Consolidation sets in media buying industry

With Havas Advertising of France announcing the acquisition of Tempus, the British owner of CIA Media buying agency, the wave of consolidation that is sweeping the industry gathered strength. The deal, valued at an estimated $603 million, is an all cash deal and will create a media buying powerhouse with operations in 29 countries. WPP, the world's largest advertising and marketing group, headed by Sir Martin Sorrell, has a 22 per cent stake in Tempus.

Earlier Publicis and Cordiant Communications had announced their intention to combine under a single umbrella the buying power of their Zenith Media and Optimedia subsidiaries. The former is a 50-50 venture between Publicis and Cordiant, while the latter is a wholly-owned subsidiary of Publicis.

Publicis will control 75 per cent of the new merged entity while Cordiant will take 25 per cent along with board representation. The deal, expected to close in September, will create the world's fourth-largest media buying group with combined annual billings of E21 billion ($18.4 billion).

The consolidation in the media buying industry is a response to the wave of mergers that swept the television broadcasting industry. This resulted in the creation of big media owners who sought to translate their growing size into higher advertising rates. In response to this, owners of media buying agencies have been seeking to merge their operations enabling them to offer clients better advertising rates through their combined buying power.

With the announcement of these mergers, Carat, the well known British media buying networks, remained one of the few independent networks in the industry.