The Power of London

The already over-supplied UK ad agency sector is about to get even more crowded. Amid more expected takeovers and mergers next year there will be at least four new “serious” players in the market – established overseas agencies, all with more than 15 years experience, operating in London for the first time. Some observers suggest the four, the US agencies Wieden & Kennedy and Fallon McElligott plus the Bates-owned Australian shop Campaign Palace and Scholz & Friends from Germany, could become top 20 agencies within just three years. That would represent the most dramatic shake-up in the middle rankings of the agency league table for a number of years. In truth, Scholz & Friends has had a presence in the UK since October, working with existing unnamed German clients, but is pursuing UK and international business from London as of now. Even minimum estimated start-up costs of between 1m and 1.5m is not deterring interest. “A lot of clients I have spoken to are interested in the new arrivals,” says AAR Group managing director Martin Jones. “They are new and different. Clients might not necessarily give them their accounts but they will place them on pitch-lists. Having them on a pitch-list could improve the reputation of the marketing director among his or her peers. “It is only a gut instinct but looking at the top 25 agencies in the next 12 months, some will merge to be replaced by two or three of the newcomers. Agencies like Scholz are coming to London to play on a larger European stage – London is still seen as a centre of excellence for advertising.” That is a view shared by Burtch Drake, president and chief executive of the American Association of Advertising Agencies. “London is clearly the advertising centre for Europe. The UK is the biggest market in Europe. All the big multinationals are doing business there.” Drake even suggests that the two US agencies making the trip are late into the market. “Wieden & Kennedy and Fallon McElligott are among the most famous agencies in the world. They have to do as their predecessors have done and go beyond home territory.” The motivation for that is clear. It is not just because these agencies see London as the “heart of advertising” or even as a “centre of excellence” – that is secondary. They are coming under increasing pressure from clients, globalising their accounts, to handle business beyond their domestic market. Not being able to offer that makes the domestic account in the US or UK or wherever, vulnerable. London is feeling the impact of that more than most markets because so many multinational companies site their European headquarters in the UK. Last year, Wieden & Kennedy lost $50m (31m) of US Nike business to Goodby Silverstein & Partners in San Francisco. It was determined that the same thing would not happen in Europe – a major factor in its decision to open an office in London. It is the same logic that is taking Bartle Bogle Hegarty in the opposite direction by opening a US operation later this year to service its Levi’s account. And it is significant that three of the four agencies moving into the UK share, with BBH, international reputations for creativity. But that is no longer enough for some clients. “I don’t know about Wieden & Kennedy but all of the other three agencies have previously been asked by clients if they have London offices and to handle business outside their domestic markets,” says Scholz & Friends London chief executive Kate Robertson. “We have had to pass up business because we had no London operation,” she adds. “But the step into London is a big one. It may not be easier, but it is simpler to go and set up in Prague, Moscow or Brussels. J Walter Thompson and others may have arrived over 50 years ago but for the latterday raft of agencies it is another story.” Of the new arrivals, two handle BMW work in their domestic markets. This should not trouble WCRS, which holds the car maker’s UK account plus its Land Rover business, too much because of chairman Robin Wight’s famously close relationship with the company. But there will be other agencies, perhaps those which are not picking up as much new business as their financial position dictates, which will be less pleased to see more entrants in the UK. This could accelerate mergers between some players. There is an element of coincidence in the fact that four established agencies, which previously have not had a London presence, are arriving within the space of a few months. But the moves should also be seen in the context of the changing face of the agency market worldwide. Some observers believe there will be just five worldwide agency networks in the future. That may be an exaggeration, but with the acceleration in the globalisation of accounts there will be a fall-out and fewer serious players will be able to operate. In that context, these agencies seem to be acting in the nick of time.

Wieden & Kennedy

Although it intends to open its London office on April 1, Wieden & Kennedy is nobody’s fool. Of all the agencies entering the UK market this year it is arguably in the strongest position, as it already has a 9m account in the bag courtesy of one of its leading clients – Nike. The sportswear company’s decision to move its UK business out of TBWA Simons Palmer (MW November 27 1997) was made specifically on the basis of Wieden & Kennedy finally setting up shop in the UK. There have been rumours about a move to London almost since the agency, with estimated 1996 billings of $625m (390m), set up in Portland, Oregon in 1982 but now it is real. While Wieden & Kennedy director of client services Dave Luhr attributes the opening of the London operation entirely to winning the Nike account, it can also be seen that there is a defensive element to the agency’s expansion. Last spring, it lost $50m (31m) of US Nike business to Goodby Silverstein & Partners, a San Francisco agency. The loss sent shockwaves through the agency and inspired a staff shake-up. It is no surprise, in the light of this, to find the agency investing in Europe, where Nike is experiencing massive expansion. Its global sales are estimated to be worth 5.6bn. With Nike as its signature account, Wieden & Kennedy is under pressure to maintain an international outlook or face more reviews of the business in the future. The London office will initially employ ten people and is expected to be led by one of its senior US creatives – Susan Hoffman or Jim Riswold. However, it will have to diversify out of the Nike business if it is to become a significant player. It will look closely at opportunities from existing major accounts including Microsoft, for which it handles global corporate work, and Coca-Cola. Unlike Fallon McElligott, Wieden & Kennedy already has some non-US offices. Amsterdam employs 115 people and it also has agency relationships in Spain, Italy, Germany and France. It has entered an alliance with McCann-Erickson in Tokyo to service the Microsoft and Nike accounts. “We are not looking to expand elsewhere. We have a few core offices in a few core cities,” says Luhr. Francesca Newland

Scholz & Friends

If we are not in the top 30 in the UK within 24 months, I hope Scholz will get rid of me.” It is the sort of statement journalists have a nasty habit of returning to after 23 months. But that is the task set by Scholz & Partners London chief executive Kate Robinson for an agency which now has 16 staff, some business from existing German clients, a wish list that includes retailers and IT companies and which is looking to land its first piece of UK business within the month. It is the first international office the German agency has opened which will not break even from day one – instead setting a break-even target of September. Scholz & Friends, part of the Bates network, began life 15 years ago in Hamburg and became part of the then Saatchi & Saatchi-owned Bates in 1993. It has opened 11 offices – including Moscow and Prague – in the past two years. Its London operation opened with the recruitment of executive creative directors Steve Spence and Trevor Kennedy in October. Robertson was most recently executive new business director for Bates Europe and Dorland. The group has links with the Far Eastern agency group Batey to handle business in the area and also has a wholly-owned operation in Singapore. It has further expansion plans in France and other East European markets and claims total billings of $350m (219m). Its biggest clients are: BMW, which it handles in Germany while also producing all the brochures and sales literature worldwide; Reemtsma, the cigarette company which includes the West brand, a sponsor of the McLaren Formula One team; the top German newspaper Frankfurter Allgemeine; DHL; Deutsche Bank; and also the Coca-Cola roster, on a project basis. Ironically, it originally joined the Bates network to serve its Mars business only for Bates to lose the account in the fall-out that saw the Saatchi brothers, Maurice and Charles, leave to set up their own agency. Similarly, its international expansion has followed its Reemstma client into Central and Eastern Europe. It has the biggest single advertising office in Germany, based in Hamburg, where there are over 300 employees, but it only entered Germany’s top ten in 1996 and is now ranked eighth. Tom O’Sullivan & Jon Rees

Campaign Palace

Last year, Campaign Palace managing director Reg Bryson demonstrated the importance of his agency’s creative reputation by launching a public attack on Saatchi & Saatchi, then a sister agency, and a former client Sanitarium. Bryson claimed that the food company had pinched a Campaign Palace idea for a Weet-Bix ad and used it without any payment or credit. In view of that spat, Bryson may welcome the demerger of the Cordiant group because Campaign Palace and Saatchi are no longer “sisters”. More significantly, the demerger has spurred the Bates Group into making a substantial investment in the future of Palace, acknowledged as one of Australia’s top creative agencies. Underlining that investment was the decision last July to shift Andy Bryant, Bates Dorland client services director and the key account person on its 17m Heinz business, from London to Campaign Palace as one of the agency’s five-strong management team. Bryant will presumably be advising on the London start-up. The brand is being rolled out not just in the UK but also in the US as part of an effort to boost the Bates network’s reputation for creative advertising. Both Bryson and joint chairman and group creative director Lionel Hunt have spoken to the new London operation of Scholz & Friends – also Bates owned – about opportunities in the market. With a client list that ranges from Daewoo to the Australian Football League, Australian Meat & Livestock Corporation and Olympic sponsor the Westpac Banking Corporation, the agency records estimated billings of $160m (Aus). By comparison with other agencies entering the London market this year, its work on international accounts is fairly minimal. But the expansion plans are designed to change that. “English advertising has been the benchmark for some years and it is natural that we would therefore consider London as a possible destination for opening our first Northern Hemisphere office,” says joint chairman and chief executive Des Speakman. “While we are, at this end, very interested, there’s much work to be done before any firm go/no go decision is made. It is too premature to talk about opening dates, costs and people. If any opening was to take place in 1998, it would most likely be in the second half of the year. Tom O’Sullivan

Fallon McElligott

For almost 20 years Fallon McElligott has set itself the same objective: “To be the premier creative agency in the worldä” That is the opening line of its mission statement and is the first thing all employees see when they turn on their computers each morning. But, realistically, to achieve that the company has to have more than its two offices in Minneapolis and New York. As a consequence it plans to open its first non-US office in London and, if all goes well, take on the rest of the world in the next millennium. “London is an interesting market because our brand means something there,” claims director of communications Janet Northern. It means “creativity” because even those in the UK who have never seen a Fallon McElligott ad know that the agency has a reputation for creative work. It has appointed UK headhunters and it is understood that any pan-European business will be co-ordinated from London. Founded in 1981, it now has estimated US billings of $500m (312m) and a client list that includes BMW, United Airlines, Timex and Miller Brewing. It could be argued that Fallon McElligott should have come to the UK earlier. Despite denials, it is believed to have come under pressure from clients to develop an international network. Clearly the agency, which bought itself out of WPP Group in 1993, sees opportunities for new business in the UK. But unlike its US rival Wieden & Kennedy, which has already secured the 9m UK Nike account to support its London opening, Fallon McElligott has no UK business at the moment. It shares the 70m global United Airlines account with Young & Rubicam – the latter responsible for all non-US business. Speculation in the US suggests that Fallon tried to land the full account in 1995 but that United was unwilling to be “the guinea pig” for the agency’s international expansion. Shortly afterwards, Fallon began to look more seriously at a UK venture.

Barraclough Hall Woolston Gray is a classic victim of its own success. In the past 12 months it has added 11 new clients, handled 60 projects, boosted its income by 60 per cent and hired 100 people. The appointment of Dennis Kerslake, former managing director of below-the-line agency Carlson UK and, as of this week, managing director of BHWG, is an admission that the growth has to be managed. He has been taken on board to sort out the problems caused by this rapid growth. Rivals have called the agency a “sweatshop”, but that may well amount to jealousy of a client list which includes Volkswagen, Alliance & Leicester, BAA and BT. Kerslake calls it a place with growing pains. With one eye on publicity, he says: “You don’t go from being an agency billing 60m to one billing 94m and with 100 additional staff taken on in one year without having some fall-out. My job is to tighten the reins.” More precisely his job is to put the brakes on the six-year-old agency’s rampant growth, both of staff hired and accounts won. “This is a very ambitious agency and we want to keep growing. Consolidation does not necessarily mean slowing down on new business, or just sticking with what you have got. It’s about using resources more efficiently,” says 40-year-old Kerslake. In February, the agency moves out of its river front offices in Hammersmith, where people work in every cranny and corridor, and moves in with sister agency Abbott Mead Vickers.BBDO in London’s Marylebone after parent AMV plc bought it for the princely sum of 12m in 1996. It is not an easy job. Elly Woolston, who was promoted to managing director from client services director less than a year ago, could not handle the unruly child. She has now been given the title of vice-chairman and will head client services. BHWG is very anxious that Woolston’s move is not seen as a demotion. Creative director Chris Barraclough snaps: “In the past she was doing both jobs but now we have grown so big that she needs to concentrate on clients alone. She has not been moved anywhere.” Kerslake says he will concentrate on developing three areas – creative work, data and planning. It is also believed he will take the agency into sales promotion – his background is at Carlson and before that, a nine-year stint at LGM – although Barraclough denies this. There are also client gaps, including airlines, that will be a priority for Kerslake to fill. In common with all below-the-liners, he prefers the tag “integrated”. “We could have a discussion about above and below the line, but it would be a very dull one,” he says. As part of his quiet revolution Kerslake will pay more attention to changing the way the agency re-cruits and trains its staff. Too often, he says, graduates are hired and after a year are expected to be experienced account handlers. “We chuck people in at the deep end. Training needs to be more systematic. “In the past, we have concentrated totally on our clients. We need to focus on ourselves for once.” BHWG now sits alongside Craik Jones Watson Mitchell Voelkel, the direct marketing agency bought by AMV in October for 2.4m in cash. There are no signs that AMV has any plans to merge the two. Kerslake will have time to stamp his style on BHWG before the four partners reach the end of their earn-out period in the year 2001. One source says: “When the earn-out happens, I think a couple of them will jump ship.” Kerslake describes himself as a good all-rounder. His reputation in the industry is as a trooper, a pragmatist rather than a visionary. He is smooth, capable, likeable, he has all the right answers: “We will work smarter not harder.” He will not set the room alight with ardent charisma. As someone who knows him rather cruelly puts it, he’s a “perfect number two”. But this is precisely what the agency needs – a straight guy to play against the boyishly flamboyant chief executive Simon Hall, art director Duncan Gray and Barraclough himself. Kerslake is used to being the sensible one. For nine years he worked with industry pitbull terrier Graham Green, at sales promotion agency LGM. Of Green, Kerslake says: “He is loud and he can be difficult. But he is very genuine and he ran a very good shop. His bark is worse than his bite.” Sadly Green was not available to give his view of Kerslake. When talking about Carlson, Kerslake is less guarded. He calls it dull and lacking in direction. “Basically it is a completely different business in the US – the Americans really do not understand what is going on in the UK. They come over once a year and try to interfere. In the US it is all to do with bulk.” He says he took the Carlson job because, predictably, it was a challenge. It was the bringing together of three different companies – FKB Carlson, MHA Carlson and Carlson Loyalty Marketing. “I feel I did a good job and that was with 400 people so I shouldn’t have any problems with the 200 people here.” But fulfilling his brief effectively made him redundant when the business restructured in September and the board was pared from 15 people to just three key players. Kerslake left by “mutual consent”. “My style is very open. I am good at listening. I am decisive. A lot of colleagues and clients who worked with me in the past would like to work with me again.” He might add “conceited” to the list following this comment, but he is highly regarded. Kerslake clams up on the subject of the BHWG second-string direct marketing agency, Kite. He says the agency is operational and claims it has more clients than just the one everybody knows about – Volvo. Until a managing and creative director have been found for the agency, it will be kept quiet in the same way the Government has only recently acknowledged the existence of the MI6 building on the south bank of the Thames. Before Carlson, Kerslake was a client – first at SmithKline Beecham and then at Scottish Courage where he launched Miller Lite. He also spent three years at sales promotion agency IMP, where he worked on clients including Allied Bakeries, United Biscuits and Colgate-Palmolive. BHWG is building the business by pitching for small packaged goods accounts – effectively going for any business available – so his background is perfect. This fits with a wider belief that the best way to expand business is to introduce direct marketing virgins to the discipline through projects. It is a strategy Kerslake has inherited but one which he says he fully supports. But BHWG does do some things differently. For a start, Kerslake will have to lose the suit and adopt the self-consciously casual attire of the rest of the BHWG management. The agency, famed for its parties, says it wants to add some glamour to the direct marketing business. It’s a corporate culture that seems to ill accord with Kerslake’s hobbies of playing golf and hockey and his daily commuting from Buckinghamshire. But he does not lack ambition. When asked who he sees as the agency’s main competition, his suggestions range from J Walter Thompson to management consultant McKinsey & Co. Presumptuous may-be, but he does admit, with a smile, that the feeling may not yet be reciprocated by JWT and McKinsey. It is Kerslake’s job to make sure that changes.

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here