Agency awaits outcome of hardware bid

THE Brand Agency stands to add $10 million to its total revenue if Wesfarmers is successful in its bid for the BBC Hardware chain.

If successful, Wesfarmers’ $2.4 billion bid for Howard Smith will deliver the group a hardware retail network of more than 270 stores across Australia and New Zealand.

The Brand Agency currently manages the advertising account for Bunnings in WA, South Australia and the Northern Territory, with its Melbourne office looking after the business on the east coast.

It’s expected the BBC Hardware chain will be rebadged Bunnings in all states except NSW, where BBC Hardware has a stronger brand identity than Bunnings.

Not only would this deal significantly bulk up the Bunnings account for both of The Brand Agency’s offices, it also could add the BBC Hardware account to its client list.

The Brand Agency managing director Ken James said he expected the agency would attract significant new business if the deal with Howard Smith bears out.

“I think it’s an expectation,” Mr James said.

“We’re working on strategic ideas for the amalgamation of the two groups.

“It’ll probably grow the (Bunnings) account by about $10 million.

“It depends on how they (Wesfarmers) look at each state, but Bunnings is very strong in WA so why would you change that. but BBC is very strong in NSW.

“That would build our business, billed out of the Melbourne office.”

Indirectly, the new hardware heavyweight would direct much-needed dollars back into the advertising industry in WA.

Wesfarmers was a little more reluctant to comment on the possibility of new advertising dollars for The Brand Agency, maintaining that it was a little too early to comment on the finer details of the bid at this stage of negotiations.

“I haven’t had any discussions and that talk is just premature,” Wesfarmers public affairs general manager Keith Kessell said.

“If we are successful, NSW (stores) will keep the BBC (brand) but everywhere else will be rebadged Bunnings.

“Bunnings is extensively an east coast operation and they operate out of the Melbourne agency (of The Brand Agency). Clearly some synergies would involve things like advertising but I haven’t had any discussions.”

BBC currently looks after its advertising in-house, relying on the services of a design company and a small agency for any television advertising.

If the Wesfarmers bid is successful, the hardware giant is expected to generate 43 per cent of the group’s sales revenues and 36 per cent of earnings before interest and tax.

The strategy would likely be to get the BBC Hardware stores performing to the same high levels as the Bunnings chain, which produces an average of $27 million per store.