So, Allan Rich isn’t. Well, he’s obviously moderately well-heeled,
and has been since he floated his company, the Media Business Group, on
the Stock Exchange. But until last week, when talks between his company
and Grey broke down, he thought he was about to become even richer.
Grey and its media subsidiary, MediaCom, are not the first outfits to
seek an accelerated pathway into the super league by buying a
long-established media independent. The deal would have made sense for
both buyer and seller, each hovering, as they do, in the grey (no pun
intended) billings area of just over pounds 200 million. The merger
would have created the UK’s fifth-largest buying point.
Last week, six months of discussions fell apart not because of structure
or ego problems but for the simple reason that - largely because of
international financial market instability - the Media Business Group’s
share price has collapsed. Both sides are trying to make light of the
situation, hinting that they still have audacious master plans for
improving their market ranking. We shall see. But perhaps the most
surprising aspect of the affair is the extent to which its whole purpose
- the acquisition of increased market clout - is still so important.
Hasn’t the argument moved on? In the last couple of years, the emerging
wisdom is that the buying performance of the tenth or even the
15th-biggest buyer is not that different to the performance of number
five. Clout is not an issue these days, surely. We’re all far more
worried about clever strategic thinking and planning expertise.
Apparently not so. Instead, the super league seems to be an increasingly
exclusive club. If this is so, does the future look bleak for those in
the middle ground? Mark Cranmer, the managing director of Motive
Communications, disagrees. ’If you are clear about what you are trying
to deliver for the client, then there is nothing wrong with being in the
full-service or medium-sized specialist position. You have to be clear
about what you offer and why it can deliver a competitive
advantage.’
Cranmer believes that there are problems if you pretend to be what
you’re not. ’Masqueraders’ are those who attempt to convince everyone,
including themselves, that they can offer everything - from the
one-dimensional buying efficiencies at one end of the market to the
extremely personalised service at the other.
He adds: ’I am surprised when people talk about clout, because the
argument has moved on. We don’t feel threatened. We’re not looking over
our shoulder worrying about whether we’re delivering. I still don’t buy
into the notion of there being a real threat to the centre ground.’
Size isn’t important, agrees Glenn Burton, the chairman of Media Buying
Services. ’In my view, it’s well down on the list of reasons to appoint
or stay with a media agency. Great media ideas and buying come from
bright and talented people regardless of the size of their company. If
this wasn’t true, we’d only have one media agency in the land.’
Burton points out that cost savings are commonly cited as the key
motivation for mergers. But he questions whether those savings benefit
clients as much as shareholders. ’Whatever mergers occur - and I’m sure
there will be many - I’m pretty confident that in ten years’ time we’ll
still have large, medium-sized and small media agencies successfully
operating for clients who appreciate their contribution, regardless of
size.’
Mike Sell, the chief executive of Total Media, is even more bullish.
He believes that structural change in the industry is geared to the
demands of a small minority of advertisers. He wonders how long the
majority will remain silent. ’The move towards volume has been driven
primarily by clients who have volume on an international basis - the big
agencies have been restructuring primarily to meet their needs.
’The corollary is that there are an increasing number of UK clients
whose needs aren’t being met. The most visible example of this was CIA
dumping a whole lot of its smaller clients back in November 1997, but it
has been happening on a less public basis right across the board. Those
deemed to be not big enough come to us rather than smaller shops because
the middle ground is fully resourced.’
He adds: ’Middle-sized clients are, after all, the vast majority of the
market. They know that, at the big shops, they subsidise the bigger
advertisers - and in the TV market especially, their demands are
different. The pounds 1 million client doesn’t want big blocks of
airtime. It wants carefully crafted schedules, specific programmes, spot
by spot.’
Wishful thinking? Colin Gottlieb, the managing partner of Manning
Gottlieb Media, believes so. Until not so long ago, MGM was the hottest
of the medium-sized operators. Now it’s part of the Omnicom Group.
Gottlieb agrees that the middle ground will continue to exist - but he
doesn’t believe it will exist independently. This, for him, is the big
issue - and he predicts a bleak future for anyone who isn’t part of one
of advertising’s big tribes.
’The real killer for middle-sized specialists is convergence in terms of
all forms of media communications. It’s not just about media buying any
more - you’ve got to cover all the other areas and you certainly won’t
be able to build proprietary tools. Only the WPPs, the Interpublics and
the Omnicoms can do that.’
Gottlieb insists that people talk a lot of twaddle about the client
being lost at big operations. That’s missing the point, he says. The top
operations don’t operate like that at all.
And he concludes: ’There’s also the question of entre-preneurs. What
about the people who drive forward the business? The answer is that the
big groups will have to be flexible enough to accommodate them - they
will have to allow offshoot specialist companies billing around pounds
100 million.
There, the client can get the best of both worlds. The analogy we have
is with the car business. Ford is a huge car manufacturer but it also
owns Jaguar and Aston Martin. That is the model for the media landscape
of the future.’
