Sibling ad agencies not averse to rival pitch

David Walden is more than happy to take on other Omnicom agencies.

The shared ownership of this country's major advertising agencies does not appear stop them from taking each other on in the marketplace - or so say agency bosses.

For the concentration of agencies into the hands of the world's four biggest advertising powers continued last month with the sale of MTC (formerly Meares Taine Creative) to Ogilvy New Zealand.

MTC, with its staff of 20 and estimated annual billings of $35 million, was seen by many as the last "significantly sized" local independent.

"Meares Taine finally going to Ogilvy was one of the last of the major so-called independents that were left. Everybody else is pretty much swallowed up," says Colenso BBDO chief executive Roger MacDonnell.

While there are a few exceptions - such as Auckland-based agency Consortium, which bucked the trend by opening a New York office this year - the shift has been rapid, is creating new dynamics and looks like it's here to stay.

MacDonnell says the trend encourages agencies to work to "world's best practice" and is part of a wider global push.

"The world has gone global and advertising agencies are no different," he says.

"These days you've really got to be part of an international chain. You can only get to a certain size and status without it."

However, TBWA\Whybin chief executive David Walden was adamant that even though his agency had a shared parentage through Omnicom with Colenso BBDO and DBB it unashamedly vied for business with them.

There are five big international advertising powers: Omnicom, Interpublic Group, WPP, Publicis Groupe and, finally, Dentsu, which started in Japan but does not have a big presence here.

Interpublic Group's reach here includes global names McCann, FCB, Lowe. WPP's includes Ogilvy, JWT and Y&R. Saatchi & Saatchi is a subsidiary of France's Publicis Groupe, which is also aligned with Publicis Mojo.

The arrangements vary, with some of the New Zealand agencies fully owned by an overseas company while others are part-owned.

The trend started here after industry ownership deregulation in the 1980s: previously offshore companies could not have a majority stake in New Zealand advertising agencies.

Fred Dobbs, former chairman of Dobbs-Wiggins McCann-Erickson, pushed for deregulation of agency ownership from the 1970s, in what he describes as a "very controversial" stance at the time.

Dobbs, who is now retired and does occasional consulting work, said he spotted the trend for advertising globalisation early while on business overseas.

"It was people like Coca-Cola and General Motors - international accounts wanted consistency in whatever country they were in."

Dobbs said his agency sold "to the extent the law allowed us" - 49 per cent - in the 1970s, then completed the sale after the law changed.

The buy-up extends to other communications avenues, including direct marketing and public relations companies.

The move provides more consistency for global brands and allows holding companies to get accounts for competing clients without a conflict of interest.

TBWA\Whybin does work for the Radio Network and Colenso BBDO for CanWest RadioWorks.

However, Jeremy Johnston, managing director of wholly Kiwi-owned Sugar Advertising, believes independent agencies are having a resurgence.

"What an agency delivers is ideas and ideas come from people - and you don't have to be a multinational monolith to generate great ideas," says Johnston.

"In fact, many of those structures make it much harder for good thinking to survive and prosper."

Sugar, with its 14 staff and $13 million annual billings, this month starts work as Honda NZ's communications partner.

The agency's small size was reportedly one of the reasons Honda moved its business from another agency, Generator, after it merged with its bigger sibling Y&R.

TBWA\Whybin's Walden, also president of the Communications Agencies Association of NZ (CAANZ), says the overseas holding companies are creating a new dynamic in advertising by having direct dialogue with large corporate clients.

Deals are starting to emerge where the large advertising parents win global clients, then decide which in its family will service the business.

"We have always been kind of masters of our own destiny to a degree," says Walden.

"But now we are finding that the strength of your holding company is a new kind of element in the great mix. It's like a sophisticated game of monopoly."

Walden has yet to notice big changes from the new dynamic.

"It will ripple down into this market by way of an agency group being aligned to a large international client," he says.

"All we would see is business arrive having been aligned internationally."

Walden says Omnicom, with its US$10.5 billion revenue last year, encourages its companies to compete for business.

"The last thing I'm going to do is treat Colenso or DDB as anything other than a competitor - I want their business."


GLOBAL REACH

Four companies have an interest in most of New Zealand's large advertising agencies:

* Omnicom's reach includes TBWA\Whybin, Colenso BBDO and DDB.

* WPP's includes JWT, Ogilvy and Y&R.

* Publicis Groupe's includes Saatchi & Saatchi and Publicis Mojo

* Interpublic Group's includes McCann, FCB, Lowe. A fifth global power, Dentsu, started in Japan and expanded to Europe, the US and the Middle East.

Correction

This is a corrected version of the story which wrongly suggested that Blackwood King Adpartners was foreign owned. The agency is wholly New Zealand owned and represents Leo Burnett here.