U.S. firm acquires BTL Group

Polish advertising agency BTL Group was acquired by U.S.-based advertising group TBWA Poland last week, creating Tequila/BTL Group, the country's second-largest direct marketing firm. The move comes in response to the increasing squeeze on Polish direct marketing firms from their multinational competitors. The decline in consumer spending in Western markets has fueled demand from international manufacturing and service companies for promotions that can reach potential consumers cheaply and effectively. Expenditure on below-the-line (BTL) or direct marketing services is on the upswing and becoming part of global, rather than local strategy, leading Polish firms to seek partners in international networks as a source of new contracts.

"We were the biggest independent (BTL) company on the Polish market and further growth seemed to depend on an alliance with a strong, international network ... the market for below-the-line services is increasingly based on global contracts with international advertising firms … " said Michał Lehmann, president of Tequila/BTL Group. "While BTL advertising in Poland is growing in importance, there is a danger that, subject to global contracts, local suppliers like ourselves will find it increasingly difficult to access those budgets. To gear Poznań-based BTL Group for the growing demand for direct marketing, Lehmann found a partner in U.S.-based advertising firm TBWA. TBWA purchased an 80% stake in BTL Group, which specializes in direct marketing and employs 43 people, merging it with its own BTL agency, Tequila. By joining TBWA, BTL Group will gain access to international contracts, giving it a chance to grow further, but will also boost the firm's know-how, said Michał Lehmann, president of Tequila/BTL Group and former president of BTL Group.

"The market in Poland is shifting at the moment, budgets have moved away from above-the-line to BTL so if you want to grow on this market you will need to be strong in BTL in the future," said Christian Lainer, chief executive officer of TBWA/Poland. "BTWA Amsterdam only generates 30% of its revenue from advertising services and 70% from BTL. The Polish market is not that advanced yet, but it's getting there very fast … in difficult economic times clients tend to put more money into direct sales-driven activities."

Lainer would not reveal the price TBWA paid for BTL Group as it depends on the performance of BTL over an "earn-out period of ... more than three years," he said, refuting local media reports of a price tag of zł. 20 million ($4.9 million). "There has been a huge shift toward marketing services in the advertising industry," said John Domas, head of France-based Euro RSCG New Europe in Poland. France-based advertising agency Havas, which owns Euro RSCG, receives close to 60% of its revenue through marketing services, Domas said. Ties with Polish BTL agencies are also important for global advertising networks, Domas said. The transformation of the Polish advertising market led Euro RSCG New Europe to purchase Dialog Galicja and Marketing House, two of Poland's largest marketing services agencies, in June 2001. Before the acquisition "Euro RSCG was a company that was written off on the market," Domas said, adding that the internal growth achieved by the firm since the acquisition means that a further acquisition could soon be on the cards.