Wednesday, April 09

The end of MARK BBDO, and what it means for the market


In one sense the news that MARK/BBDO will no longer exist as a separate entity still shocks many veterans of the industry, as does the detail of its fate; it will be brought under Proximity Prague. Proximity started life as Advis in 1993. It was the boring 'direct marketing' agency that sat quietly alongside the dominant MARK/BBDO, which introduced most Czechs to modern mass advertising. Look at the commercial register entry for Proximity. There are some well known names from the 90's: Marek Šebesťák, Pavel Kubíček, Jiří Janoušek, all shareholders alongside Petr Šec, who today retains 28% share, the rest owned by BBDO.

In another sense, it was predictable, after the fall of the other 90's giant in the Czech Republic, Leo Burnett, now just one of three agency brands sitting in the same building of Lion Communications (in reality Publicis Groupe). Nevertheless I personally did not think anything too dramatic would happen in the Czech Republic alone. Things that may make perfect sense in a small market can cause huge problems if they set a precedent for the British or French markets. "Lion" is a risky creation; try putting those three agencies together in London under one group CEO, and see what happens.

We understand that originally Omnicom planned to "merge" BBDO into DDB, which has apparently happened in Hungary, and more surprisingly in Spain and Sweden. According to some reports local DDB management resisted the merger, other reports say the BBDO staff refused the offer to work for DDB. Whatever the reason, the Plan B, merging BBDO into Proximity, seems more logical given that this merged "brand name" already exists effectively in France and Germany; it presents clients with a range of skills under one roof. In reality though, only five MARK/BBDO staff will work in the new agency.

People in this market assume that this happening because of the consolidation of the big holding companies. However there is another factor at work; the reduction of revenue from the big local clients. Some of the biggest agencies report that the big global clients (usually FMCG) now account for as little as 5% of  an agency's revenue. It was revenue from these clients that were the basis for the setting up of these agency offices in the 1990's. These clients have in turn downgraded their national marketing teams. In the 90's P&G and Unilever recruited talented young people from Czech universities and trained and developed them. That process has stopped, and there seems to be less and less Czech specific marketing carried out in such companies.

The global companies are therefore saying that the Czech consumer is not so different to the German one that he or she needs anything more than a translation of a German campaign. It is true that to some extent they have been saying this since the 90's, but the process seems to have accelerated, and presumably the companies must by now have some evidence that this approach is effective. It is up to agencies to demonstrate that a national approach to marketing brings such companies more profit.

It is possible that if Europe enters a more positive economic phase (and I am an optimist in this respect) the global companies will to some extent return with bigger local budgets; in this case the network agencies will come under pressure to rebuild their Czech offices with good people. But what if this does not happen? That suggests that the future is with locally owned agencies. Some may be affiliated to networks. The WMC-Grey model is very common in smaller markets such as in the Balkans. But it also means new potential for talented people to set up local agencies. We have not yet seen enough of this in the Czech Republic. In London we see it all the time; people rise to the top of a big agency, get frustrated, leave, and start again. The case of the Saatchi brothers is simply the most dramatic example. When clients hire an agency they simply hire a group of people. There will always be an opportunity for those with talent and courage.



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