Analysis: Clients split over one-stop shops

British Gas, Orange and Lloyds TSB have moved their accounts into one-stop shops - OgilvyOne, Wunderman and Rapier, respectively.

So why is Capital One bringing other agencies on board, when the trend appears to be in the opposite direction?

"Capital One's model is changing and we need massive amounts of creativity and the best talent," says Justin Basini, vice president of brand marketing at Capital One Europe.

He adds that the ability to choose talent from different agencies is key. "I don't want one agency that is amazing at one thing and just okay at the rest - that isn't good enough."

Basini's roster is likely to remain small, with about five agencies, but his desire to avail of a wide skill set is a difficult one to argue down. Why then has a single-supplier route suddenly become popular?

According to Jason Foo, deputy managing director at Chemistry Communications, which is on rosters for Diageo, Unilever and Premier Foods, procurement pressures are a driving factor in clients slimming or getting rid of rosters to lower risk and costs.

Reducing the agencies a client works with means less time managing them and can produce more integrated work, says Foo.

The time-saving attractions of having just one agency was an incentive for Lloyds TSB when it moved its DM account to Rapier earlier this year. Julian Elliott, customer and marketing intelligence director at Lloyds TSB says that managing multiple agencies had become an organisational nightmare.

"If you're working with several agencies, you end up with a cottage industry inside the company, devoted simply to keeping agencies up to speed, especially as staff turnover in agencies is high," says Elliott. "You expend all your energy trying to keep up rather than progressing, as you have 10 agencies that sort of understand rather than one that really gets it."

Elliott says that he would still work with a niche market specialist, if a situation demanded it, but would discuss any such move with Rapier first.

The bigger the client, the larger an agency has to be if it is to achieve sole-agency status. When British Gas assessed DM agencies earlier this year, it went into the pitch with an open mind about whether a single agency set-up would work, aware that the huge size of its business meant the winning agency would have to have critical mass. (See cover story, page 26.)

There's no doubt that some clients, depending on size and product range, will always require more than one agency to provide their DM work. But if rosters become too long or informal, clients and agencies can suffer.

Basini says running a roster will put more pressure on his department, but adds that as long as briefs are clear, this shouldn't be a problem. If the model proves unworkable for the firm, it may move to a single-agency model.

The downside of rosters is the discipline required by the client in managing them. Unless all the agencies on a long roster work cohesively, the client may end up with diverse interpretations of their brand. Agencies who are unsure of their relationship with a client may also struggle to plan resources and staff appropriately around ad-hoc business.

But can a single agency deliver all of a client's requirements? Chris Fry, a partner at intermediary Agency Insight, says large clients tend to need a dedicated agency team of about ten people, necessitating an agency of at least 40 to 50 staff to manage the account effectively. This can rule out smaller creative hotshops.

Fry adds that clients are also reluctant for their accounts to form too big a part of an agency's business because of the risk to them should the agency go under.

The issue of running rosters versus single agencies will always be a difficult one for clients. With current pressures from procurement and other sources, it's easy to see why many are consolidating work into a single agency.

However, the trend towards consolidation from procurement and other pressures means that clients wanting to run rosters have to become more intelligent about doing so. All eyes will be on whether Capital One can pull this off.

CLIENTS WITH DM AGENCY ROSTERS
Scottish Widows - WWAV Rapp Collins, Team Spirit, Partners Andrews
Aldridge
Norwich Union - TDA, Tri-Direct, Fox Murphy, Kitcatt Nohr Alexander Shaw
BSkyB - EHS Brann, RMG Connect, Finex
Legal & General - Crayon, Teamspirit, Pepper, Omobono, WWAV Rapp
Collins, Rhythmm
CLIENTS WITH SINGLE AGENCY
Orange - Wunderman
Lloyds - TSB Rapier
AIG - WWAV Rapp Collins
Callcredit - Ashley Bolser Agency
British Gas - OgilvyOne
Oxfam - DraftFCB
RNIB - WWAV Rapp Collins.