Spa Advertising, the last purely Thai-owned advertising agency, is negotiating with two major marketing and communications agencies in England and Japan with a view to a possible merger.

Spa Advertising is the first subsidiary of Osotspa, a 115-year-old consumer-product company owned by the Osathanugrah family, which is also set to merge with a foreign partner. Until now, the group has welcomed foreign partnership only in its manufacturing businesses.

As the last purely Thai agency, Spa Advertising has seen all other Thai agencies bend to increasing domestic and global competition and merge with foreign partners - among them Damask, Next, Creative Juice and Far East Advertising.

Some of the names have disappeared altogether, while many formerly Thai-owned agencies are now in the hands of major communications groups from Europe, including Omnicom, WPP Group, Publicis and Inter Public Group (IPG).

Spa Advertising chairman and CEO Kitti Chambundabongse

said negotiations with his

company's prospective partners would be finalised within two months.

He said Spa Advertising originally split from the advertising department of Osotspa about 25 years ago to handle marketing communications and brand building activities for major Osotspa products.

The agency now handles many Osotspa products, including the M150 and Shark energy drinks, 12-Plus skincare products, Banner Protene and M-Sport, with annual billings of between Bt400 million and Bt500 million, accounting for 30 per cent of the agency's client portfolio.

"We [Spa Advertising] are at a turning point. Although we have the ability as a local agency to build our brand to a successful level and sustain it, my intention for the long-term future is to build something more secure for the shareholders and staff," Kitti said.

"Nobody can escape globalisation. What I want to do is to build strength for new

generations and the future business of Spa Advertising, and most of this will come from multinational clients."

He said Spa Advertising had had a few multinational clients, including Nokia, Toshiba and Sun Micro Systems, which generated less than 5 per cent of its billings.

However, last year it lost the major Nokia account, worth about Bt450 million, when it moved to MyShare, a media buying and planning specialist of the WPP Group. The company's total billings dropped almost Bt600 million last year.

Kitti said that in negotiations with the candidate partners, his company was offering up to a 51-per-cent stake in Spa Advertising but insisting that control should remain local. After the merger, the name Spa will appear in front of the new company name.

"I want to see multinational opportunities and new business substance under the partnership. They [the new partners] should offer true multinational accounts, clients that are big spenders in their business categories. Those accounts should be substantial, with total billings of more than Bt100 million," Kitti said.

Spa Advertising and its marketing communications affiliates in the Future Communications Group recently signed a partnership agreement with Enjaz, a creative boutique from Dubai, in the United Arab Emirates.

Under this agreement, Enjaz is able to use local facilities of Spa Advertising and its affiliated agencies, while the Thai agency can use Enjaz's connections in 22 Middle Eastern markets.

Spa has also formed a joint venture with Far East Advertising and a local partner in Burma to set up a branding and marketing communications agency named Myanmar Spa, based in Rangoon.

"Despite all this negotiation for a possible merger, we are still moving forward and expanding business opportunities as usual," Kitti said, adding that he would spend the next two years developing a new generation of leaders for the agency.

As well as developing local human capital, the company is also recruiting foreign staff in other business areas, as well as taking part in staff-exchange programmes with foreign partners.

Kwanchai Rungfapaisarn

The Nation