The PR world is accustomed to seeing advertising agencies swallow
up PR agencies in multi-million pound deals.
Yet, if speculation that Sir Tim Bell’s Chime Communications is poised
to acquire ad agency HHCL and Partners proves correct, the boot next
time around will be firmly on the other foot.
But, should the deal go through, and the usual junior (PR) and senior
(ad agency) roles are reversed, most agree that it will be a good
Shareholders of HHCL, led by Rupert Howell, will cash in their chips for
up to pounds 20 million. Meanwhile the addition of an ad agency group to
Chime may help it tackle the City’s aversion to PR-led businesses and
boost the persistently low rating of its share price.
But are such marriages between PR agencies and advertising firms always
made in heaven?
Abbot Mead Vickers has acquired a veritable harem of PR outfits over the
past three years, with take-overs of agencies Freud Communications,
Fishburn Hedges and Aurelia PR, in earn-out deals which could cost the
advertising-led group over pounds 28 million.
But AMV chairman Peter Mead is in no doubt that placing PR operations
with broader marketing services groups makes sense for all
’Our group companies continue to develop relationships with each other
and to generate referrals,’ said Mead, unveiling AMV’s interim results
’The number of clients using three or more companies continues to
increase and we saw more joint company pitches as the trend towards
integrated marketing continues.’
Quentin Bell, chairman of independent PR agency The Quentin Bell
Organisation, says that PR agencies are often absorbed into ad agencies
when shareholders are faced with takeover offers which are too good to
Top PR agencies may have far smaller turnovers than ad agencies, but
will often work on far superior margins, he says, so PR agencies are
attractive to ad agencies seeking to boost their profit margins and can
justify the acquisition with arguments of synergies with their core
But Bell questions whether clients or the acquired PR agencies
necessarily benefit from the one-stop shop concept.
’Ownership by a particular company is no guarantee of quality across all
the marketing services an agency has to offer. Some clients don’t like
buying into a one-stop shop, and often think that they have more power
if they cherry pick agencies on their own,’ he adds. ’Putting all your
eggs in one basket can have its disadvantages.’
Nick Wiszowaty, managing director of Freud Communications, insists his
agency has benefited from business referrals within the AMV Group, with
many clients happy to at least have the option of a single-buy
’AMV will sell in Freud’s service if there’s an opportunity,’ he
’There have been instances in the past where we have been involved in
group pitches, where the client buys into one or two elements but not
the whole package.’
Freud has worked alongside AMV sister agencies on consumer brand
campaigns for clients including Pepsi and Volkswagen since it signed its
pounds 8.4 million earn-out deal at the end of 1994 - since adjusted to
a maximum of pounds 10 million.
But concern among some client companies about divulging marketing plans
to PR agencies connected to ad agencies who work for rivals can verge on
Wiszowaty concedes that an ad agency connection can work against, as
well as for, a sister PR agency.
’I’m sure that some companies have avoided us because we are part of
AMV,’ he says. ’But a lot of clients say that they want their agencies
to work more closely together, so it does help if agencies are linked in
PR agency acquisitions are not always based on seeking synergies with
local advertising agency partners.
Charles Barker had prospered after nearly five years of independence
following an management buyout from the now defunct Corporate
Communications Group in 1992.
But in July, it was bought by the Bozell international advertising and
marketing services group, and now finds itself a sister company to UK ad
agency Delaney Fletcher Bozell.
Nan Williams, managing director at Charles Barker, says that Bozell
believes in offering integrated advertising and PR services to clients
in the US.
Charles Barker will attempt to replicate this by working with its UK ad
agency sister company Delaney Fletcher Bozell.
’We have already won joint business with Delaney Fletcher Bozell to
handle a campaign for the Teacher Training Agency,’ says Williams.
Charles Barker also expects to be working with DFB on a number of
unspecified healthcare product campaigns in the near future.
But Quentin Bell is not convinced that the logistics of co-ordinating an
integrated marketing campaign is improved simply because agencies are
owned by the same parent company.
’Ad agencies argue that things can be co-ordinated better across
agencies that are all under the same roof - but how often are they
actually working together even if they are under the same roof?’ he