Ad agencies' megamergers leave online status cloudy

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Interpublic group of Cos.' plan to merge of two of its agencies, Ammirati Puris Lintas and Lowe Group, begs a question: What will happen to their New York-based interactive components, APL Digital and Lowe Interactive? Similarly, Leo Group's proposed merger with MacManus Group could have ramifications for Giant Step, the Chicago-based interactive arm of Leo Burnett Co., and MacManus' Blue Marble ACG, New York, which merged with Novo Interactive, San Francisco, in September.

A merger of the APL/Lowe Web agencies seems likely. A merger of the Burnett and MacManus interactive shops is intriguing, but probably not in the cards.


Giant Step CEO Eric Heneghan said right now "there are no plans" to merge with Novo Interactive/ Blue Marble. While Burnett owns a majority of Giant Step, he said it's not a division of Burnett and therefore wouldn't automatically be clumped together with the new company's interactive units. "It's not that simple," Mr. Heneghan said. "I know very little about [Novo and Blue Marble's] companies. I'm not sure there would be a fit there."

Kelly Rodriques, CEO of Novo Interactive/Blue Marble, could not be reached for comment.

Keith Metzger, president of APL Digital, also wasn't available for comment, but Lee Garfinkle, chairman-chief creative officer at Lowe Lintas & Partners Worldwide, didn't rule out a merger of the two interactive units.


Indeed, it's hard to imagine why Lowe Lintas would maintain two interactive units when it already has begun to engineer the more difficult task of merging two general-market agencies.

"I am an incredible supporter of interactive and I am looking forward to utilizing the resources from both entities," Mr. Garfinkel said.

When asked if that entailed a merger, he responded, "At the end of the day, we will do whatever is best to service our clients."

Potential client conflicts at the shops, especially those tied to Ammirati and Lowe, could create difficulties or opportunities -- depending on how the agencies decide to unite and leverage their reach and networks.

A combined APL Digital/Lowe Interactive would rank No. 40 in the U.S. with about $8 million in annual revenue based on 1998 revenue, according to Advertising Age's Interactive 100 (see listing at APL Digital ranked No. 49 and Lowe Interactive, the interactive arm of Lowe Lintas, was No. 97 this year.

APL Digital clients include Dell Computer Corp., Lego Group and United Parcel Service of America, while Lowe Interactive clients include Dell rival Sun Microsystems, as well as Denny's, Marriott Corp. and Western Union.


MacManus' Blue Marble and Novo Interactive will announce a new name for the combined shop within the next three months, an agency spokeswoman said. Blue Marble, which was 100% owned by MacManus before the merger, ranked No. 17 in the Interactive 100 with annual revenue of $15.5 million. Novo Interactive, an independent, was tied at No. 23 with annual revenue of $12.5 million. MacManus now has an undisclosed investment in the combined interactive agency.

Novo Interactive/Blue Marble clients include Continental Airlines, the E*Trade Group, General Motors Corp., Motorola Paging Products Group and Toyota Motor Sales USA.

Giant Step, of which Burnett owns an unspecified majority stake, also ranked No. 23 on the Interactive 100 with $12.5 million in annual revenue.

Although it is less likely than an APL Digital/Lowe Interactive merger, if Giant Step with its strong Midwestern presence were to merge with Novo/Blue Marble, the resulting agency would have fully functional offices in three key markets -- Chicago, New York and San Francisco -- right out of the box.


The fact that the new holding company, temporarily named BDM, intends to operate Burnett and MacManus agencies separately makes it likely that the Web shops, too, will remain separate. Still, Jim Nail, senior analyst at Forrester Research, said a Web merger is a possibility.

"If they merge the shops, they will do so under the Giant Step name," he said, adding that Giant Step is the stronger of the shops in terms of client relationships. "It must be very tempting (for Giant Step)."

Merging Lowe Interactive into APL Digital appears more feasible, Mr. Nail said.

"There's not enough (clients) at Lowe Interactive to bother with; they never appear anywhere on the radar screen," he said. "But APL is starting to gain credibility and it may be better for them just standing on their own. APL Digital should rebrand itself and spin off with an eye toward going public."

Contributing: Patricia Riedman

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