Death-knell sounds for media departments

Whatever else the future might hold for the structure of advertising agencies, it seems plain that a media department is no longer part of the picture.

Abbott Mead Vickers.BBDO’s 12m acquisition of Pattison Horswell Durden, and the creation of New PHD in August, is just one illustration of the way the wind is blowing. AMV was among the most strident proponents of the full-service agency, but has decided that the future of media will involve a small number of very large buying points, followed a long way back by a large number of middling ones.

The three PHD partners decided likewise that they need bigger billings to move their business on and stay competitive. They did the deal to stay in the game. WCRS made the same decision in pooling its TV buying into the newly-launched Mediapolis with Mediastar and Young & Rubicam.

Lowe Howard-Spink, another stalwart of the full-service agency concept, is also likely to move down that road, setting up a media dependant operation using its US sister brand Western International. Sources at LH-S’s New York parent company Interpublic admit that the agency held discussions with the CIA Group 12 months ago about linking it with LH-S, but the deal went cold and has not been reheated.

CIA’s recent legal problems with ITV sales houses Laser and TSMS has led some observers to question whether client confidence in media independents will be undermined.

“The CIA saga might raise questions among clients about whether they are getting what they want,” says one source. “It may encourage a shift back to the full-service, one-stop agencies.” But there is little evidence at the moment to suggest clients are revising their strategies.

The prospect is certainly not deterring WPP, which is still attempting a joint media operation, combining J Walter Thompson and Ogilvy & Mather’s The Network. Then there is BMP DDB, whose media department will be rebranded as a dependant by the end of the year.

While the fully-integrated media department looks a thing of the past, it is worth remembering that in all these cases the main agency will still be in the business of media buying – it will just be done through a subsidiary or a joint venture.

Media buying, one of the few relatively profitable parts of the industry, has the added advantage of helping cash flow. It must not be forgotten, as interest rates start to rise again, that there may yet be substantial money to be made by sitting on client’s media money, as there was in the late Eighties and early Nineties.

Knowledge Bank

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