Dutch-based electronics giant Philips is in the process of
consolidating its PR agency relationships in a bid to increase the
consistency of its brand communications across key markets. Porter
Novelli International, encompassing hi-tech specialist Brodeur
Worldwide, has been appointed to handle PR in ten European
After a similar review on the other side of the Atlantic last year,
Philips hired Brodeur Porter Novelli and Ketchum PR Worldwide in the US.
The moves reflect a desire by Philips to reduce the number of its
agencies: in 1997 it employed 80 agencies on either a project or
Philips is by no means the only major corporation to see advantages in
consolidation. On 13 January this year, software company Oracle
announced it had selected Avalanche PR as its global PR firm to operate
in 55 countries.
Avalanche is a joint venture created especially to handle the Oracle
account and comprises three PR consultancies: independent hi-tech
specialist Cunningham Communication and WPP-owned businesses Hill and
Knowlton and Ogilvy PR Worldwide.
Technology businesses have recently been leading the way in
consolidating their PR into regional agencies, although Hill and
Knowlton has also been retained by Kellogg as its exclusive agency in
European, Middle East and African markets.
Brodeur A Plus managing director Mike Copland believes technology
companies are taking the lead on consolidation because their move into
the high street and the volatility of their industry is forcing them to
reassess their messages. He says: ’Their messages can be quite complex
and the issues and technology that underline their companies change
quite a lot. They need to find consistent messages to bind those changes
But Hill and Knowlton president and chief executive for Europe, the
Middle East and Africa Paul Taaffe argues that while clients are
increasingly looking to exploit the advantages of working with networks
internationally, none of the main agency players has the resources yet
to provide uniform service quality across the globe.
’There is no network in the world that has the best agency in every
country in the world,’ says Taaffe.
He adds: ’Consolidation is tending to mean fewer agencies rather than a
single agency. It gives clients buying power, more information-sharing
and the opportunity for longer term relationships.’
This is the case with Philips, which will retain key local agencies in
addition to Porter Novelli and Brodeur. Bell Pottinger Good Relations,
for example, will continue to act for Philips in the UK.
The globalisation of business is a factor driving the consolidation of
agency relationships by clients. But it is not the only factor.
’Consolidation highlights that clients are starting to analyse more
closely their exact needs from PR and are being more objectives-led and
strategically focused,’ says Text 100 director mainland Europe Carlo
’It’s something that is more of a business trend than an economic one.
Clients want a clearer structure in terms of agency partnerships. They
want it to be more direct and transparent.’
Consolidation is happening on a national as well as regional or global
level. In 1997, ICL used 14 agencies in the UK. Given that this was at a
time when it was refocusing its business away from hardware sales into
the provision of IT systems and solutions, there was concern that there
could be confusion in the marketplace with so many agencies working for
different business units.
This year, ICL has cut the number of agencies to three. Firefly has been
given the corporate brief for the whole of ICL while Grayling and
Financial Dynamics have specialist roles (respectively, retail systems
and issues related to ICL’s proposed flotation in two years time).
’The company has changed but our image has lagged somewhat behind
reality,’ says ICL head of media and PR Neil Pattie. ’To put a truer
picture across we need to control our messages better. It’s imperative
that our PR messages are consistent’
Although ICL’s approach is primarily about ensuring message consistency
there are also budgetary implications in what it has done. Pattie
insists that the reduction in agencies will save pounds 200,000 a
There are also other efficiencies to be made. ’If you’ve got ten
agencies, you’ve got ten learning curves,’ says Firefly director Mark
Mellor. ’And each agency is ultimately trying to get as much of the
client’s business as it can.’
The nature of communications today, and in particular the speed with
which information can be disseminated on the internet, has led many
clients to strengthen relationships with agencies as a means of
safeguarding their own reputations. Pressures on management time make it
impossible for clients to do this with a large number of agencies.
Therefore the likelihood is that we will see further consolidation in
the future. This need not mean, however, that smaller agencies will
always lose out. Some clients may choose to follow the approach of IBM,
which has Ogilvy PR Worldwide acting as a lead agency which co-ordinates
the work of ’best of breed’ agencies in local markets.
Copland says that consolidation in whatever form will grow because faced
with ’more dynamic and volatile’ markets companies increasingly seek to
bring a more ’holistic and harmonious’ approach to bear on their
The chances are that this will favour larger agencies and those that are
part of a significant network.