Isabella Piasecka, Media Week, 20 November 2007, 00:00am

Regional agencies - Expertise is key to regional dilemma

How can agencies halt the apparent business drain to London? Isabella Piasecka reports.

The shift of several high-profile accounts from regional media agencies to London networks has reignited fears of a creeping drain in business away from cities such as Manchester, Bristol and Leeds.

Most recently, MediaVest Manchester, part of the Publicis Groupe, lost its £30m BGL Group account to sister agency ZenithOptimedia, having been knocked out before the final shoot-out between Zenith and Omnicom's PHD.

In February, Mediaedge:cia Manchester saw Morrisons, until then its highest-spending client, shift its £37m media planning and buying account into MEC's London office, prompting a major strategic rethink.

Certain industry voices have been banging the regional drum with some fervour. The Marketeer Association, which operates in partnership with Aegis-owned media agency Feather Brooksbank and advertising agency TBWA\Manchester, among others, aims to reverse what it believes is a damaging concentration of marketing services agencies in the South East.

It estimates that there is £2bn under the management of marketing departments along the M62 corridor, of which only one half - equating to 11,000 jobs - is spent with local agencies. The rest, it claims, migrates mainly to London.

Quality services

Few would argue with the need to champion the quality of local services. Yet, some agency bosses believe it is time to stop over-emphasising location as a factor in key account moves.

Rob Clilverd, chief executive of specialist regional agency BLM Clilverd, says: "Too many regional agencies have a chip on their shoulder. Yes, some big bits of business have moved, but business doesn't move because of the city in which the agency is based. This isn't The Sopranos; it's not like somebody has decided to take out Manchester."

Andrew Burgess, managing director of Swindon-based digital and direct response agency Equi=Media, agrees. He says: "Location is not as much of an issue for clients as it used to be. The advent of e-mail and other technical advances means that contact between client and agency is easier than ever. As long as agency staff are willing to visit clients on a regular basis, location is irrelevant."

So, if location is a red herring, why have some of these big, national accounts headed southwards?

According to Jason Spencer, managing director of PHD North: "A lot of it is to do with client perception and not at all with reality."

There is a tendency, he says, for some clients to move to London when they grow to a certain size because they believe they will be better serviced in the capital.

As MediaVest Manchester's managing partner, Andy Jeal, explains: "It's very hard to argue with certain marketing directors when they insist on taking a business to London.

"It takes a braver marketing director to understand that you're getting a good, if not better, deal in the regions."

Clients that head to London don't necessarily find better value. The regional agencies that are part of larger buying groups, such as WPP's GroupM and Interpublic's Magna Global, have the same access to discounted rates as their London counterparts. They also benefit from significantly lower overheads. MediaVest Manchester, for example, is now the third-largest buyer of search in the UK. And Jeal is keen to point out that his agency recently broke the £200m billings mark for the first time. Growth is strong and national business is not edging down a one-way street to London, he insists.

Of course, for the more specialised agencies such as BLM Clilverd, competing purely on price, and across all sectors, is unrealistic. Clilverd suggests: "What is quite clear is that plenty of businesses, because they want to buy as cheaply as possible, have started shopping at the big London supermarkets. We're more of a deli. We absolutely don't say that we're the cheapest buying point in the UK in a world of supermarkets ... but we do compete extremely well on price for the things that we buy more of, such as regional media."

Business expertise

And BLM is not alone in working hard to push the unique aspects of its business, such as its staff and expertise. All media agencies, whether in London or Leeds, are struggling to differentiate themselves in an increasingly competitive market where price has become a leveller. Regional agencies can play the anti-London card when it suits them. For example, to lure talented, commute-weary staff away from the capital to cheaper, less congested cities outside the M25.

But equally, many choose simply to compete on their strengths, geography aside.

They do not win or lose business on account of their location.

As Equi=Media's Burgess says: "Expertise is the issue, not your postcode."

KEY ACCOUNT MOVES IN 2007

NOVEMBER

BGL Group, insurance group behind price comparison website comparethemarket.com and insurance brands Budget, Bennetts and Dial Direct

Value: £30m

From: MediaVest Manchester

To: ZenithOptimedia

OCTOBER

Taylor Wimpey, newly merged housebuilder, previously George Wimpey and Taylor Woodrow

Value: £18m