Outdoor rivals draw up battlelines (Kinetic vs. Posterscope vs. IPM)
As Kinetic wins the Unilever account, Caitlin Fitzsimmons examines the prized ramifications for the outdoor sector.
Despite a protracted pitch process, when Unilever awarded its £40m UK outdoor planning and buying account to the WPP empire early last week, it came as little surprise.
Kinetic, which is 50% owned by WPP, is naturally happy with its win, but the decision has potentially far-reaching ramifications.
It boosts the buying scale of Kinetic, now the only serious rival to Aegis-owned Posterscope, and it leaves Concord, also owned by Aegis, with the challenge of rebuilding its business after losing more than half its billings.
As with the main media planning and buying account – which went to WPP's MindShare in November last year after 15 years with Initiative Media – industry sources suggest the decision was imposed by Unilever's global media director, Alan Rutherford, against the inclinations of the UK team.
Concord has held the Unilever account since 1993 and chairman Alan Simmons, who has a personal relationship with many senior staff on the UK side of the business, believes the decision was "straightforward politics".
"It's become obvious it was a foregone conclusion," he says.
"We couldn't win it – all we could do was compete heavily and drive down the price."
Yet Unilever denies this, saying that it was a UK ruling and that all three decision makers –Nigel Cowin, Edwin Sharpe, and Jerry Wright – were in agreement.
Industry opinion is split on whether the decision was driven by cost or by the ease of having all media under the WPP umbrella.
Simmons believes the WPP alignment was the crucial factor, but says he was under pressure to deliver huge cost cuts. He predicts buyers at Kinetic will have their work cut out.
"It will be extremely tough," he says. "Media owners will be put under immense pressure and it will be interesting to see whether they relent or resist."
Media owners suggest Unilever already pays "rock bottom prices" and there is not much leeway for further discounts – and nor do they believe that Kinetic will waste its time trying.
They believe it was more about "seamless media planning and buying" – or, as one media owner puts it, "having one butt to kick and one phone call to make to Martin Sorrell".
Kinetic, formed in June from the merger of Poster Publicity and WPP-owned Portland Outdoor, gets a huge boost with the win. Its share of the outdoor buying market rises from 34% to 38% – Posterscope is at 44%.
It is only a matter of time before Kinetic, which declined to comment for this piece, also gains £84m-worth of outdoor billings from MediaCom as part of the former Grey Global's integration into the WPP empire and global buying network Group M.
And the balance could tilt still further in favour of Kinetic if Swiss food giant Nestlé, which awarded its UK media account to MindShare as part of a global pitch in October last year, also decides to consolidate outdoor buying, currently worth about £9.7m to Concord, into WPP.
Doubts are also being raised about the future of Helix, the joint buying shop for Concord and Interpublic-owned IPM, now that Concord is under the Aegis umbrella and £40m of billings is set to disappear.
Simmons says Aegis has been "very supportive" and he is hopeful that any redundancies will be minimised by redeployment internally.
He says the £40m estimate given by Unilever is based on rate card prices and the true spend is closer to £30m.NielsenMedia Research gives the spend for the past 12 months as £37.3m.
Either way, it's a big hole and Simmons does not shy away from the fact that the next couple of years will be tough.
The plan is to run Concord as an autonomous entity from the rest of Posterscope with the remit to pick up direct appointments – such as the £3m Peugeot account won last month. Simmons also claims he has the benefit of time since Unilever is obliged to give Concord six months' notice.
There is speculation the loss of Unilever will speed up the absorption of Concord into Posterscope. Equally, the industry makes no distinction between Kinetic and Outdoor Connection, now that Kinetic has bought out PHD's stake in the business.
With IPM a distant third behind Posterscope and Kinetic, battlelines are drawn between Aegis and WPP. And with outdoor set to report its 13th consecutive quarter of revenue growth this month, they have everything to play for.