Takeover of True North heralds yet further agency consolidation

Interpublic’s proposed &£1.5bn take-over of True North Communications will lead to more agency consolidation over the next few years, especially if the economic downturn deepens, according to industry sources.

The deal, announced yesterday, will unite Interpublic’s McCann-Erickson and Lowe Group agencies with FCB Worldwide, creating the world’s biggest advertising company, with combined revenues of more than $7bn (&£4.9bn).

If approved by True North shareholders, the deal will bring together top advertisers such as Coca-Cola, General Motors and Unilever. But John Banks, chief executive of Bank Hoggins O’Shea FCB, part of the True North network, insists there will be no conflict between the various clients.

“If you look at McCann and Lowe there are already minor conflicts between some of their clients, but it does not matter because the agencies operate separately,” Banks says.

“The only possible conflict would be between Coca-Cola and Pepsi, because we have Tropicana, but we have spoken to the companies and they have agreed (there is no conflict).

“In the next few years there will be three or four holding companies that will control most of the advertising world, compared to about seven or eight today.”

True North, whose clients also include GlaxoSmithKline, Compaq, Samsung and AT&T, suffered a major blow last year when it lost the DaimlerChrysler account to Omnicom’s BDDO Worldwide.

The deal ends months of speculation that True North would be taken over by a larger company such as Havas or Cordiant Communications Group.