While Burnett executives are cautious not to label the move a merger, CEO Tom Bernardin said, "Consider Burnett and Arc as one entity, albeit with two facets."
The move comes as Arc experiences robust new-business growth and Burnett struggles to add new business and keep large, existing clients. (The U.S. Army and General Motors Corp.'s Cadillac were among the major accounts that left the Chicago shop last year.)
People inside the agency said that the inability of the two shops to effectively collaborate is a major factor in its U.S. new-business slump. Since its 2004 founding, Burnett and Arc have worked together on only one U.S. business win, Diageo's TheBar.com, which was predominantly an Arc project but had some Burnett account managers involved.
"In the cases where they've worked together well, they've won," said Mr. Bernardin, referring to a recent win of Barclays iShares business in Asia, Europe, the Middle East and Africa. "In the U.S. they've been structured separately and they haven't had as much success working together."
That deficiency was underscored by the ability of Windy City rival DraftFCB Group, part of Interpublic Group of Cos., to use its newly merged old- and new-media capabilities to lure Wal-Mart, before that account evaporated in a scandal involving the retailer's former senior VP, Julie Roehm.
Potential roster conflicts
But while the urge to merge the two shops makes sense, the move is not without risk, as the two agencies have separate client rosters dotted with significant potential conflicts of interest. For example, though Arc's work for Capital One is said to produce similar billings to that of Burnett's Washington Mutual account, and it's unclear how those two accounts could coexist in the same shop.
Arc's roster also contains several marketers who've dumped Burnett in the not-too-ancient past, such as Miller Brewing Co. and United Airlines, and it is unclear how eager they are to return to the Burnett fold.
Mr. Bernardin said the agencies will work separately when necessary. "We are not merging the two companies out of respect for our client bases," Mr. Bernardin said. "We are extremely sensitive to that."
Burnett also announced that Arc Worldwide and North America President Marc Landsberg is leaving the agency early next year, and that the joint North American operation will be led by Rich Stoddart and Juan Carlos Ortiz, the former heads of Burnett's U.S. and Latin American offices, respectively. Mr. Landsberg had been president of Arc since 2004.
Most of Mr. Ortiz's former Latin American duties will be performed by Miguel Angel Furones, a former global creative chief at Burnett who has been running Burnett offices in Madrid and Lisbon.