Close-Up: Live Issue - Do networks neglect local business?

Why are network ad agencies losing local business to independent shops, Claire Billings asks.

The recent departures of Argos, Axa and Abbey National from Euro RSCG London, JWT and TBWA\London highlight a growing dissatisfaction with network agencies among UK clients.

It is a trend mirrored by the recent COI roster review, which saw JWT, Euro RSCG, Grey, Saatchi & Saatchi and Ogilvy & Mather dropped in favour of newer, more UK-focused shops including Bartle Bogle Hegarty, Clemmow Hornby Inge and Farm.

As a result, the likes of CHI, Delaney Lund Knox Warren & Partners, VCCP, WCRS and Miles Calcraft Briginshaw Duffy have dominated Campaign's new-business league. DDB London, Cheethambell JWT and Abbott Mead Vickers BBDO are the only network agencies to feature in the table so far this year.

So why are network agencies so regularly beaten by their domestic rivals on domestic accounts? Are local accounts no longer important to the networks?

Nothing could be further from the truth, McCann Erickson's president for Europe, the Middle East and Africa and group chairman for UK and Ireland, Rupert Howell, argues. When he set about turning around McCann Erickson London, one of his first missions was to attract domestic accounts. He's made a good start, bringing the Co-op, Sharwood's, Bisto and Jammie Dodgers to the agency.

"The optimum mix is reckoned to be 50/50 international/local in a network agency," he says. "It gives you your local identity, which matters when hiring local talent."

Few networks boast such an even split, though: McCann's ratio is more like 70/30.

Lorna Tilbian, a senior analyst at Numis Securities, believes it is because local agencies are more focused on servicing domestic clients that they are winning the lion's share of the business. "When creative guys get fed up with the big internationals and set up their own agencies, the first people they target are the big domestics. They can handle those accounts because they're at home. These agencies appeal to the client because the guy whose name is on the brass plate is their account handler," she says.

This has proved a great selling point for the highest-profile independents such as CHI, which won the hotly contested £35 million Argos account this year. Such direct access to the agency's founders is also helping to attract European business: Toyota handed CHI the launch of the Aygo and a slice of pan-European work for the Corolla at the expense of the car manufacturer's global agency of record, Saatchi & Saatchi.

But it's not just about getting access to the names above the door: There is a growing perception that networks are distracted by international pressures.

Carl Nield, the interim head of brand marketing at Argos, says: "We are a local business and the benefits of a network agency are less relevant to Argos. CHI does not have the distraction that running a network agency brings."

Domestic accounts bring smaller financial rewards; add to that pressure from the network to focus on higher-billing global accounts, and the tendency for network shops to concentrate their energies on global business is natural. As Andrew Melsom, Agency Insight's senior partner, says: "There's a subterranean suggestion that at large global network agencies you're a pudding, but not the main course."

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NETWORK AGENCY - Farah Ramzan Golant, chief executive, Abbott Mead Vickers BBDO

"Because of the talent, scale and depth of experience in our management team, we don't have to split our focus between our international and domestic business. Other network agencies may focus on network referrals at the expense of domestic clients. As ever, if you focus your attention in one place, another area slips. We've retained pieces of business such as Sainsbury's,BT, Dulux and the BBC because we're not trying to do an 'either/or' strategy.

"We have a strong domestic profile and, at the same time, have developed our international credentials. We have invested in our talent base, so we can be in both places at the same time."

INTERMEDIARY - Stuart Pocock, partner, Agency Assessments

"Sometimes the creative work at network agencies doesn't quite cut it. If that happens, it can expose the normal problems that most agencies have, such as poor account handling.

"Network agencies sometimes wheel out the big guns for a pitch, but when the business gets taken in, it's a more junior team that runs it. At a local agency, the owners are more connected with that business as they don't get distracted by international business. They can also be more flexible on money."

CLIENT - Andrew Marsden, marketing director, Britvic

"In theory, there shouldn't be any difference between local agencies and networks - they should all be working just as hard for their local clients. You should only ever see added value from a network agency, because they are able to leverage network resources.

"In practice, however, you don't often see it. Network agencies have all the hassle of administrative structures, so clients rarely see the benefits.

"A network agency should be a local agency plus; very often, they're a local agency minus.

"While there should be economies of scale at network agencies, dealing with the network can take up the bulk of a senior agency person's time."

INDEPENDENT AGENCY - Mark Lund, group chief executive, Delaney Lund Knox Warren & Partners

"If you're independent and it's your money, you're more hungry - it's that drive which is difficult to replicate. No network business is given to you, so new business is the only thing that makes you successful.

"There are fewer politics and fewer agendas as you don't have to worry about Europe versus London versus America.

"It's a group of people who like working together and get on with it. It's easier to get the brightest young people to work for you, unless they have ambitions to do the international thing."

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