It will be the first foreign takeover of a leading Korean agency, and promises to expand Bates' opportunities in Korea, traditionally a tough challenge for foreign ad agencies. Foreign ad agencies have had trouble finding customers in Korea because they naturally lack the network of personal and business connections that is essential to doing business here.
"The Korean ad market is very peculiar (Winning accounts) is not based 100% on creativity," says Lee Hwan, international business coordinator at Diamond.
Diamond is the second biggest agency in Korea, with about $450 million in billings this year. Korea is the world's 10th largest ad market.
The deal will also strengthen Bates' relationship with Hyundai, Diamond's main customer. Bates already has several major Hyundai accounts around the world.
Diamond will import some of Bates' international business practices. Once the deal is inked, Bates will begin bi-annual evaluations soliciting client feedback in order to improve service. "That's not a normal practice in Korea," says Mr. Lee.
Diamond's customers will also get market information from Bates' international network of 175 offices in 65 countries. Diamond says that its management and employees, as well as all of its local clients will stay with the company. Diamond-Bates Korea, a small joint venture operated since 1996, will remain unchanged by the deal.
Several other Korean agencies are rumored to be courting foreign buyers. To help Korea recover from the economic crisis that hit in late 1997, the government has instructed conglomerates to shed non-core businesses and focus their empires. Bates is part of the Cordiant Communications Group.
Copyright November 1999, Crain Communications Inc.