Global Expansion: Specialists are key to McCann domination - Last week the Ludgate Group was bought by global advertising giant McCann-Erickson as part of a spending strategy to buy up specialist firms to build a top-ranking PR network.

As you read this Larry Weber, chairman of McCann-Erickson’s public relations arm, is scouring the globe armed with a long list of PR firms and a fat cheque book.

As you read this Larry Weber, chairman of McCann-Erickson’s public

relations arm, is scouring the globe armed with a long list of PR firms

and a fat cheque book.



His mission is to build the advertising giant a top five worldwide PR

network by the year 2001. ’Top three’, he adds hastily, ’in the key

markets of the US, UK, Germany, France, Australia, Japan and Latin

America.’



His method is to buy the ’absolute best’ agencies in each area.

Healthcare, consumer, public affairs, strategic consultants, hi-tech and

publicity - no sector will escape Weber’s scrutiny.



The buying frenzy began in earnest last week when McCann snapped up

corporate and financial agency the Ludgate Group in a deal estimated to

be worth around #10 million.



The agency has become part of Weber’s hi-tech group Weber PR Worldwide,

which was bought by McCann at the end of last year and is the building

block of its PR empire.



Under the agreement Ludgate chief executive Tim Trotter becomes deputy

chairman of Weber PR, reporting to Weber and McCann chief executive John

Dooner.



McCann already has a UK PR subsidiary. McCann-Erickson PR has five

offices, employs just under 40 people and recorded a fee income of

#815,600 in 1995.



However, despite the declaration in PR Week last year by McCann CEO

Brian Child that he knew of many PR people ’who would kill to get their

hands on the McCann-Erickson name,’ a re-branding exercise seems

unlikely. Both Trotter and Weber insist that Ludgate will retain its own

identity at least ’for the foreseeable future.’



’McCann-Erickson is a very strong brand name in advertising but not in

PR,’ explains Weber. ’Ludgate has a strong reputation for financial PR,

we want to build on that.’



The plan is to grow both Ludgate and Weber side by side through a

combination of acquisitions and organic growth. This strategy will make

Ludgate a truly global player. The company already has offices in New

York and Hong Kong and a network of 22 affiliates in 20 countries.



With McCann’s capital it is planning to grow its US investor relations

capabilities. It is also aiming to expand its financial PR services from

its Hong Kong office into Singapore, Malaysia, Thailand and the

Philippines and stretch further into Europe.



Weber, meanwhile, will grow his Massachusetts-based hi-tech business

along the same lines but continue on the acquisition trail for more

specialists.



Healthcare could be the next on the list.



Unlike the communications group Omnicom, which keeps its businesses

separate, Weber and Trotter have not ruled out combining their efforts

on the occasional pitch. ’We will grow side by side and have areas of

cross fertilisation,’ explains Ludgate chief executive David Simpson.

’We could pitch together,’ he added. ’For example if a large financial

services company was looking for financial PR and product PR in

different countries.’



Tie-ups between Ludgate and McCann’s main advertising business, which

has billings of $8 billion and operations in 110 countries, are

unlikely.



’Advertising and financial PR personnel PR are very different beasts,’

explains Simpson. Although he is hoping the Ludgate name will become

’better known’ among McCann clients Coca-Cola, General Motors, Nestle

and Unilever.



To Weber, the Ludgate deal is just the start. ’I want to build what B-M

was to this century,’ he pledged in an interview last December.



Weber predicts the four or five global PR firms like B-M, Edelman and

Fleishman-Hillard will grow to seven or eight. The gap between these

large companies and the mid-range and niche agencies will widen. He

wants Weber PR to be up there pitching with the big boys. ’There is a

huge opportunity in the PR market to create another global brand,’ he

explains.



Agencies on Weber’s list are not the biggest, but are niche outfits.



’Over the last five years there has been a growth of entrepreneurial PR

companies like Ludgate,’ he says. ’I want to grab them and manage them

into one.’



Also high on the agenda is ’interactive abilities’. Weber PR’s USP will

be its use of technology with, for example, virtual press rooms and

CD-ROM annual reports. Its existing strapline ’The agency for the

information technology’ may be adopted by other companies within the

group.



Media analyst Lorna Tilbian sees a promising future. ’McCann-Erickson is

catching up with Omnicom, which has Gavin Anderson and WPP, which has

Hill and Knowlton,’ she says. ’The breakaway from Shandwick Consultants

to form the Hogarth Partnership is proof the PR market is pretty

buoyant,’ adds Tilbian. ’McCanns is buying at the right time.’



Weber has set himself ’quarters, not years’ to achieve his goal of

making Weber PR a top global network. If he does succeed it may cost him

his own job according to a promise he made last December: ’I’ve told

people around here the second I see it hit number one, wherever I am in

the world, I’ll stop working.’ Fighting talk.



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