Unbundled Media and the Plight of Multinational Agency Networks

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London is a small ad market relative to New York, but with outsize importance. Many of its innovations, like many of its
Scott Donaton, editor of 'Advertising Age.'

best people, eventually earn a tryout on this side of the Atlantic.

Given that, and given the general malaise blanketing the marketing business, U.S. ad execs would be well advised to tune in two conversations now dominating table talk among their U.K. counterparts.

The first concerns the strategic vacuum left at creative agencies by the unbundling of media, a trend imported to the States a number of years after it was common in Europe.

Networks as distributors
The second centers on the willingness of some major marketers -- including Coca-Cola Co., Diageo, Unilever and Vodafone -- to view multinational agency networks primarily as distribution systems for others' ideas. (The best recent example is Coke, which still relies mainly on McCann-Erickson to distribute its work globally but turned to Berlin Cameron/Red Cell for its new Classic campaign and has also asked London's Mother to contribute ideas for its flagship brand.)

Boutiques and creatively oriented midsize networks that don't have 200 dots on the map ( BBH, Fallon, Red Cell, Wieden) are particularly fond of advancing this argument, seeing in it juicy opportunity and validation for their models. But even those who run the European operations of large agency networks concede the threat, and that their companies' need for growth hampers their ability to resist it by refusing such assignments.

Sorrell is right
A series of meetings earlier this month with leading U.K. ad executives revealed the extent to which this tight-knit community is focused on the same agenda items. Among the things on which everyone seems to agree: that Bartle Bogle Hegarty and Mother are the agencies to beat; that Martin Sorrell's prediction of a 2004 turnaround was correct; and that Unilever is one of the brightest clients in the business.

It's also clear that the London market's leading players are all engaged in the debate over whether media planning needs to return to creative agencies. No one predicts a complete reversal to the full-service agency concept, since few question the wisdom of keeping buying separate. But in allowing planning to follow buying out the door, agency executives now admit they lost an important role developing communications strategies for their clients.

Unbundling has left a hole
"Unplugging planning has left a hole in agencies," said William Eccleshare, chairman-CEO of Europe for Young & Rubicam. He, and others, believe many creative agencies will re-establish internal planning operations.

"Every agency in town is talking about how you get media back in," said Nigel Bogle, CEO of BBH. "The buying of media will become a price-based exercise, and media planning is going to have to reinvent itself so it gets back on its own pedestal."

George Michaelides of Michaelides & Bednash, which was originally established as a media strategy shop, appreciates the bind agencies are in but believes their squeezed profits make it economically unfeasible to introduce a new layer of staffing.

Debate happening here
Although media unbundling is still relatively new in the U.S., there are already signs the debate over planning's return will migrate here. DDB's Keith Reinhard was among the agency chieftains who fiercely opposed the separation of planning. Starcom's Renetta McCann mentioned reunification in a speech last fall, which prompted Universal McCann's Robin Kent to note that his media agency "is there right now. ... And it has placed us at a vantage point."

Those seeking an early line on how these issues will work themselves out would be well advised to keep the line to London open.

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