NEW YORK (AdAge.com) -- Only 16 months after it set out to build a 1,000-person marketing agency to serve Dell's needs, London-based holding company WPP has folded the start-up into its Y&R Brands division.
WPP Chief Executive Martin Sorrell did not immediately respond to a request for comment, while Enfatico declined to comment beyond a statement calling the move a "strategic decision" that "responds to the current economic environment by allowing Enfatico to tap Y&R's available resources for Dell and other clients."
Ironically, the merger with Y&R comes as executives familiar with the matter say Enfatico finally managed to attract its first non-Dell client: Bedford, Mass.-based Progress Software, a maker of infrastructure software programs. (That company, which has 1,600 employees in more than 90 countries, is having its own bout of turmoil, though, with the departure of its co-founder and longtime CEO, Joseph Alsop.)
Reporting to Y&R Brands
Effective immediately, Enfatico will no longer be a stand-alone company under the WPP banner but part of the Y&R portfolio of agency brands, which include Y&R Advertising, Wunderman, Burson-Marsteller and Landor. Enfatico CEO Torrence Boone previously reported directly to Mr. Sorrell, but now will report to Y&R Brands CEO Peter Stringham.
For Y&R, the changes mean it once again will have to devote its resources to helping WPP and Dell in its quest for a dedicated ad agency. In the initial days of the venture, Mr. Sorrell called upon the expertise of Y&R, tapping its chief marketing officer, Mitch Caplan, to serve as interim head of the Dell-WPP transition team. At the same time, it could mean a lucrative opportunity for the agency to grab new work from Dell.
Did agency have a chance?
Many would say that Enfatico has been doomed from the start. Industry observers have been highly critical of the venture ever since WPP inked a $4.5 million, three-year deal with the Round Rock, Texas-based computer maker in December 2007 after a lengthy holding-company pitch. Ad types have derided everything from the agency's tedious naming process to its creative work -- or, the lack thereof. Visible executions from the shop are few and far between, including a campaign it bowed last fall for Dell in the Indian market and, more recently, its first big U.S. effort, for Dell's ultra-thin Adamo laptop.
While the WPP deal allowed Dell to whittle down its bloated roster of some 800 agencies worldwide, truth be told Enfatico has never served as a one-stop shop for all of Dell's marketing needs. The agency has always reserved the right to tap internal WPP agency resources and external ones, too -- particularly independent shop Mother -- whenever needed.
Cracks in the Enfatico structure were all too evident with the exit of the two top Dell marketers who designed the agency, Mark Jarvis and Casey Jones. The latter once told Ad Age he hoped that the Dell agency being built at WPP would come to be known as "the greatest agency in the world."
Layoffs attributed to economy
Then came the news in February that Enfatico would lay off 8% of its global staff, a move which it attributed to economic pressures on the technology sector.
A chief criticism of Enfatico has always been that it was built around a sole client, and a challenging client at that, which has drastically cut its marketing budget amidst the recession. But Enfatico has tried to grab new clients, making it to a final round of a pitch for Vonage, but earlier this week the marketer chose Omnicom Group's TBWA/Chiat/Day, New York. While picking up Progress Software is a step in the right direction, it's not exactly enough to sustain a stand-alone integrated agency.
In an internal memo to Enfatico employees announcing today's moves, Mr. Boone remained positive, saying, "This decision does not change who we are as an agency and will only strengthen our relationship with Dell and other clients." He went on to assure staffers that "in the first year since our inception, we have made incredible progress against our goals," and said there is "more news on the new-business front" and "a number of strong leads in the pipeline."
A sign of strength?
Still, it's hard to be convinced that WPP swallowing its pride to merge Enfatico -- an agency several months and millions of dollars in the making, with far-flung offices in New York, London and Singapore -- is a sign of strength.
Some observers attributed Enfatico's woes to WPP building the wrong type of agency for the project, and that Mr. Boone -- brought onboard from Digitas several months into the project -- wasn't involved from the get-go.
"Torrence [Boone] didn't have enough time. Had he been the guy at the beginning, it may have worked," said one top executive. "I just don't think they had the talent that really understood the high velocity of the transactional nature of the Dell business. They thought it was a big global branding assignment, but brand is part of that, and you have to drive the transactional part. It's a tough piece of business, and what's tough about it is to really understand is how do you drive the business and drive the brand at the same time. I think they struggled with that."