Posterscope US deal with Clear Channel is key to Carat ‘no profit’ arrangement with General Motors

Posterscope is Aegis Group’s out of home specialist agency which, like its rival WPP-owned Kinetic, sets out to handle all its clients’ poster spend and much else besides including increasingly popular ‘experiential’ marketing, events and the like.

Posterscope has had its problems in the US, most recently with the coming to light of fraud allegations against two former senior US executives that date back to 2008. More generally its business model (like that of Kinetic) depends on persuading big outdoor media owners to do exclusive deals, trading large amounts of inventory at a discount (including a generous commission to Posterscope). US outdoor owners have been markedly less keen to do this than those in the UK (where outdoor specialists began) and Europe.

The Carat media agency, also owned by Aegis, is now the proud holder of the $3bn General Motors global media account. To land the deal it had to promise GM global CMO Joel Ewanick that it would work on a cost-only basis for the first two years of what is believed to be a five-year contract.

Aegis says: ‘While the nature of our contract with General Motors (GM), or any other client, remains confidential, it is totally inaccurate to describe our contract with GM as a ‘no profit’ or ‘cost-only’ contract.’

But Aegis-owned Posterscope is under no such obligation even though it is set to handle GM’s outdoor business in the States. GM is one of the biggest US outdoor advertisers, probably the biggest if its huge dealer network comes into the equation. But to make this part of the GM deal Posterscope needed to sign up a big US outdoor owner.

Which it is believed to have done in the shape of Clear Channel, itself the biggest player in its field in the US. In January Clear Channel appointed former ad agency veteran William Eccleshare (pictured) as its global CEO. Eccleshare, a Brit, began his career at JWT London and was a senior European executive at BBDO before being appointed to run Clear Channel’s business outside America in 2009. Now he’s running the whole show.

Eccleshare is well aware of the benefits that a big outdoor specialist such as Posterscope can bring in terms of big volume deals and, as we said earlier, they don’t come much bigger in outdoor than GM. Presumably he has also driven a hard bargain on GM’s discount, but discount there will be. Posterscope’s commission is probably only known to Posterscope, Carat and, ultimately. Aegis.

And it’s certain that the potential benefits of such a deal would have been part of Aegis’s thinking when it agreed the cost-only deal for two years with GM. The contract may indeed be for five years but there will be a break clause, most likely (yes, you’ve guessed it) after two years. So Aegis has to make its money somewhere.

My colleague Stuart Smith broke the story of GM’s appointment of Carat back on December 7. Yet GM boss Ewanick was still telling credulous hacks that no deal had been done at the Detroit Motor Show at the end of January.

Which suggests, among other things, that some fairly fearsome negotiating was going on between client and agency. And that part of this extended process was Posterscope lining up its no doubt lucrative deal with Clear Channel.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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    Aegis says: ‘While the nature of our contract with General Motors (GM), or any other client, remains confidential, it is totally inaccurate to describe our contract with GM as a ‘no profit’ or ‘cost-only’ contract.’