'BETTER NOT TO JOIN'
Warner-Lambert, which markets such diverse brands as Zantac 75, Benadryl, Schick, Certs and Listerine, has "very close relationships with the networks, [with] a number of long-term deals already in place," said one executive close to the company, "so they just decided it was better for them not to join the alliance."
Neither Warner-Lambert nor the agencies would comment.
Even without Warner-Lambert's participation, however, the pairing of the two into what's called the JWT/O&M Alliance will put buying clout of well in excess of $1 billion into one operation.
The alliance will primarily affect broadcast TV buying, though some of the bigger cable and syndication deals will be done through the alliance, too.
No doubt WPP has noticed some of the pitfalls encountered by Cordiant's Zenith Media U.S. operation, formed in 1995 and currently consisting of Saatchi & Saatchi Advertising and Bates USA. Almost immediately, Zenith ran into problems on the local TV side of things.
The JWT/O&M Alliance, at least initially, does not include local or spot TV.
"We're going into this much slower," said one WPP insider. "Let's see how this works."
MEDIA DEPARTMENTS SEPARATE
To try to prevent culture clash, the two agencies are basically leaving their own media departments separate at this time. Zenith merged most of the two Cordiant agencies' media personnel.
The benefits of media consolidation on the agency side are clear: It potentially gives the buyer more clout as well as flexibility.
"We can move inventory between various clients, and cover periods when one advertiser has fewer ads running than another," said Larry Cole, exec VP-U.S. media director at O&M.
But numerous kinds of conflicts can mitigate the effectiveness of such megamedia alliances.
"Let's see what happens when it's 3 in the morning during the upfront [TV marketplace] and Sprint [a JWT client] and IBM [an O&M client] want a deal with some network to close, but Ford [a JWT client] and American Express [an O&M client] don't," said one network TV executive. "That's where the rubber hits the road."
There also is the traditional client-conflict issue. For example, O&M recently won the GTE Corp. account and JWT handles competitor Sprint Corp.
While Mr. Cole said no decision has been made about whether GTE will join the alliance, one executive close to the situation said GTE will not.
"First of all, it's mostly a spot TV account," he said. "But if they do have national buys, they will be made separate from the alliance."
GTE did not return phone calls.
CONSOLIDATIONS MAY GROW
Large-scale media consolidations may grow. While Interpublic Group of Cos. is said to not be crazy about the idea, Omnicom Group is known to be more open-minded about it.
"Right now, 20 agencies have 85% of the media billings," said Jean Pool, exec VP-North America media buying services at JWT. "And five agency groups have 66% of the billings. Consolidation is going to continue."
As previously reported, Mr. Cole and Peter Chrisanthopoulos, senior partner-president, broadcast and programming, will be the point people on the O&M side of the alliance, joined by Ms. Pool and Ron Fredrick, senior partner-national broadcast group director from JWT (AA, Feb.17).