Euro RSCG London's hold on Matalan under threat as retailer reviews advertising

The discount clothing retailer Matalan has put Euro RSCG London on notice, just ten months after handing the agency its £10 million advertising account.

The review is being overseen by the Matalan marketing director, Claire Bayliss, who returned to the company recently following a stint at Asda.

Matalan's advertising account has changed hands several times in the past three years. M&C Saatchi and its sister direct marketing shop, Lida, won the business in 2002, but lost it a year later when the incoming advertising manager, Ruth Start, decided to take it in-house.

The company reversed this strategy last October, when it appointed Euro RSCG.

Bayliss has installed a new marketing team and is keen to stamp her authority on the department. She is already reviewing Matalan's PR business.

The company has been the subject of takeover speculation. Last month, its share price rose by 8 per cent after it was reported to be in talks with several retailers, including Tesco and Wal-Mart.