Media agencies struggle to manage client conflicts

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for the major media agencies in 2004, conflict remains the elephant in the room. The holding companies might be reluctant to talk about it, but behind the scenes they are working hard to resolve it.

With considerably fewer genuinely global media agencies than advertising shops, and one media shop often doing the planning and buying for several of the parent company's ad agencies, the major media players are finding themselves boxed out of billions in business. Holding companies are therefore restructuring their media offerings to juggle conflict and revenue-spitting out new networks, cobbling together unaligned shops, building agencies around lone megamarketers, and trying to nudge clients to ease up on how they view their rivals.

WPP Group is developing a third network to supplement MindShare and Mediaedge:cia. Omnicom Group's OMD is considering ways to manage conflicts. Aegis Group created Vizeum out of 18 European offices and this year plans to go global. Publicis Groupe, whose main media properties are Starcom MediaVest Group and ZenithOptimedia, is launching Coca-Cola City to handle the soft drink concern's consolidated U.S. $350 million account. Other shops have satellite or regional offices to keep conflicts at bay.

"Agencies and holding companies will do anything they can to make sure that they have a shot at a new review. If it means adding a brand, they'll add a brand," said Michael Lotito, CEO of Media IQ, a strategic-media-auditing firm.

Brad Simmons, VP-media services at Unilever U.S., which was once an absolute stickler on conflicts, said agencies and marketers are now being pragmatic.

"Conflicts need to be considered on a case-by-case, category-by-category basis. A blanket mandate from a client which bars the agency from pursuing business with any company that might be considered a competitor is probably not realistic in the current environment," said Mr. Simmons, whose media partners are Initiative Media and MindShare. "Clients need to recognize that if they want to work with best-in-class companies, there may need to be some give and take." He added, though, that "Some [conflicts] are not solvable even with firewalls."

in the middle

Some marketers will share an agency with a competitor as long as they are in different offices, while others will share the same location given sufficient Chinese walls. Some companies, however, so rabidly distrust their competitors that they won't share a holding company with them. In the middle is the vast majority satisfied with regional exclusivity.

Interpublic Group of Cos. handles two car brands-General Motors Corp. at Universal McCann and Mitsubishi Motors North America at Deutsch. Though each Interpublic agency buys separately, most media dollars are lumped together so it can negotiate lower prices. Ian Beavis, senior VP-marketing at Mitsubishi Motors North America, said that while he has a problem when his media dollars help rivals get lower rates, he acknowledged no conflict concerns with Deutsch.

overlap dangers

Robin Kent, chairman-CEO of Universal McCann, said some big clients overlap but that minor conflicts don't raise any eyebrows. "It's very difficult to have a pure relationship. As companies expand into new areas and build and launch new brands, there always are dangers of overlapping."

Publicis' media agencies, meanwhile, handle both GM via GM Planworks in Detroit and Toyota Motor Sales USA's Toyota and Lexus brands, via Zenith. Deborah Wahl Meyers, manager-communications at Toyota's Toyota Division, said she trusts Zenith's firewalls.

The growing number of international media consolidations highlight that many networks work for several marketers, especially in areas such as cars and package-goods where major brands outnumber media networks. Earlier this year, Interbrew consolidated its estimated $200 million global media duties at Interpublic's Universal and Publicis' Starcom Motive. Starcom handles rival SABMiller in the U.S. but Interbrew in Europe. WPP's MindShare, for instance, handles Nestle, Kraft and Unilever in various parts of the world.

"There are always more brands than there are agencies," said Martyn Rattle, a former Carat International VP who is Vizeum's chief operating officer. "There aren't enough agencies to go around."

Linda Fidelman, president-CEO of Advice & Advisors, said forcing a media shop to split would dilute its talent pool, leverage, and investment in information technology-the chief draws. That said, "it is easier to start another network [than to get clients to loosen up on conflict policies], as silly as that sounds."

sticky situations

Executives familiar with OMD-which has major clients in automotive, soft drinks, fast food, spirits, insurance and computers-said the network itself is wrestling with how to manage conflicts. Even though OMD cannot pursue many clients, Omnicom could still profit from sticky situations through PHD, with offices in North America and the U.K., or by tailoring resources around a particular client.

Though suggestions range from creating an additional network to tailoring solutions around separate companies, OMD presumably would seek only to accommodate secondary conflicts rather than ?berconflicts.

Omnicom Group, however, said it has no plans to create a third network.

WPP is mulling a shortlist of agency names, all beginning with the letter "M," for its third network. Dominic Proctor, CEO of MindShare, said WPP already owns pieces that can be rebranded for its the third network, from Total Media in Mexico to the stand-alone Maximize network in Asia, as well as European shops.

In another deal to watch, Grey Global Group's Grey Worldwide is teaming up with Naked Communications, a media-neutral creative communications agency that is one of London's hottest shops and plans its own expansion to New York and Sydney. The offshoot, Naked Ambition, already works with a couple of Grey's U.K. clients including America Online, and Grey is taking a small stake in Naked Ambition. Grey has been rumored to have an interest in taking a stake in Havas' MPG, but MPG has adamantly denied that it seeks a partner. n

contributing: claire atkinson, jean halliday

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