Magazine article Marketing

Mergers Reshape the SP Landscape

Magazine article Marketing

Mergers Reshape the SP Landscape

Article excerpt

The big communications groups are busy restructuring with one aim - to dominate. An analysis of the SP league tables follows

There's a different look to this year's sales promotion Top 10. Still out in front is Carlson, which had an excellent growth year for such a big agency. In the following pack, however, are several new and unexpected names.

Much of this is the result of the big, international communications groups restructuring their below-the-line services. The aim is domination. The argument is that big clients want big suppliers, able to offer genuine expertise in a range of disciplines, and ideally across frontiers.

In just a few short years, for instance, we have seen Tequila develop from a small but award-winning creative hot shop, privately owned, to an international network within the Omnicom empire. At the beginning of this year it was merged with sister company Payne Stracey, a well-respected direct marketing specialist - a deal which has helped move it up from ninth to second slot.

Immediately behind is another Omnicom subsidiary, the fast-rising Claydon Heeley, and then a completely new name to the list, Mosaic Group Marketing Services (MGMS).

Mosaic is a publicly-quoted Canadian group, pursuing an aggressive acquisition strategy. Its UK purchases include two important field marketing companies, FMCG and EMS (see Marketing's field marketing league tables, September 2). It has now put two SP/DM agencies, ZGC and Stretch the Horizon, together with some other interests, into MGMS.

In tenth place is Bates-owned 141 Communications. Its story is one of major management change, but also the amalgamation of below-the-line offshoots - 141 London, Bates Communications and Bates Interactive.

And that's not all: it's understood that the staff of two more Omnicom agencies, Clarke Hooper and Momentum Integrated, have been told a merger is planned. If it goes ahead, the result will be yet another firm with a gross profit of around [pounds]12m, vying to be in the top five or six in the country.

Meanwhile, only last week, Omnicom's arch rival, WPP, acquired Perspectives. While an announcement stated it would retain its distinctive identity, there is already speculation that Perspectives will be merged with WPP's other entry in the league, Promotional Campaigns.

For once, it has been tricky to work out an overall industry growth rate. Some major players (Tequila, Mosaic, Alcone) have not provided comparative figures for 1997-98, because of their restructuring. Taking these out of the reckoning, and adjusting for 141's true underlying expansion, the industry figure looks to be some 20%.

But it's not universal, and it's not the whole story. "I have never before witnessed such dynamism, with two major factors stridently emerging with profound impact," says Mike Pearce, a veteran of the Mars group, and chairman of TSM consultancy.

Internet impact

First, he says, is new media, with e-commerce threatening to undermine many current and conventional ways of doing business. "This is generating a radical shift in client needs, covering everything from advice on customer relationship management (CRM) strategy, through web site design, to new-media advertising," he says.

"Second, clients are progressively employing consultants to provide strategy advice on all brand and CRM issues, including brand positioning. It means that some agencies are at risk of being downgraded, in clients' eyes, to the role of mere implementers. The requirement, arguably, is for specialism rather than generalism."

In what might be termed the 'new marketing', the brand remains paramount, but is now seen to touch the consumer in many more situations. Marketing retains responsibility for long-term brand building, but is held accountable for short-term results.

At the same time, new priorities are rising up the agenda, including brand and corporate reputation, and internal [TABULAR DATA OMITTED] [TABULAR DATA OMITTED] communications which, arguably, can both be linked to profitability and share performance. …

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