Foote Cone & Belding, the biggest advertising agency in the US, wants to get itself back to the days when it was a leading agency in the UK. Its acquisition of Banks Hoggins O’Shea last week (MW November 12) is a step in the right direction, but more is on the way.
The revival attempt comes almost two years after FCB parent True North and Publicis dissolved their global alliance – in which FCB mainly handled US global business and Publicis ran the European side.
FCB president international Harry Reid says: “We inherited a bit of a dog from Publicis. It hadn’t invested in FCB for years.” That alliance, as well as constant changes in senior management from the early Eighties, are two reasons for FCB’s poor show in the UK.
The newly-merged entity has an impressive list of clients. FCB handles Kimberly-Clark and Bristol Myers Squibb internationally, while BHO manages domestic accounts which include Daihatsu, Buena Vista Home Entertainment and Waitrose.
John Banks, chairman of nascent Banks Hoggins O’Shea/FCB, claims the combined billings for the merged agency are between 90m and 100m, which he says makes it twice the size of established agencies such as HHCL & Partners and CDP. Inflated though his figures may be (billings are closer to 80m), he wants to get the agency into London’s top 12 within the next three years, requiring billings of between 170m and 190m.
FCB, even with its new BHO management structure, could not hope to increase its billings by more than 80m in three years simply though winning business: so the agency is still on the acquisition trail.
Growth will be led by Tony Douglas, recently handed the job of chairman of FCB Europe. He moves from the Central Office of Information, where he was chief executive. His task is to build the agency’s billings across Europe through acquisition and organic growth. A good profile in London is key to European growth.
Banks says: “We’re not going on a billings crusade. We’ll build the agency in the best way we can, which could involve further acquisition if the deal is right.”
FCB’s president international Harry Reid says: “We have got to get the merged agency working, another acquisition is down the road a bit.”
Nick Mustoe, chief executive of Mustoe Merriman Herring Levy, draws a parallel with TBWA GGT Simons Palmer: “TBWA is the result of four mergers. You would have thought it would be utter chaos, but it has pulled it off. It’s just won NatWest.” Others simply say FCB is “doing a TBWA”.
The BHO deal comes after months of talking to potential partners. Reid says: “There are four or five independent agencies and we have talked to everyone.”
It is understood that at one stage FCB was close to signing a deal with Duckworth Finn Grubb Waters, but that in the end BHO proved more attractive, for whatever reason. Partners BDDH is also widely believed to have been in the frame, although chief executive Nigel Long denies his agency even spoke to FCB. Rainey Kelly Campbell Roalfe and Walsh Trott Chick Smith are also understood to have been contacted by FCB.
Observers were surprised that FCB chose BHO and not Duckworth Finn or Partners BDDH. Duckworth Finn has strong management under Mickey Finn and a much respected planning operation under Gary Duckworth. Partners BDDH has strong management with Nigel Long, planning through Leslie Butterfield and a respected young creative team.
Through the acquisition of BHO, FCB will gain a strong, and famous, management. Banks, Ken Hoggins and Chris O’Shea are well-known and experienced figures in the industry and they will lend FCB the kind of visibility it desperately needs. However, in the savagely ageist world of advertising the trio, all in their 50s, are considered “mature”.
It has been known for some time that FCB was looking to improve its name in the UK and shake off its dowdy creative image. Hoggins and O’Shea, deputy chairmen and joint executive creative directors, have won many creative accolades, but they are not the young blood the industry expected FCB to take on.
Banks denies that age is an important issue, saying he plans to work for another ten years. Reid sees a natural succession: “One of the strengths of the combined agency © is there is a fantastic level of middle management. There is a solid nucleus of six or seven people.” One observer says: “The deal was less about gaining management than increasing critical mass.”
A key strength which set BHO apart from the other London agencies was the international experience of its management – at Young & Rubicam, Banks worked on the international business.
Reid says: “We wanted a partner which had a global outlook.
The management all have big in-ternational backgrounds. We want London to be part of a global market.” Banks, Hoggins and O’Shea are locked into the new agency for three years. Most observers believe they won’t hang around much longer than that.
But it seems strange that FCB has let its name be buried in the name of the merged agency – Banks Hoggins O’Shea/FCB – when the main reason for the deal is to raise its profile.
This, again, indicates a certain “short-termism” about the relationship with BHO.
Reid says it is because the BHO name has a lot of credibility in the UK. And it is also believed that BHO’s clients are less likely to review their business if the agency name remains prominent.
But once it has become established, or indeed has bought another agency, the name is likely to change. Reid adds: “The name will be reviewed after a period of time.”
It is clear that Banks, Hoggins and O’Shea are happy with the deal. Banks, sometimes referred to in the industry as “Piggy Banks”, has made his cash. The team built up the agency, launched in 1991 in the midst of recession, and as they approach retirement age, have been able to sell it on.
The advantage for FCB is less obvious. It has not bought the agency with the most highly regarded creative work and management, like Duckworth Finn or Partners BDDH. But what it has acquired is about 35m worth of billings and a well-known management team which will be ready to step down as FCB takes off.
There will be more acquisitions: to make its mark in Europe, FCB must first be strong in London. The agency is likely to look again at its original shortlist and reopen talks with Duckworth Finn, Partners BDDH or Rainey Kelly. It could also acquire another marketing services business, such as a design group or an interactive outfit.
Given the scale of its growth plans, its parent True North could look at acquiring something large – Bates, for example, looks appealing at the moment.