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A Royal Mail spokesperson confirmed that the competing agencies -- Grey Worldwide London, M&C Saatchi and J Walter Thompson --

had been informed that they were no longer in contention for the account.

However, he said that AMV had not yet been officially appointed and was dependent on successfully completing contract negotiations.

"We are solely in talks with the Omnicom Group. We have entered commercial negotiations with them so it doesn't mean that they will be definitely signed, it depends on how the negotiations go," the spokesman said.

The contract to the account will initially be for three years.

AMV BBDO, which presented jointly with direct shop Proximity London and design agency Wolff Olins, fought off competition from Grey and below-the-line sister agency Joshua, M&C Saatchi, Saatchi Village and Lida; and J Walter Thompson, OgilvyOne and Landor.

Incumbent Bates UK failed to make the agency shortlist to re-pitch for the business, adding to its woes.

Royal Mail launched the review process in the last week in February, examining more than 30 of its agency contracts, with the aim of reducing the number of agencies on its roster by developing a more integrated marketing approach.

It has cut its overall advertising and marketing budget from £80m in 2002 to between £50m and £60m this year.

The only part of the Royal Mail advertising and marketing business not affected is the media planning and buying account, which is held by Carat.

The account excludes contracts for the Post Office and Parcelforce Worldwide.

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