Word: omnicom
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Dates: during 1986-1986
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...industry for weeks. The first jolt was the three-way agreement in April to merge the sixth largest U.S. agency, BBDO International, with Doyle Dane Bernbach Group (No. 12) and Needham Harper Worldwide (No. 16). Their combined annual billings of $5 billion made the new agency, now called Omnicom Group, the world's biggest -- for a moment anyway. The commotion reached another peak two weeks later, when Britain's acquisitive Saatchi & Saatchi agreed to buy Ted Bates Worldwide, the third ranking U.S. agency, to create yet another world's largest ad group, this time with billings of $7.5 billion...
...passing loud and painful judgment on the results. Their verdict so far: bigger is not necessarily better. An unprecedented parade of coveted clients has quit the two supergroups for smaller agencies. One such advertiser is RJR Nabisco, which took away $32 million in accounts (example: Fleischmann's margarine) from Omnicom and $96 million from Saatchi & Saatchi/Ted Bates. Declared RJR Nabisco Chairman J. Tylee Wilson, speaking at an advertising convention two weeks ago in Virginia: "The wave of mergers has benefited the shareholders and managements of the agencies, but I'm the client. I'm selfish. Show me how the mergers...
...told, Omnicom has lost more than $100 million in billings from the flight of customers, which include Sears, IBM and Pillsbury. The damages at Saatchi & Saatchi/Ted Bates have totaled more than $300 million; among the clients who canceled accounts were Colgate-Palmolive, Procter & Gamble and Warner-Lambert. While both agencies claim that they can absorb those losses without severe stress, the exodus of blue-chip clients has quickly soured Madison Avenue's merger mood...
...executive suite at Omnicom, where former BBDO Chairman Allen Rosenshine is in charge, has been comparatively tranquil. "It seems to be working," observes Harry Paster, executive vice president of the American Association of Advertising Agencies. "They have added some strengths to each agency that they didn't have individually." But Omnicom has a worrisome growing pain: the refusal of some advertisers to deal with an agency that handles any archrival products. The merger of three agencies brought together under one roof many combinations of fiercely competitive consumer goods. Pillsbury, for example, which had cake and frosting accounts with Omnicom, withdrew...
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