A plan to form a diversified communications company from a number
of small to mid-sized Australian agencies and publicly float it on the
stock exchange has been met with fierce criticism from Australia's only
successful, publicly-owned advertising agency, John Singleton
Advertising.
The venture, which is believed to be the brainchild of former adman
Michael Ball (founder of The Ball Partnership), would see a number of
Australia's smaller agencies and other marketing services companies
amalgamated to form one super agency, which would then be publicly
floated.
The project for the diversified agency would be an attempt to create
only the second publicly-owned advertising agency, after John Singleton
Advertising (which in 1998 became Singleton Ogilvy & Mather) was floated
in the early '90s.
The initiative would likely see the agencies bought out by Mr Ball, who
would then create a holding company for the agency, with executives
likely to retain management responsibilities for their own agency.
Agencies mentioned in relation to the venture include Belgiovane
Williams Mackay, Collins Thomas Cullen and The Edge in Melbourne.
But Singleton Ogilvy & Mather CEO Russell Tate has warned the attempt
could be a dismal failure because it attempts to bring together not only
a diverse group of companies, but also diverse personalities.
Mr Tate said whether or not an agency could be floated was not the
issue, as the Singleton example had proven it was possible to make it
succeed, but attempting to make a group of people who "are, or at least
should be enemies" work together as a merged agency and then to float it
on the stock exchange would be disastrous.
"I certainly wouldn't be putting money into it," said Mr Tate.
"If you get all these agencies trying to work for the common good and
then try to decide who gets what shares, it would be a bloodbath.
"Unless there is something missing (in the details of the plan) I find
it an extraordinary thing."
Mr Tate said when John Singleton Advertising was floated in 1994 it was
done so along with Singleton's share of the 10 Network.
"I'm not sure we would have been so successful if we were just offering
shares in an advertising agency," he said.
He said while it was easier to float an advertising agency in today's
climate, it was important to prove to investors that there was
consistency in the business.
The loss of a big account, when the agency is in the public eye is a lot
more damaging, than if the agency is owned by its principals.
With a number of different smaller agencies being brought together under
one roof, would-be investors would be likely to take an interest in the
histories of all members of the new agency.
But Mr Tate said a public float could be very beneficial to an agency as
far as improving efficiency and making the business more
accountable.
"You are accountable to other shareholders than just the guy down the
hall and that makes you very efficient," Tate said.
