Media: All about ... Global new-business activity

What's behind the recent wave of international reviews?

Martin Sambrook, a managing partner at Billetts, put it rather well the other week. Business was good, he admitted. In a nutshell, he explained, the forecast is for persistent rain - and media auditing and consultancy companies, not least Billetts, sell umbrellas.

Advertisers are eternally rigorous in their pursuit of greater effectiveness where their marketing spend is concerned - but that's never more true than during an economic downturn.

By the same reckoning, a downturn may also (sometimes as a result of insights provided by their media auditing consultancies) present ideal opportunities for a root-and-branch review of media agency relationships. And, yes, we have seen plenty of those, most notably on a global or European basis, since the turn of the year. The roll-call includes Reckitt Benckiser, Nokia, Renault/Nissan, Ikea and Danone, plus a clutch of companies in the financial services sector - including RSA, Zurich and Axa.

It would be easy to assume that much of this activity boils down to clients trying to cut costs - whatever the consequences. And, as always, there might be more than a little truth in this assumption; but this time around, it might also be true that there's something far more fundamental at stake.

1. The most recently announced result was Nokia's decision last week to hand its £300 million global media planning and buying account to Carat. The Aegis -owned network triumphed in a final shoot-out against ZenithOptimedia. The incumbent, MediaCom, decided not to repitch when the review was instigated in April. Tellingly, perhaps, it declined to come under orders due to issues surrounding the whole question of remuneration after submitting an initial "lowest offer" on which it was unwilling to improve.

2. Arguably, this international pitch frenzy kicked off last autumn when Renault/Nissan consolidated its £650 million business across Europe, the Middle East and Africa into OMD, which had been the incumbent on the Nissan business. Carat, the incumbent on Renault, lost out.

3. In May, Reckitt Benckiser announced a review of its £800 million global media planning and buying arrangements. Its roster agencies include OMD in the UK and MPG and ZenithOptimedia elsewhere. It has been defying the general trend and actually increasing its media spend through the downturn - and companies that are able to do this almost always see a significant increase in their market share. Reckitt Benckiser has also signalled its intention to shift its media consumption profile, using less broadcast TV and focusing more on streamed video in online environments.

4. Back in January, PSA Peugeot Citroen announced that it was reviewing its £350 million media spend across Europe. Previously, this was administered on a market-by-market basis by local managers: OMD holds the account in the UK, Denmark, Switzerland and Russia; MPG has France, Belgium and the Netherlands; while a Havas-WPP joint venture operation, called 2MV, services the business in Germany, Italy and Sweden. It was assumed that the company was seeking to appoint a single media partner across the region - but the review process was put on hold in March.

5. Ikea instigated a review of its estimated £200 million global media planning and buying account in April. Both the incumbents, Mediaedge:cia and MediaCom, are WPP agencies but Ikea may be looking to widen its horizons, with questionnaires being sent to all major agency groups. The central issue for Ikea is identifying "potential improvement areas on all key value drivers", but it has also invited ridicule by asking potential partners to reveal whether they use child workers, prisoners or forced/bonded labour.

6. Danone, whose incumbent agencies include Mediaedge:cia, MPG, OMD and Carat, announced a review of its £300 million global media spend in May.

7. Zurich awarded its £100 million global account to Mindshare in May with the incumbent, Zed Media, and Aegis Media losing out; RSA handed its £50 million global account to Starcom in June; and, two weeks ago, Axa Group announced it was reviewing its global spend (incumbents include Mindshare and MPG) of around £150 million.



- This recent wave of reviews is not wholly about cutting costs - it's also down to a recognition that we're seeing profound structural shifts in consumer markets. As people buy more stuff over the internet, manufacturers will inevitably seek new ways to engage with them.

- And it's interesting that a significant minority of advertisers are actually increasing their media spend through the downturn - confident that they can come out of this with increased market share.

- Advertisers don't necessarily want cheaper advice - they want to be represented by cleverer media agencies.


- There's a painful aspect to this. The outcome of some of these pitches will undoubtedly be that some agencies will find themselves doing more for less.

- But they're also being asked to meet the structural challenges that will still be there when the downturn is over. And some agency bosses see this aspect as a huge opportunity.

- As Iain Jacob, the chief executive of Starcom MediaVest Group EMEA, puts it: "There's an imperative for change within marketing services companies due to the convergence of a number of forces. So while you might have to cut in some areas, you might be looking to expand in others - and we, for example, are spending more on training than ever before. The companies that embed the changes now will be the ones that are successful in the next ten years. And it's exciting because it's at times like this that you can grow your market share."