity for Norwich Union Direct. The successful partnership came into play again this year with the agencies snaring the Royal Mail's integrated account.

AMV's group chief executive, Michael Baulk, says: "Anything we can do to strengthen the relationship between Proximity and AMV, the better it has to be for our chances of winning the substantial deals that tend to be the long-term agreements."

He adds: "Thomas' appointment is specifically designed to further strengthen the link. The thing that has sat in the way of integrated communication in the past is the fact that the ad industry has been governed by egos and silos."

But how do the DM agencies feel about this trend? After all, Thomas is from an above-the-line background and has never worked at a direct agency.

At Euro, it's the ad agency's management that has taken charge, and Eccleshare, again, is an advertising, rather than direct, figure. When Y&R's new global chief, Ann Fudge, was appointed this year, it was made clear that Wunderman's global chief, Daniel Morel, reported to her. He had previously reported straight to WPP.

Martin Troughton, who runs Harrison Troughton Wunderman, does not believe integration is always a recipe for success. He says: "It doesn't work unless it's a meeting of equals. It works best in a network such as Y&R where there is an equal commitment to above-the-line advertising and direct marketing."

Another senior direct source is less diplomatic. He says: "It's quite simple. Advertising agencies have started seeing DM agencies win more business and they desperately want a piece of the action to bolster their own flagging fortunes.

"We are accordingly seeing admen put other admen in charge of DM agencies, but what do they know about direct marketing? Absolutely nothing. Advertising agencies are trying to muscle in because they are losing money."

Indeed, it can be argued that all the DM networks have gained from the changes is a whole new set of above-the-line bosses.