Asia yet to feel impact of global M&A activities

The global mergers and acquisitions activity is continuing with the reported tie-up between WPP and Y&R, however, they have yet to significantly impact advertising operations in Asia since different agencies within holding groups still run as separate entities. This is because most of the horizontal mergers are aimed at strengthening capital and holding assets of the head company. However, the mergers have altered the business landscape, especially in terms of media planning and buying. The merger talks between UK-based WPP and US-based Young & Rubicam (Y&R) initially fell through because of a divergence in terms and conditions. As soon as those talks collapsed, a relatively smaller player, the French advertising group, Publicis started negotiations with Y&R for a possible tie-up. In the end, however, Y&R and WPP resumed discussions and struck a deal after both sides resolved management differences. The deal is pending final approval from major shareholders and clients. However, there will likely be little change to the way each agency runs its Asia-Pacific operations. The real impact for these consolidation lies in increasing the network's clout in media buying and specialised communications disciplines in PR, direct marketing and interactive services. The bigger the umbrella conglomerate, the wider the scope of services offered and the greater bargaining power in media buying, powerful weapons in retaining existing clients and pitching for new accounts. Meanwhile, the newly-created holding advertising conglomerate BCom3 has vertically merged the Leo and MacManus groups' media brands, Starcom and MediaVest respectively, to form Starcom MediaVest Group (SMG). The merger, however, will not happen in North America, the UK, Brazil and Puerto Rico. Global media clout is now the niche of mega advertising conglomerates in luring clients. With a majority 20 per cent share holding of Dentsu, BCom3 has formed PDS with the involvement of Phoenix Communications, Dentsu and Starcom to serve Procter & Gamble's media business in Korea. In China, a similar media venture, Quest, was created to pitch for the P&G account, and now runs its media business there. "We are responding to our clients' needs by offering a global media solution that combines the resources of three organisations, including Dentsu with its 25 per cent Japanese market share," said BCom3 CEO Roger Haupt.

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