Ad agency branches out with production merger

Advertising agency Ogilvy is merging its Ponsonby agency Ogilvy Metro into its production arm, forming RedWorks with a bigger role in advertising production.

Ogilvy and its predecessors have been making ads for its clients for several years.

Now it will be making ads for the wider market - including those who are not necessarily Ogilvy clients - and competing against a plethora of small production firms.

The agency - which already makes television commercials for clients including Progressive Enterprises and Briscoes - has a background working with retail chains.

Retailers make a lot of fast turnaround advertising and the production business - making brochures, TV, radio, print and online ads - offers solid cashflow and returns.

RedWorks executive director Paul Manning said the company was aggressively leveraging resources and buying power to lower the cost of production.

Ogilvy's push into the advertising business coincides with controversial moves by TVNZ to take a bigger role in the television commercial production business. TVNZ has formed a relationship with the ad company BrandWorld.

That has led to concerns among smaller ad agencies. Advertising and media companies have been hit in the recession as spending on advertising slumps.