Holding company pitches may have captured the headlines as well as the interest of the world's largest marcoms conglomerates in 2004, but one man has watched the drama unfold with a sense of deja vu.
As CEO of media and market research specialist Aegis, Douglas Flynn doesn't get a sniff at the vast revenues promised by these multi-disciplinary contracts, but past experience tells him they are rarely as lucrative as they sound.
"It reminds me of (media owners) selling direct to a client across multiple platforms," Flynn remarks, recalling experiments by the likes of Viacom and News International. "More effort went into the press release than went into the deal."
Although there have been two pitches at holding company level within the last 12 months, with more expected in 2005, Flynn regards them as price-driven deals offering little real value to clients, and doesn't expect them to gain real traction in the market. Citing a direct sales package Decaux once cut for Unilever across Europe, he says: "All of these things sound like the beginning of a trend. Well, it wasn't then and it ain't now."
Aegis, home of the last major media independent, Carat, as well as research agency Synovate, which commands a prominent position in the Asian market, has become better known for what it isn't - part of a large holding company - than for what it is. Ongoing consolidation in the marcoms industry has made Aegis a rare beast in an environment dominated by six large holding companies. Talk is no longer of whether Aegis will be swallowed up, but when.
Flynn downplays such speculation while conceding he is obliged to consider any suitor presenting a cheque with enough zeroes on it for the sake of Aegis' shareholders. "The fact is, it hasn't occurred, and we don't plan for it to occur."
The Australian-born Aegis boss has been fielding similar questions since he joined the company in 1999. He is careful not to definitively rule out a major merger - Aegis may attract clients who favour Carat's independence, but Flynn denies it is a poison pill for potential buyers - while at the same time promoting the absence of a creative partner.
Flynn's possible departure from Aegis may create an opportunity for a change in direction - he has reportedly been interviewed by the board of major Australian media group Fairfax - but he refuses to be drawn on the issue.
Although the bundling of creative and media together in a business review hindered Carat's early development in Asia, Flynn is optimistic about the agency's development. The agency has reached break even in China after a "long hard slog" and there are promising signs in other parts of the region, such as the Philippines, where the agency has struggled in the past. "Change helps us," he says. "If there is a mood of change and you're different and you're good and you're vibrant, then you are more likely to win more business than anyone else."
Carat's communications channel planning credentials received a boost in the US last year when the agency secured a sizeable chunk of planning business from Procter & Gamble and Flynn has resolved to develop the agency's specialist services in Asia. This includes the continued development of digital and one-to-one network Isobar, as well as the planned Asian debut sometime this year of a data analysis service to gauge marketing effectiveness that is provided by MMA in the US. Flynn is also bullish about the growth of Aegis' second media network, Vizeum, despite the lack of a rich seam of acquisition opportunities, plugging its planning capability into the existing buying clout within the group to develop presence outside Greater China.
Aegis Asia-Pacific began contributing to the group's bottomline in a "useful, meaningful way" two years ago. Carat itself has been enjoying a spurt of growth, helped in part by business opportunities afforded by the decreasing number of bundled pitches. Whether it is growing fast enough to compete with larger rivals in a business where scale counts has been open to conjecture. Flynn points to a claimed US$400 million net new business last year by way of a reply.
"People say, 'are you big enough in Asia? Are you big enough in North America?' It's an easy one to answer. They are our two highest growth areas. If we're not big enough, how are we growing so fast?" he says.
