Perspective - Is the clock ticking on a Universal andInitiative merger?

Last week's news that the Interpublic Group agencies Universal McCann and Initiative had lost the General Motors pan-European media account was a massive blow for IPG, hot on the heels of Universal's loss of the gigantic US GM business last year.

The estimated £400 million account is moving into Aegis Media, apparently after disputes over contracts between Universal - which holds the account everywhere in Europe except the UK - and GM's headquarters in Germany.

This leaves little comfort for Initiative, which holds the £60 million Vauxhall UK and the £14 million Saab UK accounts. It has done sterling work for GM for 17 years, through Lowe Howard-Spink and Western International Media. Initiative's chief executive, Jerry Hill, was apparently informed by telephone that the business would be moving without a pitch. The vagaries of international client relations show scant regard for the hard work of a local agency and the unsung heroes, such as Initiative's managing director, Garry Birtles, who has nurtured the Vauxhall business for years.

The switch to Aegis has potential implications for the future of IPG Media. How long, some observers ask, can IPG continue to justify operating Initiative and Universal as separate networks when both have lost some large chunks of business in recent years? Even more significantly, it could be just a matter of time before such an account loss triggers a break-up or takeover bid for IPG. Perhaps this won't be the occasion but the vultures will be circling.

Turning back to the UK, I've already heard comments on the lines of "this could be the final nail in the coffin for Initiative". These seem a little premature. Granted, this column's recent assessment that Initiative appeared to be turning the corner on the back of wins such as Burger King, and an investment in digital services, now looks painfully optimistic.

The agency, however, still has significant business in the shape of Tesco and Johnson & Johnson, as well as some good talent - so there is still hope. It's hard, though, for an agency when it is having more taken away at network level than it is gaining and, if we don't see a merger with Universal, we may see Initiative UK proceeding down a route already well-trodden by Media Planning Group: specialising in winning smaller, domestic business rather than relying on blockbuster network wins. Last year's capture, by Initiative, of the Bernard Matthews turkey business is, perhaps, a sign of things to come.

So while critics struggle to see a rosy future for IPG Media, Aegis has once again confounded the doubters and the GM win puts it in an ever-stronger bargaining position with future suitors. But is its real value now being proven in its independence from the advertising networks? I'd say it finally is.

ian.darby@haynet.com.

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