Agency

John Reynolds, mediaweek.co.uk, 07 July 2009, 07:30am

Trading terms overhaul eyed after Barkers' crash

LONDON - The collapse of recruitment ad agency Barkers and its sister company, HR communications firm TCS, has sent shockwaves through the recruitment ad industry, with one observer likening it to "MediaCom going bust in the display area".

Penna Creative Communications managing director Anne Riley

Disgruntled media owners have lost millions of pounds in unpaid contracts and some believe a fallout from Barkers' demise will be a complete overhaul of trading terms between agencies and media owners, with lenient credit terms axed.

Paul Stafford, owner of rival agency Stafford Long Group, said: "There will be much more scrutiny from media owners and more calls for greater involvement from [trade bodies] the PPA and NPA."

Adam Freeman, commercial director at Guardian Media Group, said the group would continue to work with Barkers under its new Penna management, adding: "It is in our best interests to absorb the acquisition." But he says the episode has "potentially changed the dynamic in the recruitment market forever".

One media owner, who is currently in talks with the administrator, said: "We will be lucky to get back between 10p and 20p from every £1 owed."

Such a small financial return has led some to suggest media companies could look to review spend with Penna Barkers, particularly as key executives are thought to have moved across.

But Penna Creative Communications managing director Anne Riley claimed that, after the acquisition, positive meetings had been held with some of Barkers' clients, including RBI, News International and GMG.

She said: "Ours is a very good, long-established business. Barkers had a lot of problems with its holding company, including long leases. Our strategy is to grow the business."

A key contract Penna Barkers will be keen to keep is the COI, which, including government and public sector clients, spends about £12m a year.

A COI spokesman said: "All existing projects will be honoured by Penna Barkers and we are in discussions with our procurement and legal team about future arrangements."

Barkers Q&A: Firms lose millions, model may be broken

What has happened?

Barkers went into administration last week, struggling with debts
Its assets were acquired from the administrator, Chantrey Vellactor, by the human resources group, Penna, for £8.6m. It will now trade as Penna Barkers
Barkers had a number of well-documented problems leading to its downfall - the most pertinent of which were onerous lease arrangements

Who is Barkers?

Founded in 1812, Barkers specialises in recruitment communications, including digital media and digital creative work
It supplies recruitment advertising for clients such as Guardian Media Group, News International, Reed Business Information, COI, Tesco, Orange and Microsoft

What does its collapse mean?

Media companies collectively will have lost millions of pounds, with little hope of claiming much of it back from the administrator
Guardian Media Group alone is thought to have lost more than £1m and, like other media groups, will have to seek repayment from the administrator

What does it mean for recruitment advertising?

With more spend going online and recruitment advertising hit hard by the recession, some believe the model is broken
If Penna can maintain its contracts with big-spending clients, it is likely to be a sound deal

Barkers' competitors

TMP Worldwide UK operation, headed by MD Andrew Wilkinson, offers recruitment advertising, graduate recruitment, employer branding and digital/online media

Euro RSCG Rileys Part of the UK's third-largest marketing communications group, the Euro RSCG Network. Has 60 years' experience and includes graduate recruitment and education and employment markets and has offices throughout the UK

Tribal Resourcing, part of the Tribal Group A well-established advertising and HR solutions agency dedicated to providing services to the public sector

Work Communications Led by chairman Simon Howard. The group was one of the unsuccessful bidders for Barkers' assets. Employs 250 people and generates £30m sales across UK and US locations

You must log in to use Clip & Save

All Comments

James Welford - 07 July 2009

This somewhat unscrupulous group has done more than cheat honest people out of their jobs and their compensation \(see the bitter conversations and recriminations on www.ri5.co.uk). They have almost certainly put the nail in the coffin of an already-fragile media compensation model. As you reveal, The Guardian Group alone has lost more than £1m and it is likely that the media generally will now impose far harsher terms on honest and competent agencies such as my own. This is unfair, but hardly unexpected. How dare Anne Riley and her confederates shout about their growth plans. They should hang their heads in shame. And the media should not penalise agencies who have always, and will continue to, work openly and honestly with them.

James Welford - 07 July 2009

A further point for consideration. Your article quotes the Commercial Director of the Guardian Media Group as saying: "It is in our best interests to absorb the acquisition." Why precisely? The Guardian was, of course, also a client of the late lamented Barkers and is now presumably a client of Penna. But that's no reason for a casual 'it's business as usual' approach. If the media draws a line in the sand and makes it clear that simply declaring bankruptcy on one day and carrying on under a new name the next is unacceptable and that it will be penalised, the likes of Penna would not seek to buy and profit from dubious commercial entities. That would put the blame squarely where it belongs - and not effectively spread it to legitimate and honourable agencies who do not behave in this manner. Just a thought...

Rik Pipe - 07 July 2009

Speaking as one of those made redundant without even my notice money, can I extend my sympathies to media owners who have been dealt with in a similar way. By the way, does that gurning image of a Penna apparatchik along with the excuses and flimsy promises grate with anyone else?