Campaign Palace, Bates merger blamed on harsh New Zealand market

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AUCKLAND -- Tough times in New Zealand's advertising industry have forced two of Auckland's largest agencies, The Campaign Palace and Bates, to merge. More than 25 jobs are expected to be lost in the merger, which follows The Campaign Palace's recent loss of the Westpac New Zealand business.

"Westpac was the catalyst, but it wasn't the reason," says Des Speakman, chairman of The Campaign Palace. "The New Zealand marketplace is far more competitive than it was 10 years ago. There are really only two agencies in this country, Saatchi and Colenso ( BBDO), which are in what I call the premier league. The rest are aggressively fighting in division one. In this country, we have watched a whole spate of new wave agencies that have not met the success that new wave agencies have had in the U.K. and Australia. Given that this market is officially in recession, there is no natural growth and margins are tightening," he said. "Whilst we can continue to operate the two agencies separately and independently, it was going to be a very long-haul struggle to get into the premier league."

Both Bates and The Campaign Palace are owned by the publicly-listed parent company Cordiant. Mr. Speakman said he had been in discussions with Bates Asia Chairman Alex Hamill about the merger for the past three years. "The difficult climate throughout the New Zealand ad industry has probably sped up the process," Mr. Hamill says.

From September 6 the merged agency will be known as The Bates Palace and will be the fifth largest agency in New Zealand and third largest in Auckland. There are no client conflicts resulting from the merger.

Copyright August 1998, Crain Communications Inc.

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