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".
