Anyone remember what it was like a year ago across the agency world? A lot of agencies sounded like they wished they could just cash in their chips if the lack of new business and pitches were anything to go by. The smallest account win seemed like the largest jackpot and advertisers had cut back so much that agencies were quietly jettisoning staff.
The market was static and the new account roulette wheel was in serious need of oil to get it turning again. Marketing directors didn’t want to instigate expensive pitches during a downturn and were happy to “stick” rather than risk all and “twist” on a pitch that their chief executive would probably see as an unwanted distration.
In the dotcom days, it did not matter if an agency lost an account as there was always another pitch on the way. But that had changed.
Marie Oldham, joint managing director at Media Planning Group, says that many clients ended up holding back from pitching their business because of economic outlook: “We were in the throws of recession and were suffering post 9/11. Clients were in a time of uncertainty and were holding back, not quite knowing what they were going to spend the energy –marketing wise – on.
“While that was going on and clients were not focused on developing new work, clients were building agency teams and marketing plans for the future.”
Now all bets seem to be back on. This week, the agency world is sweating it out as they wait to see where the wheel will land for some of the biggest accounts to come up in years. And the stakes have become high.
So, after several years where there seemed to be little in the way of big market action in the media world, every agency seems to be working late into the night on pitches to try and capture some of the most prestigious accounts in media.
The account that seemed to start the roulette wheel was “the world’s local bank”, HSBC.
Its global marketing director Peter Stringham decided earlier this year that although the bank’s focus was on local knowledge, its advertising account needed to be a little more worldwide.
WPP chief executive Martin Sorrell thought so too, after his company took the £350m account following a pitch process that included network heads from many of the major agency groups pitching personally for the bank’s account.
Since then, other multiregional advertisers have been asking the agencies to place bets.
Pete Edwards, managing director at StarcomMotive, says the desire by clients to consolidate and achieve more efficient cost structures is one of the driving forces behind the current pitch frenzy: “More clients are waking up to the need to consolidate. A lot of these things are in cycles – it’s a natural evolution.”
Efficiency is key
Though Edwards thinks that price is one of the main reasons the market has seen some big pitches, he argues that it is also hunting for planning efficiency: “Price is always a critical component as is planning efficiency and service requirements.
In isolation, price is important but it’s not the only measure.”
In the current round of pitches, the network that seems to have taken the early lead is Aegis, whose Carat network seems to have turned things around after a dry period in 2003 and early 2004.
Carat’s first big victory was retaining the £31.5m Diageo account in Britain, while winning the £20mGE Consumer Finance Home Lending account in the UK and securing the £35m pan European Lego brief. Meanwhile, Aegis’ second-string network, Vizeum, is very much in the running for the £25m European Panasonic account.
The network may have been dealt a good hand up until now, but it still has a fight on its hands if one were to believe some (hotly disputed) reports. French car manufacturer Renault is claimed to be putting its European business – a prime Carat asset – to tender some time during 2005.
The account is coveted by, among others, Publicis and KR Media – the latter is run by Aegis’ former European chief execs Bruno Kemoun and Eryck Rebbouh.
The largest advertiser to roll the dice so far has been Nestlé, which called a pitch for its gargantuan £894m European media account, causing widespread trepidation that it would amalgamate into one network.
But there proved to be more winners than losers in this pitch, as the spoils went to the WPP network and Publicis-owned ZenithOptimedia while Universal McCann went home from the pitch with nothing.
The decision on which of these two networks get the
Even this choice is proving to be problematic, with Nestlé already making noises regarding conflicting accounts at both of its preferred networks.
WPP-owned MindShare will have a problem accommodating the Nestlé cereals business, due to a conflict with existing client Kellogg’s.
ZenithOptimedia would also have similar problems with the confectionery side of Nestle’s business, as they still hold the buying account for competitor Masterfoods, whose brands include Mars, Twix and M&Ms, competitors to Nestlé’s Kit Kat, Yorkie and Aero brands.
Paul Longhurst, managing director of The Allmond Partnership, said: “I think what we’re seeing is a lot of choosing camps, the big multi-nationals are choosing where their business should lie and conflict is a key part of that decision.
“I’m sure that MindShare and ZenithOptimedia would love to have the whole Nestlé account, but the reality is far toomuch conflict exists.”
Now that we know the Nestlé business will be split between at least two, if not more, agencies there is really only one pitch with the ability to devastate an entire
The consumer goods giant may have held back from rolling a full-service pitch out, but it did put its £555m media account out to pitch in May, proposing that the agency that finally takes the prized account slashes g 40moff its pan-European budget.
The media account has been held for 15 years by Initiative and no agency is sweating more than the Interpublic-owned company, which stands to lose just under half of its
Overall, the news has not been good for Initiative which has also been faced with the possibility that the General Motors account could also leave the agency, after the latter announced a pitch for its £400m pan-European media brief.
Also, the group they are part of is not in particularly good shape.”
The Unilever account alone could cripple the agency in the
Most agencies have had to get used to losing a least one prized account during the past year, as the roulette wheel started to turn.
The £30mO 2 UK account moved from PHD, The Allmond Partnership and Outdoor Connection to consolidate into ZenithOptimedia, as did the £32mbrief for film distributor UIP – which went from Mediaedge:cia to ZenithOptimedia’s Equinox.
That, in turn, caused rival film distributor Entertainment Films to take its £22mbudget of out Zenith to MediaCom.
Meanwhile, MediaCom was having a good time of it. Winning Boots from MindShare, plus T-Mobile in five European territories and Sky’s £43m business in the
Then there was the £19m More Then business Universal McCann wrested from Manning Gottlieb OMD, the HJ Heinz £40mpan-European account, which was swallowed by Vizeum – and the £11m Pizza Hut account that was resigned by PHD and delivered to Starcom Motive.
The final decision on the Nestlé account is expected over the next few weeks, but the agency-breaker is the Unilever account that, should it go to one agency, could immediately shift the power balance among agencies.
No wonder the agencies are betting all they have – a win for either MindShare or Carat would see them top the
The main accounts – changing the media landscape
The £894mglobal media account was previously split between MindShare, which held the confectionary and beverage brands, and Universal McCann, which held chilled foods and cereals in the
Universal McCann was this month removed from Nestlé’s roster, as the FMCG company decided to split the business globally between ZenithOptimedia and the WPPGroup. This means that there is still the possibility that parts of the business could end up in WPP agencies MindShare, MediaCom or Mediaedge:cia. The decisions, taken on a country by country basis, are expected in the next few weeks.
According to Recma, the pan-European media account for Unilever is worth £555m across Europe and would take almost half of Initiative UK’s billings with it, should the agency lose the account.
Initiative holds the account across most European territories, with the exception of
Incumbent Initiative, MindShare and Carat are all vying for the business. The announcement is due this week.
Panasonic put its £25mpan-European media account up for review in August.
The account, worth £5min the
The car manufacturer announced its £400mpan-European pitch in September, among its three roster agencies Initiative, Universal McCann and Carat.
The Interpublic agencies Initiative and Universal McCann hold the bulk of the business.
A loss for Initiative, if they also lose the Unilever account, would be a blow for the agency in the