Risk and opportunity

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A merger creating the biggest advertiser in the U.S. also creates big opportunities and risks for agencies involved. Gillette holding companies WPP Group and Omnicom Group will angle to stay on Procter & Gamble Co.'s clubby roster, while Publicis Groupe will get a shot at more business.

The biggest question: whether WPP Group's MindShare, which handles Gillette's more than $900 million in global media buying, can hang around under P&G, which has consolidated most of media buying with Publicis Groupe's Starcom MediaVest Group and U.S. communications planning with SMG and Aegis Group's Carat.

The sticking point is whether MindShare, which already handles rivals Gillette, Unilever and Colgate-Palmolive Co. can successfully add P&G to the mix.

The deal, moreover, gives Omnicom potentially its first major foot in the door with P&G, with BBDO Worldwide handling most creative duties for Gillette globally. Adding Gillette also means P&G adding relationships with Interpublic Group of Cos.' Lowe, Havas' Arnold and independent Acme Idea Co., South Norwalk, Conn.

Through all of its major acquisitions in the past two decades, P&G has consolidated duties with existing roster shops-all of them now within Publicis Groupe and Grey Global Group, whose acquisition by WPP is nearing completion.

Gillette represents about 1% of Omnicom revenue. Publicis shops handle the bulk of creative, media and communications planning duties in the P&G units where Gillette businesses are likely to be consolidated.

But it's also a new world at P&G, where creativity is getting a higher priority; the company has deployed a computer program to rank agency creative performance.

One executive close to BBDO said the deal is a welcome opportunity to land a spot on P&G's roster, noting no apparent conflicts with P&G competitors. "If they bought the business because of the momentum, why would they mess with a good thing?" the executive said.

For its part, P&G isn't offering any clues. In a Cincinnati press conference, Vice Chairman Bob McDonald called agency assignments "much too specific a question to answer at this point."

Adding to the allure of the business, the deal combines two of the industry's biggest spenders-both putting more than 10% of sales into advertising. Gillette's measured media spending soared a whopping 67% to $391 million through the first nine months of 2004, while P&G's rose 7.5% to $2.4 billion after two years of strong double-digit growth, according to TNS Media Intelligence/CMR.

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