It was supposed to be a textbook takeover. The agency world’s equivalent of Nissan buying the Aston Martin of London’s ad agencies in a deal to add sophistication and glamour to a dull mass market brand.
However, four months after the tumultuous initial 7m takeover of Simons Palmer Clemmow Johnson by Omnicom’s TBWA, (MW January 24) the deal now looks as if its textbook entry will be very different to the one intended.
Last week News Group Newspapers joined a growing list of clients reviewing their business out of the new TBWA Simons Palmer (MW May 22). The News International subsidiary, whose account is worth 10m, runs The Sun and News of the World.
Wrigley’s, Pretty Polly, Debenhams, IDV, Anglian Water and the National Canine Defence League have all moved or begun reviews since Marketing Week exclusively revealed the merger. Axa Equity & Law is also conducting a strategic review of its business following the merger of French insurer UAP, which owns the Sun Life brand.
But the departure of News Group would be the biggest blow to the merger yet. It was Simons Palmer’s largest piece of business last year, after Nike whose revenue is shared with US agency Weiden & Kennedy. The account is estimated to be worth about 1m in income to the agency and the income is built into the Simons Palmer executives’ earn-out payment from the 7m deal.
It has lost several clients which it shouldn’t have, not due to client conflict – but client mismanagement. Others, including News International, IDV, and Goldfish were told of the merger by journalists not the agencies.
Simons briefed journalists suggesting that Carl Johnson would be leaving to head TBWA’s office in Australia. News Group in particular was known to have taken exception to such a move – Johnson stayed.
“The deal happened so quickly they were unable to take News International with them,” says one source close to the newspaper group, “and they don’t take too kindly to being excluded.”
The merged agency has also lost some of its top creatives. Former Simons Palmer creative directors Paul Hodgkison and Andy McKay left in April and creative duo Andy Amadeo and Mick Mahoney, who only joined TBWA/ Simons Palmer in March from DMB&B, and worked on the Goldfish and British Heart Foundation advertising accounts, left in April.
The story of the takeover began on the English Channel last September. Simons Palmer chief executive Paul Simons was approached by TBWA managing director Jonathan Hoare onboard the Oriana during the Marketing Forum conference.
TBWA was perceived to be weak in the UK after the London Chiat Day office bought itself out of the global merger in 1995.
Though TBWA had traded on the reputation of creative director Trevor Beattie, it had widely been seen as having lost its edge even before he left in January this year. A number of key client defections, including Direct Line, compounded TBWA’s problems.
Though Simons Palmer had some success in pitches – winning British Gas’ Goldfish brand and Sony PlayStation – it found it difficult to grow organically and was isolated because it did not have a network. The loss of Wrangler and BT in 1993, largely due to lack of size, were bitter blows. It had talks with several suitors including WPP Group.
There was an explosion of rumours in the second week of January about a merger. According to Simons, TBWA hired Mark Borkowski PR to handle the announcement of the merger.
But sources say Simons then decided to handle the PR himself and lined up interviews with selected trade press because he believed Borkowski was working not for TBWA, but for creative director Beattie – the self-styled enfant terrible of advertising.
Insiders say that senior TBWA executives failed to keep Beattie in the picture. He was given the impression that he would be running the merged creative team for the agency. But when Beattie realised that he would be part of an enlarged creative team headed by Simons he resigned.
Attempts to keep him at the agency failed and he staged a spectacular departure. Simons, who prided himself on his ability to handle the press, was severely shaken by the PR successes of Beattie and Borkowski.
“Simons completely miscalculated Beattie’s personal PR and basic organisational issues had not been sorted out,” says a source close to the takeover.
Though the new agency has had some qualified successes – TBWA Frankfurt won the 3.7m Sony PlayStation account influenced by Simons Palmer’s work in London – there are still outstanding problems.
Four months after the merger was revealed there is still no home for the merged company, though Simons says he has found premises in Charlotte Street, and there is also the unresolved question of the use of media agencies. TBWA/ Simons Palmer holds 30 per cent of Manning Gottlieb Media, with key clients such as Goldbrand, Fuji and Nike, while TBWA is contracted to use Eurospace as its official pitch partner. Simons is known to favour the use of MGM.
Omnicom is a notoriously decentralised network but there must be a point at which it becomes unwilling to allow the haemorrhaging and bad press to continue. The agency needs to regain its creative reputation and sort out its confusing media arrangements before it can convince clients – and the press – that the textbook takeover nightmare is coming to an end.