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.
