M&A frenzy looking set to continue

The mergers and acquisitions trend within the advertising industry looks set to continue in 2000, according to a MEDIA poll of regional agency heads. Almost 80 per cent of Asia-Pacific chiefs signalled that they would be involved in mergers or acquisitions of one type or another this year, while three-in-four stated that they were involved in similar activities in 1999. The most high profile involved Lowe & Partners combining with Ammirati Puris Lintas, The Leo and MacManus groups allying with Dentsu to form BDM, and FCB taking over Bozell. However, there have been countless mergers and buyouts on a smaller scale. They include Carat and Saatchi & Saatchi launching a JV in Taiwan and Vietnam respectively, Grey and McCann-Erickson buying out local partners in Malaysia and Korea respectively, and OgilvyOne Worldwide acquiring a stake in Singapore-based Cybersport. The consolidations are being spurred on by the fact that agencies feel they need to be bigger in order to be more competitive by taking advantage of cost-saving synergies and improving efficiency on the operational level and on the servicing of global and regional accounts. The merging of the huge global agency networks is pushing their smaller network counterparts to merge or forge new alliances in a bid to survive. According to Euro RSCG Asia-Pacific CEO Vincent Digonnet, this is resulting in agencies being either small or big, but not in between. "Currently, the second tier networks have to get together to survive as networks. The communication scene is polarising more and more between worldwide networks and local shops. There is no room in the middle," he told MEDIA. He echoed the sentiments of other regional chiefs by saying the consolidation trend is being accelerated by the fact that clients are increasingly merging with each other "to put the emphasis on fewer, but better brands".

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