INDEPENDENT AGENCY NETS RACE TO FILL IN THEIR GAPS

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Trans-Atlantic linkups, agency-hunting in the Pacific Rim and legislative "inducements" from Eurocrats in Brussels continue to stimulate growth among independent agency networks.

Single-continent networks quickly are becoming passe as 3-year-old Group '92, based in London, affiliated in 1993 with the much larger Local Independent Agency Network in the U.S. LIAN's 12 middle-sized shops generate collective billings of $2 billion compared with $337 million for eight-member Group '92.

The move came on the heals of the formation of three other alliances that connected Paris-based CrossWorld (10 shops) with both Dayton, Ohio-based IAAA (16) and Trans-Canada Advertising Agency Network (23); and 32-shop MAAN, Cleveland, with the 14-agency European Marketing Communications Organization, London.

Such global networking is being encouraged by accelerated growth in Eastern Europe, the 12 member nations of the European Union and in particular, the Pacific Rim. Virtually all networks with international presence are moving quickly into those markets.

Dialogue, largely a business-to-business agency network, just added shops in Hong Kong, Singapore and Sydney after interviewing 17 agencies in the Pacific Rim. Its next target: South Korea and India.

Hot spots may be where agencies are needed, not necessarily where business is booming. Confrad needs shops in Norway, the Philippines and Indonesia to replace agencies recently bought out by multinationals. LIAN is seeking coverage in Detroit and Boston to blanket the U.S. fully.

Accelerating growth is a new Brussels-inspired business designation, the European Economic Interest Group.

Independent Network, setting up headquarters in Luxembourg, became an EEIG connecting six agencies. Group '92 has been operating as one since 1990; ELAN since 1992. In another EEIG, four agencies this year formed Independent Creative Partners, Paris (not shown in this report). As envisioned by Brussels, the EEIG encourages small-to-mid-sized companies to form loosely held federations that hopefully will become a single pan-European company.

One incentive to create an EEIG is the growing advertising/marketing budgets within the EU institutions in Brussels.

The typical EEIG structure borrows a capitalization plan long used by independent networks: Members buy shares in an umbrella corporation. Confrad, Dialogue, ELAN, Eloquence and Interpartners are umbrella structures. These and others are sustained by annual dues or pro-rated budgets. Dues generally are $3,000-$4,000 annually but run as high as $13,500 (Interpartners). Some are run by secretariats, and others directed by member executives on a rotating basis.

These networks are not solely advertiser-driven, although international expansion tends to behave so. Independent shops congregate in networks for other reasons: LIAN and others give their membership local market media buying and cheaper media research rates via pooling of contracts.

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