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How Sir Martin Cinched $4.5 Billion Deal for Dell Biz

WPP Chief's 'Personal Gravitas' Helped Convince Marketer That Holding Company Can Build a 1,000-plus-person Agency to Service Its Massive Marketing Account

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NEW YORK (AdAge.com) -- Since he hit the ad scene in the mid-1980s, Martin Sorrell has irked any number of managers at his agencies with his intense attention to their affairs. Now the micromanaging has paid off. Just ask Casey Jones, VP-global marketing at Dell, who said Mr. Sorrell's "commitment" was a key reason the computer maker deposited its $4.5 billion account with WPP Group last week.
Martin Sorrell
Martin Sorrell Credit: Tom Stockill

"The depth of his understanding and involvement in the operations ... worked to WPP's advantage," Mr. Jones said in an e-mail. "We asked for a commitment to innovate with us. Martin has the personal gravitas to assure that happens."

And gravitas will be needed to pull this off. Dell's requirement that WPP build a 1,000-plus-person agency to service its massive marketing account in all major disciplines is an unprecedented one in the ad business -- and it's sent shockwaves up and down Madison Avenue.

For it to work, WPP, which triumphed over Interpublic Group after a seven-month pitch, will have to contort itself like no other holding company has for a major marketer. Working with Dell means WPP will have to look past venerable agency brands such as JWT and Wunderman in the hope that building something from scratch will eliminate interagency skirmishing and facilitate truly integrated marketing. The yet-to-be-named Dell agency will have a single profit-and-loss statement that should eliminate the turf wars that often get in the way of attempts to integrate.

Potential
The reward is potentially big. Billings on the three-year contract are $4.5 billion and revenue is in the neighborhood of $150 million a year -- no small change for a company that has $12 billion in annual revenue.

But there's also tremendous risk for WPP. The hiring frenzy needed to get this agency up and running by March 1 ensures there will be disruption at some WPP agencies. You could say that's already begun. Just days after the WPP win was announced, Mitch Caplan was pulled out of WPP-owned Y&R, where he was the agency's chief marketing officer, to run the Dell transition team. Mr. Caplan had been tapped by Y&R CEO Hamish McLennan to help rebuild that troubled agency brand and it's unclear whether he'll return when the transition is complete. Situations like this, no doubt, will be common, even though WPP is sure to hire outside help.

"The holding company has to be very careful that they don't take top talent from some of their existing agencies and put it into this and have their existing clients feel that they're losing resources," said consultant Arthur Anderson.

While Mr. Jones always planned on a consolidation, there was an outside chance up until the final days of the review that the business could be divided among the two finalists and Havas' Euro RSCG, which handles Dell in Asia Pacific.

Mr. Jones declined to comment on that but, besides crediting Mr. Sorrell, he praised WPP's decision to wheel out Chief Talent Officer Mark Linaugh during the pitch -- "a brilliant move" -- as well as WPP's focus on "advanced analytics."

"We're a data company," Mr. Jones said. "WPP very much embraces basing a relationship with us on results."

Fast results
Those results will have to come fast if both sides want a long relationship -- no easy feat in a corporate world where there's always intense pressure on marketers, let alone those at companies in the midst of turnarounds such as Dell's. In recent years, CMOs have become the fruit flies of the C-suite, with average tenures of 26 months. When they leave, agency shake-ups often ensue. Which brings us to the second big risk: What happens to WPP's Dell creation if there's change at that senior level?

Right now, WPP can't afford to worry about that. After all, there's agency building to get done, an effort led by Mr. Caplan and Bob Berenson, the former Grey Global Group vice chairman. The first order of business: branding the new WPP agency. Code name Da Vinci -- selected by Dell because it was looking for the perfect mesh of an artist and a scientist -- isn't intended to stick. (Neither is Heresy, the name used by WPP during the pitch.)

Whatever it's called, the new agency -- instantly among the 30 largest marketing organizations in the world -- will be allowed to chase other accounts so long as they don't compete with Dell.

Dell's business also could provide an occasion for the company to do more deals. Said Mr. Sorrell, "If there is any need to supplement our resources in any way, through acquisitions as well as organic growth, we'll make that decision."

You can bet he will.

The consolidation trend

Dell is just one in a long line of marketers that have consolidated -- or deconsolidated -- with agency holding companies over the years. Some of the relationships have worked out and some haven't. Below is a look at how some of the more prominent pairings have fared in recent years.

Dell

  • Consolidated at Omnicom ( DDB, OMD) in April 2001 (from Lowe, BBDO).
  • Shifted creative duties to Omnicom-owned BBDO in February 2006.
  • Consolidated with WPP in December 2007, forming a new agency.

Bank of America

  • Consolidated at Interpublic in October 2002. The holding company formed an executive consortium called Flag, with the bulk of the duties handled by Draft, Initiative, Gotham, Jack Morton and R/GA.
  • Moved to Omnicom shops in August 2005.
  • Dismantled in 2007 after chief-marketing-officer change and a desire for more flexibility. Media in review. BBDO still lead agency.

Samsung Electronics

  • Consolidated at WPP (JWT, Berlin Cameron, Group M) in November 2004.
  • Moved creative and account responsibilities to Publicis Groupe's Leo Burnett just 11 months later.
  • Shifted media duties to Starcom in November 2007.

Ford

  • Chief Operating Officer Nicholas Scheele directed the company to use WPP exclusively as a "single source" for advertising in March 2003. The order, which led to speculation that all Ford brands would be forced to align with WPP, was overturned after an internal review.
  • Signed global pact with WPP in July 2003, but the deal didn't preclude the automaker from seeking advertising solutions from outside the holding company.
  • In October 2006, WPP announced the formation of Team Detroit, a joint venture of six agencies (JWT, Y&R, Wunderman, Ogilvy, Mediaedge:cia and MindShare) to focus on the Ford business.
  • Held review for Ford Focus campaign in August 2007; opted to keep the account at JWT over non-WPP shops McGarryBowen and Arnold.

7-Eleven

  • Consolidated at Omnicom in August 2005. The holding company formed FreshWorks, a virtual agency specifically designed to service the account.

Chrysler

  • Consolidated at Omnicom in November 2000. BBDO funneled work to Pentamark Worldwide, a company that focused exclusively on the carmaker's business. (Pentamark changed its name in the U.S. back to BBDO Detroit in May 2002.)

-- Ryan McConnell

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