Publicis-Saatchis buyout heralds dawn of age of 'super agency' networks

Publicis' recent acquisition of Saatchi & Saatchi will likely spur on yet more mergers and acquisitions within the worldwide advertising scene until there are only a handful of super agency networks, senior regional advertising executives have said. Most said that the M&A frenzy was due to global agency networks scrambling to be one of the few big players and avoid being left behind as a mid-size organisation. "Ultimately, there will be a small number of big guys, lots of little ones with very few in between," said one industry executive, who spoke on condition of anonymity. "That's because mid-sized networks usually have a harder time of it through not being large enough to compete with the big guys in terms of resources and not being flexible enough to compete with the smaller ones." The impetus for the M&A activities was that clients themselves were involved in buyouts and mergers in order to cover more ground on a worldwide scale with greater cost efficiencies, the agency executives said. In addition, the Internet, the further opening up of China through its expected entry into the World Trade Organisation and the recovery of the Asia-Pacific markets have meant that clients, especially in the West, are increasingly looking at opportunities in this region. "They must get in touch with local culture and insights and the best way to do this is to work with an agency group with the resources in place globally," added Saatchis regional CEO Patrick Pitcher. "If you look at Coca-Cola, they have stopped talking about global advertising, because in this more sophisticated world, there is a danger of operating at the lowest common denominator." And as JWT Asia-Pacific COO Kevin Ramsey puts it, the bigger an organisation, the more it will need from an agency network's wide-ranging capabilities, such as knowledge, best practices, efficiencies and suppliers, on a global, regional and local scale. While most of the region's top ad executives believed that the recent spate of mergers and acquisitions were client driven, newly-installed Grey Worldwide Asia-Pacific president Eric Rosenkranz said this wasn't entirely true. "If you acquire disciplines that complement your existing network then that's the right way to go, but if it's not then I am afraid that it's a simply a means by which the parent company can raise its bottom line and look good at the next stockholders' meeting," he said. Over the past year, there have been a number of new alliances struck: FCB and Bozell; Dentsu, the Leo and McManus groups to form BCom3; WPP and Y&R which created the world's biggest communications group; and now Publicis and Saatchis. Publicis Asia-Pacific's regional director Guillaume Levy-Lambert said the acquisition of Saatchis was aimed at giving even better quality to clients. "We are ideas networks that have the ability to come up with new ideas and that combined with creative and strategic will benefit our clients. "Together our positioning is 'Ideas with La Difference'," he said. It's believed that Publicis is aiming to beef up its global creative credentials. Paris-based Publicis itself is highly-regarded in Europe while Saatchis is a leading force in Asia-Pacific. Publicis has also acquired the creative hot shops of Hal Riney & Partners and Fallon McElligott in the United States. Both Publicis' Mr Levy-Lambert and Mr Pitcher of Saatchis said both networks will not merge and will continue to operate independently. "It's business as usual," Mr Pitcher said.

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