ADVERTISING CAR WARS MAY FOLLOW CORDIANT SALE

WPP and Bates Execs Move to Calm Multiple Auto Marketing Clients

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NEW YORK (AdAge.com) -- The acquisition of Bates Worldwide by WPP Group brings a host of advertising account conflicts involving U.S., European and Asian automakers
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to the London-based ad company whose largest global client is Ford Motor Co.

Barcelona trip
WPP's acquisition of Bates, which was approved last week by the shareholders of the agency network's previous parent, Cordiant Communications Group, becomes official Aug. 1. After WPP made its bid for Bates in the spring, WPP's Group Chief Executive Martin Sorrell visited Barcelona in mid-June to persuade Volkswagen's Spanish carmaker, SEAT, to keep its pan-European account at Bates. Another European automaker, Mercedes-Benz, works with Bates in Latin America.

In Asia, Bates executives said they are reassuring their client in China, Shanghai General Motors, a joint-venture between General Motors Corp. and a local Chinese company, that Bates will operate independently from the three WPP networks that handle Ford's business. In Korea, Bates owns 80% of Hyundai's former in-house agency, Diamond Bates, whose billings are about 50% derived from Hyundai.

Ford: No comment
A spokeswoman for Ford Motor Co. said it would be inappropriate to comment on the Cordiant deal. Ford recently agreed to a single worldwide contract with WPP, switching from regional agency contracts to WPP networks J. Walter Thompson Co., Young & Rubicam and Ogilvy & Mather Worldwide. In exchange, Ford said WPP's 130 companies could gain even more Ford business.

In 2000, albeit in a different scenario, a Ford spokeswoman had said Y&R could lose all its business worldwide if Publicis Groupe was to acquire the agency network. She said Ford had an expectation that its agencies are exclusive to Ford and if that changed, senior management would have to review the matter. Y&R was later acquired by WPP.

In the U.S., Bates will be merged into J. Walter Thompson. JWT executives have been told they cannot even circulate internal memos about the integration until Aug. 1, but one executive said that privately they are already discussing office space and other plans, anticipating that Bates staff with client relationships will follow those clients to JWT. One of Bates' biggest clients, Pfizer, is also a long-standing JWT client.

Bates and Red Cell
In Europe and Asia, Bates is expected to be aligned or merged with Red Cell, the only WPP network that doesn't handle Ford. Red Cell's largest client is Fiat's Alfa Romeo, an arrangement that dates back to the founding of Red Cell as Conquest Europe. Under an earlier plan, Bates would have merged with Y&R in Asia but agency executives said that scenario could create problems with Ford. In addition, Y&R operates in Asia as Dentsu, Young & Rubicam, with Dentsu a major shareholder.

To what extent mergers between Red Cell and Bates will take place remains unclear, given Red Cell's attempts to position itself as a network with a limited number of highly creative, cutting-edge agencies capable of developing multinational solutions for clients. Bates Worldwide, according to its Web site, has 180 offices in 80 countries. And with few international clients, Bates offices have had to develop mostly local client bases to survive.

Bates Brazil
Bates agencies in different countries are likely to have different fates. In Brazil, where Newcomm Bates says its business is 90% local, speculation is rampant that Newcomm Bates' head, Roberto Justus, could put his agency back into Y&R, which at one time was called Fischer, Justus, Young & Rubicam.

When the deal is completed, Publicis is entitled to buy Cordiant's 25% stake in Zenith Optimedia Group, already 75% owned by Publicis, for about $120 million. Mr. Sorrell and Publicis Chairman-CEO Maurice Levy must also negotiate ownership of four other Zenith offices that are 100% Bates-owned. In a sign that nothing is likely to happen quickly, Zenith's chairman, John Perriss, left Friday for a week of fly-fishing in Ireland.

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Jean Halliday, Normandy Madden, Emma Hall and Claudia Penteado contributed to this report.

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