SURVIVING CONSOLIDATIONS

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It wasn't too long ago that ad industry seers were predicting the demise of the mid-sized agency. The need for international marketing expertise by more and more companies shifted the balance in favor of large shops with overseas offices, they said. But now even large shops could be in harm's way.

The desire by large multinational marketers to unify their worldwide marketing efforts is highlighted by two major ad account consolidations within the last two weeks: Colgate-Palmolive Co.'s shift to Young & Rubicam and Bayer's consolidation at BBDO Worldwide. We're talking big money (three-quarters of a billion) and big agencies losing out (Foote, Cone & Belding and Lintas).

And last year IBM replaced some 80 agencies worldwide to award Ogilvy & Mather its $500 million account. Procter & Gamble Co. and Kraft Foods are other giants paring back to fewer mainline agencies.

What's the reason? "To continue our market-share growth, we must execute our best advertising strategies and ideas simultaneously around the world," explained Colgate Chairman-CEO Reuben Mark.

Does this signal trouble for all but a handful of mega-agencies? No, the agency rosters of the top 100 advertisers have actually increased in recent years. But the newcomers are specialists. While one general agency may now handle the bulk of a large company's media advertising, the company will have an additional agency for interactive, or sales promotion, or direct marketing, or Hispanic or black advertising, or media buying-or all of the above.

In this era of agency consolidation, large agencies with a wide range of specialized divisions may find these units their salvation.

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