Can Peugeot find an end to conflict?

Client conflict, often brushed under the carpet by media agencies as a non-issue, has become a force to be reckoned with as more clients decide to pursue a global marketing strategy.

The long-running saga surrounding the location of PSA Peugeot Citroën’s (PSA) £185m media account covering the UK, Germany, Belgian and Denmark highlights just such an issue.

Only one year after appointing the Carat Group to the business, the car manufacturer has been forced to look elsewhere for a media agency.

Carat Group had hoped to house upmarket clients BMW with mass market marques PSA and Renault in one of its two main UK companies, Carat London and BBJ.

It looked as though it had got away with it. So long as Carat Group ran the businesses separately and bought media at the best possible price, the car manufacturers should have been happy.

As everyone knows it is not just about price, it is also about the type and timing of the media you buy, issues that are more strategic and brand specific.

But for Renault, which is handled by the Carat Group on a pan-European basis, the conflict appears to have proven too much. It is understood that Renault put pressure on Carat Group to resign the PSA business. However, Carat was already in the process of pitching for additional PSA business across Europe.

Advertisers have long had to deal with conflicts. Those that operate solely in the UK have had little difficulty in finding an alternative agency. But the choice is limited for clients who want to use a single network on a pan-European or global basis. Advertisers are having to face up to the fact that their agency may work for a rival, and that all parties will have to agree to accommodate the relationship through specific arrangements, such as separate management teams working on different floors of a building.

AAR director of advertising and media service Paul Phillips says some advertisers are prepared to look at the issue, but only if it suits them. He says: “It varies according to the client and their circumstances. Financial clients are often comfortable sharing an agency as there are so many financial services clients in the market. Obviously where the market is more directly competitive the circumstances may differ. For instance, you could never imagine Barclays and Lloyds sharing the same agencies. Conflict is more of an issue on the creative side. But in the pharmaceutical market, clients may even value the agency’s shared learning in the sector.”

Phillips also claims that advertisers should not be put off an agency because of conflict and that where it arises, agencies will be receptive to the idea of creating an “avenue” to accommodate business.

In July last year Carat Group was obliged to create such an “avenue” in the UK when it picked up the PSA account, only to be handed Renault on a pan-European basis two months later. It put Renault into the Carat arm and PSA into BBJ.

From the start the PSA and Renault deal at Carat has been plagued by problems. Originally PSA chose the Carat Group because its rival car marques could be handled separately, with BBJ taking Peugeot and Carat working with Citroën.

After successfully pitching in secret for the £360m pan-European Renault account, Carat then informed PSA that both the Citroëand Peugeot media business would be housed at BBJ.

At the time the industry was rife with rumours that PSA would walk. But perhaps to save face, and for practical reasons, PSA stayed put.

Meanwhile, the relationship with Renault has blossomed. So much so that Carat Group is being tantalised by the global media account for Nissan, which is 37 per cent owned by Renault. However it is only available on the understanding that the agency resigns PSA. Carat Group declined to confirm whether this is correct and PSA refuses to comment about the agency’s resignation.

Observers say that despite its unfortunate experience, PSA should not let the conflict issue influence its next media agency appointment. After all, an agency without a car account is a rare commodity.

A pitch for the PSA business is due to take place within the next two weeks. Contenders include OMD, which has Nissan, but perhaps for not much longer; the Media Planning Group and Initiative Media – which had both held the PSA business before it went to Carat. Industry insiders favour a joint pitch from Publicis-owned Optimedia and Zenith – part-owned by the same French group. This solution would enable PSA to put its two car marques into separate agencies.

But Zenith already holds the Toyota business. In the past, Toyota commercial director Mike Moran has said that he has few concerns about Zenith handling other car companies, so long as Toyota’s business is kept separate. But this may have been because Toyota’s media strategy was, until recently, handled by the creative agency Saatchi & Saatchi’s now defunct UK media planning department. Media strategy is now handled at Zenith. Moran was unavailable to comment on the PSA development.

As it happens, PSA Peugeot Citroëand Toyota unveiled a joint venture in Europe last week to build a European factory capable of building 300,000 cars a year (MW last week). What this may lead to is open to speculation, but the two companies have already extended a hand of friendship.

With virtually every major agency network in possession of a car account, PSA will find it hard to make an appointment free of client conflict.