By Paul Meller. Published on October 16, 1995.

The era of bigger is always better may be ending on the European media scene, where for years, the market has been defined by large media buying groups as ad agencies banded together to match the buying clout of rival independent media buyers like Carat.

Now agencies are clawing back strategic media functions.

Ogilvy & Mather will soon announce plans to set up its own European media planning company called The Network. O&M decided to go ahead with The Network to increase efficiency and to offer better strategic services to clients like Ford Motor Co. and IBM Corp., one insider said.

The move comes on the heels of J. Walter Thompson Co. forming its Global Media Group in July.

Both WPP Group ad agencies have belonged to The Media Partnership for six years, along with Omnicom Group's BBDO Worldwide and DDB Needham Worldwide in Europe. Agency and WPP executives insisted that the new O&M and JWT units won't harm TMP, which claims 1995 billings of about $5 billion from the four agencies' clients.

"It's not going to change anything, nothing at all," said Guillaume May, Paris-based director general of TMP Europe.

Right now, these media planning agency brands don't pose any threat to TMP, but Europe's rapidly changing media scenario does raise questions about the long-term prospects for media buying groups made up of rival agencies.

"They were started entirely as defense mechanisms," said the head of one European media buying group. "The market is different now. The whole situation has changed. It seems at some juncture or other they will fall to pieces."

Europe's media buying groups started in France in the late 1980s due to the huge discounts, often in the form of kickbacks, available when media was bought in bulk as a commodity. In March 1993, the Sapin law compelled media in France to stick strictly to rate card prices and ad industry profits nosedived.

Even Carat, Europe's largest media buyer with billings of about $5.5 billion, is trying to reposition itself from cheap bulk buyer to value-added strategic media consultant.

"Of course, buying's important but there's an increasing emphasis on strategic planning and research," said Brian Jacobs, Carat's media development director. Omnicom Chairman Bruce Crawford admitted the media landscape in Europe is expected to change greatly "in the next two or three years" and as a result all agencies are evaluating their media function.

Omnicom is in the unusual position of belonging to TMP while owning a 9% stake in Carat. And Omnicom-owned TBWA Chiat/Day has a European media buying joint venture, Eurospace, with Carat.

Speculation is widespread in Europe that Omnicom wants to further develop the relationship with Carat.

"At this point, to my knowledge there are no plans to do so in Europe or the U.S., but that's not to say somewhere down the road it wouldn't happen," Mr. Crawford said.

TMP negotiates with media buyers on behalf of its four member agencies and sometimes does the buying, too. Increasingly, TMP is also doing research jointly funded by the agencies. TMP's role varies from market to market: In the U.K., TMP doesn't even exist, and in Belgium, for example, the member agencies all have their own media buying companies.

"If there is an overlap in research between us and TMP, then we've got to decide whether to keep the work with TMP or to do it ourselves," said Ron de Pear, chairman of the Global Media Group and exec VP-media at JWT Europe. "The way of the future is for advertising networks to become communications experts, rather than purely advertising experts. And this involves offering clients a consultancy service in all areas of communications strategy, not just creative strategy."

The Network was put together by David Baldwin, media manager of O&M Media Europe, but O&M hasn't yet named someone to head the London-based operation. It will be staffed by in-house O&M media planners and separate media shops O&M owns in different European markets.

Peter Townsend, Ford's new manager of advertising and communications for Europe, lunched with Mr. Baldwin on Friday but, reached at the beginning of lunch, said he hadn't heard about The Network yet.

At IBM, Joerg Peters, manager-advertising and media for IBM Europe, said: "I have seen the letter from O&M" concerning creation of The Network "and although I was happy with their existing setup, this seems to have specific relevance to IBM."

Media buying groups are still expanding. Carat, Grey's MediaCom operation and Zenith Media, the media buying arm of Saatchi & Saatchi Advertising and Bates Worldwide, have all opened U.S. offices this year.

Pat Sloan contributed to this story.
Busy partners

The Media Partnership European buying group was formed six years ago by Ogilvy & Mather, J. Walter Thompson Co. (now both owned by WPP Group) and Omnicom Group's BBDO Worldwide and DDB Needham Worldwide. Participants say nothing's changing with TMP, but:
O&M is planning its own European media planning company, The Network.
JWT in July formed its own Global Media Group.
Omnicom holds 9% of French media buying independent Carat, and there's widespread speculation Omnicom wants to further develop that relationship.

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