Client conflict takes away pitch fizz

The pitching season may be in full swing with major account reviews, but, as Isabella Piasecka discovers, client conflict is becoming a greater issue because of consolidation within the industry.

With pitching season in full swing after a summer lull, agency news has been peppered with stories of major reviews, but also of client conflict.

ZenithOptimedia pulled out of the race for Coca-Cola's £40m media account just a few weeks before the pitch, citing "potential conflicts of interest".

MindShare had already ruled itself out because of its Britvic Soft Drinks account, which covers Pepsi, as had Mediaedge:cia because it handles Danone.

Client conflict is a long-standing issue, but the potential for conflict is now greater than ever, following marked consolidation in the industry. Clients have a smaller pool of agencies to choose from, especially if they want to avoid firms that already represent their rivals.

Ironically, consolidation is a response to clients driving down costs. As one agency insider says: "It's difficult for smaller and medium-sized agencies to offer value. The paradox is that clients absolutely want value, but, in order to get it, they have to get comfortable with conflict."

In other words, exclusivity - being the only representative of your sector in an agency's portfolio - is no longer a given.

Inevitable conflict

According to Paul Phillips, managing director at pitch consultancy the AAR, the blurring of sectors is exacerbated by the emergence of "superbrands" such as Tesco and the Post Office, which have expanded traditional remits to include credit cards and travel insurance, among other offerings.

This diversification makes it even more likely that agencies will suddenly find a handful of existing clients fighting for the same share of audience or sales.

But if conflict is inevitable, so too is the urge to minimise its effects. In practice, media agencies have all sorts of systems in place to manage conflict, from locked files to separate offices and dedicated client teams. MindShare, for example, has its Team Unilever, effectively an agency within an agency, says Phillips. And Carat successfully services both BMW and Renault by spreading its teams across different floors of its building.

Of course, there will always be some advertisers who don't sit happily in the same stable. "You just wouldn't find the likes of McDonald's and Burger King in the same agency," insists Steve Williams, chief executive of OMD UK. "Where two clients are sworn enemies, no amount of conflict resolution can overcome that."

Nevertheless, the likes of OMD or MediaCom can always try to steer conflicted new business towards other agencies within the same network, which at least adds revenue to the group as a whole.

Not that the strategy is foolproof. When PHD was under pressure from rival telecoms client Yell to resign its BT planning account because of a perceived conflict, it unsuccessfully attempted to shift the business into Omnicom sister agency AMV BBDO. But the account ultimately ended up outside the network altogether, with Mediaedge:cia.

On the whole, however, network agencies are better shielded from the potentially damaging effects of client conflict.

Grant Millar, joint managing director of Vizeum, explains how the Aegis agency enjoys the best of both worlds. "We believe strongly in integrated teams and having all our people on a single floor, which can be a challenge in terms of competing clients," he says. "But in Aegis (home also to Carat), we have the backing of a group and all of the resources that brings."

Varying scenarios

At the end of the day, managing conflict comes down to trust. "It's about pulling away from the emotional aspect and having a frank discussion about what processes are in place. You play out various scenarios and you ask clients: what would give you a problem?," explains one agency director.

All of the agencies polled by Media Week strongly denied that conflicts of interest hamper growth, either in the sense that a single agency might be forced to decline large chunks of business or in terms of an entire network, potentially saturated with mighty, clashing clients. "We haven't got a client in every category by a very long shot," says one insider.

There are also ways of turning conflict to your advantage. Williams argues that the very prospect of conflict can spur an agency to offer better solutions in a bid to win clients over. "If you find yourself conflicted out of a sector, you will drill deeper into the client's needs," he says.

And then there is the specialist agency route, founded on the value of sector experience.

Integrated agency The Gate, for example, proudly lists its key client areas as financial services, where it serves 12 financial clients, charity, business-to-business, retail and education.

Maybe Graham Hawkey-Smith, managing partner of full-service agency Smarter Communications, has it right when he says: "Two's a conflict, three's a specialism."

COCA-COLA PITCH: VITAL STATISTICS

What's up for grabs: Coca-Cola Great Britain's £40m media planning and buying account, from 2008

Pitch date: October

Brands: The media account covers all Coca-Cola brands, including Diet Coke, Coke Zero, Sprite, Fanta and Minute Maid

Shortlist: Incumbents Vizeum (Aegis Media) and Universal McCann (Interpublic Group), as well as Starcom (Publicis Groupe) and Naked Communications (independent)

Conflicts: ZenithOptimedia (Publicis Groupe) withdrew after being shortlisted due to potential conflicts of interest, not in the UK but internationally

Other clashes: Mediaedge:cia handles the Danone account, including Danone Waters.

MindShare has a conflict due to its work with Britvic Soft Drinks, which owns Pepsi.

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