Nissan loss sign of dependants’ gains

Carat’s £25m Nissan loss reflects tough times for media independents in their deadly struggle with creative agencies and dependants.

On Friday, advertising group Interpublic announced plans to rebrand Western International Media (WIM) as Initiative Media Worldwide in most markets except the UK.

Media dependants – media buying companies owned by giant ad agency networks – are gearing up to create all-powerful global media operations, and the rebranding of WIM is just one step in their bid for world domination. Meanwhile, their deadly rivals – media independents, such as Carat and CIA Medianetwork, which are not linked to ad agencies – are finding life difficult.

It was a bad week for Carat, which lost Nissan’s £25m UK business. The car maker is tipped to centralise its entire £125m European account in Omnicom’s worldwide media outfit OMD.

Channelled through Omnicom-owned creative and media agencies TBWA GGT Simons Palmer and Manning Gottlieb Media, a separate entity – called TBWA.OMD – is to be created to accommodate the business. While Manning Gottlieb remains tight-lipped on the subject, it is unlikely TBWA.OMD will handle anything other than Nissan.

In the UK the media independents were set up in the mid-Seventies – in a world where all media buying and planning was handled by the ad agencies. They have had a good run for their money, but are now feeling the pressure. The problem stems from the fact they were unable to establish themselves fast enough in overseas markets, finding the going particularly tough in the US and Asia. Without worldwide coverage, they were of limited appeal to increasingly global brands.

So the dependants believe they can make the most of the running over coming years. IPG hopes the rebranding of WIM will mark a fresh start, moving it away from its perceived image as a big buying power-house so it can focus on online and interactive ads.

But the giant media dependants have their own problems as they attempt to position themselves for this century’s global economy.

The world’s media operations will be keeping a close eye on the delayed pitch for Unilever’s US business. WPP’s MindShare is battling it out with IPG and OMD for the $700m (£438m) business. The outcome is crucial to each company and will test the global power of these brands.

Initiative holds the bulk of the Unilever business in Europe, but MindShare has been cutting into it recently. It beat Initiative to the German and Italian accounts, and last year picked up the business in China, adding to its control over some of South America.

Although, according to the Paris-based Recma Institute, OMD has global billings of $12.2bn (£7.6bn), it has yet to make its mark in the US.

Last week’s news that OMD is likely to be handed the £125m Nissan account through a new sub-brand has added to the confusion over its function. Although Omnicom has bought what are often considered the best agencies in each market, it has so far failed to create a coherent OMD network.

Two years ago, the company brought in former Procter & Gamble executive Daryl Simm to lead the global roll-out. And last month Simm drafted in Johan Denekamp from the Media Edge to review the business models of the 22 OMD agencies across Europe.

Denekamp, chief operating officer for Europe, admits the OMD network is confusing, particularly in the US. He says: “We are making an announcement about the US in the next two weeks.”

One plan being considered is for Omnicom to combine all of its US media services (except media planning) – including BBDO Worldwide, DDB Worldwide and TBWA/ Chiat/Day – into the single OMD brand.

Denekamp is confident OMD will become the most impressive global media operation around – allowing clients the greatest access to different countries in all regions.

Carat lost the Nissan business because of what it described as its lack of muscle in the Japanese market. Ray Kelly, chairman of Carat in the UK, says his company has been on a shopping spree and is in negotiations to buy SPI – the only media independent in Japan that has a client list including Adidas and Campbell Soup.

Carat may still have combined billings worth more than £685m in the UK, but the loss of both the £120m Nissan and VW business in less than a year will have hit it hard.

Meanwhile, Tempus-owned CIA has suffered a string of account losses over the past two years. Although it picked up media planning for Daimler Chrysler in some markets through its partnership with FCB, chief executive Chris Ingram’s patience with the company has been tested to the limit. CIA has lost its much-coveted Italia Telecom account in Italy – one of the largest single pieces of media business in Europe – and has so far failed to win anything of comparable substance.

There is not a network anywhere that does not have holes, but the considerable buying power of global media operations gives them an advantage over media independents.

While these global operations are still being set up, political jockeying, philosophical disputes and culture clashes have hindered almost every effort of the architects – just as they have in other industries undergoing consolidation.


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