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Terra Lycos Mulls Consolidation with O&M

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Terra Lycos is mulling a consolidation of its advertising account with Ogilvy & Mather, a move that would strip Hill, Holliday, Connors, Cosmopulos of some $20-25 million in business, sources said.

Both Hill, Holliday and Terra Lycos said the Boston agency remains on board; a client representative denied that a consolidation or account move of any kind is in the works.

A consolidation with Ogilvy--said to be in the "consideration phase" but growing in likelihood--stems from a desire by the client to have one agency forge a single global identity for the Terra Lycos brand, sources said. The company's economic situation--on Tuesday it posted a $57 million second quarter loss--is also driving the process, sources said.

Boston's Hill, Holliday, a unit of the Interpublic Group of Cos., has handled the account of Lycos, Waltham, Mass., for a year. Lycos last October was purchased for $12.5 billion by Barcelona, Spain-based Terra Networks, which has worked with Ogilvy.

The two agencies have thus far engaged in separate campaign strategies. Hill, Holliday ads for the Lycos portal are consumer focused and tagged "Whatever you're into, dig into it deeper. On Lycos." Ogilvy efforts have been more business-oriented and tout the Terra brand. The client spends about $20 million annually through Ogilvy, per CMR.

Ogilvy executives did not return calls; an agency representative could provide no immediate information or comment.

A shootout between the two shops is possible but unlikely for several reasons, sources said. Ogilvy's entrenchment with senior management is working in its favor, and the controversy surrounding Hill, Holliday's win of Lycos hasn't endeared the agency to the new ownership in Spain.

Hill, Holliday prevailed in last year's pitch only after agency CEO Jack Connors, a Lycos board member, was given samples of speculative work submitted by rival Deutsch, New York, which had been deemed the winner by Lycos's marketing team, sources said. Connors was allowed to share the work with his shop's creative staff, which then re-worked its own Lycos submission, sources said. Deutsch protested and said it would not handle the business even if it were awarded the account.

Hill, Holliday was given the unusual second chance owing to Connors' close association with then-Lycos CEO Bob Davis, who has since joined venture group Highland Capital Partners. Davis remains vice chairman of Terra Lycos, but his greatly reduced role bodes poorly for Hill, Holliday, sources said.