The recent BT media pitch was one of the hardest-fought of recent years, with most of the major holding companies throwing their hats into the ring at some stage. It ended, last week, with the appointment of Publicis Groupe as "BT's media partner", a result which preserves the bulk of BT's media agency relationships, given that Starcom and Zed Media previously handled offline and online buying.
BT sent out an RFI to agencies in early October. Steve Huddleston, its head of media, quietly informing the incumbent agencies (Starcom, Zed and Mediaedge:cia, which handled planning) that it was approaching other agency groups, including Aegis, Havas, and Omnicom Media Group.
This swiftly led to a pitch process, driven by, Huddleston says, a business and cultural evolution at BT that has seen it move from deriving 90 per cent of revenues from fixed line calls to just 15 per cent. Value in the media market was also a factor. Huddleston says: "As a result of significant consolidation (among media agencies), we saw very quickly that there would be additional value to be had even beyond where I thought we'd get to."
From day one, several BT senior players were involved to varying degrees, including Gavin Patterson, BT's consumer group managing director, and Tim Evans, its marketing director. Huddleston's six-strong team were involved alongside group procurement.
It was clear agency groups would play to their strengths. Omnicom Media Group's sister agency Abbott Mead Vickers BBDO handles BT's creative business, Aegis had a relationship via its Posterscope out-door company and Gavin Millar, the managing director of Vizeum, is a former BT head of media. WPP had won BT's planning business last summer after hiring Stuart Bowden, the planner who had run the account at PHD before becoming a consultant and helping BT to run it in-house.
BT intended a swift conclusion to the pitch, with an initial date for completion set for mid-November then moved to 30 November.
The early exchanges saw Havas and Walker Media pull out. At this stage, some at agencies raised concerns about the level of commitment BT was asking for: not in terms of buying, but in locating up to ten of their best people at BT offices as part of a dedicated team.
The process dragged on well past its supposed conclusion as agencies fought to stay in the running. One participant says: "There was never really a pitch. Most of it was done by e-mail and documents."
Some sources suggest BT procurement provided agencies with details of the buying terms being offered by rivals. One says: "BT procurement gave the information to everybody involved." That said, agency groups were still keen to participate, albeit with the feeling that elements of the pitch came to resemble an auction. Huddleston dismisses this: "There was a rigorous financial process driven by in-house expertise. BT's deals in the market place have always been absolutely market leading."
By December, Aegis and Omnicom were out of the running. It was down to WPP and Publicis. WPP had Mark Read, its director of strategy, co-ordinating things between the Group M negotiations team and Mediaedge:cia's team, which was led by the joint managing director, Toby Jenner. The Publicis Groupe team was led by Iain Jacob, the EMEA chief executive at Starcom MediaVest Group, with Chris Locke, Starcom's trading director leading trading negotiations.
Online expertise is undoubtedly vital to BT, especially given online's importance as a sales channel. Sources indicate that Group M struggled at first to get its online pricing at competitive levels, but still it looked the favourite with the bulk of the BT decision-makers seeming to back its appointment. So what changed? Publicis' critics argue it made a ridiculous offer that MEC and Group M couldn't match. Publicis sources suggest its newly created group offering impressed.
On 8 January, Publicis landed the business. It will create a team to sit within BT HQ. Publicis is not saying who will lead this, but it is a senior role, given that this is the first real integration of Publicis Groupe media resources in the UK.
Some have concluded that the BT pitch process provides a "sad indictment" of the way the business is evolving for agencies, with clients extracting increasing levels of service and buying commitments. As one observer says: "My concern is what this does to the industry. To further commoditise what we do is crazy." But Jacob says: "We took this very seriously. Of course terms were commercially tough, but there were bigger issues at play here."
WHAT IT MEANS FOR ...
- Some believe BT has played the process well in getting a stronger commitment from Publicis in terms of client service along with more competitive buying rates. As one insider on the pitch says: "There's only one winner in this, and that's BT by a country mile."
- BT gets a new agency team operated as a single contract with Publicis, and this team will spend much of its time based at BT headquarters.
- On the other hand, cynics could argue that little has changed and, far from gaining a "totally new approach that evolves the traditional agency/client partnership" as its press release claims, BT's media team will effectively end up working with the same culture and people from Starcom and Zed.
- The creation of a standalone Publicis team to handle BT will surely hasten the seemingly inevitable move towards creating a Publicis Groupe Media unit in the UK. Critics suggest, though, that it will be a test setting up a "virtual" group for one client, given that Publicis doesn't have the structures in place of a Group M, Omnicom Media Group or even Aegis Media. However, BT is convinced it has backed the right horse. Huddleston says: "These people will be some of the brightest young things (Publicis) has got. They'll be working hand in glove on an integrated basis, and it's really exciting for us to have the resources we need."
- Some indicate that the new Publicis team will be stretched in terms of delivering buying guarantees. This shouldn't be a problem for BT though, since sources suggest that Publicis Groupe has underwritten any guarantees.