Mr. Scheele and his team "may not have followed procedures when they arrived at the conclusion that we need [WPP as] a single-source supplier," a Ford spokesman said. A WPP spokesman referred calls to Ford.
Ford's original deal with WPP was the result of the automaker's cost-cutting moves. WPP agencies already handle the bulk of Ford brands globally, with U.S. annual billings totaling more than $1 billion. WPP's shares slumped amid news reports of the controversy, falling at midweek to $25.93 in the U.S., its lowest point in nearly five years before rebounding.
Mr. Scheele's son, James, is an account manager at WPP's Y&R, New York, a fact he told Ford officials a year ago.
The internal debate was said to be between Mr. Scheele and David Thursfield, exec VP-global purchasing and a leading contender to succeed Mr. Scheele. Mr. Scheele wrote an e-mail March 12 to some 50 Ford executives which read: "The real threat of this for our company and our leadership team is the risk of diversion and perceived dissension." The memo also said that after working closely with Mr. Thursfield for many years, "I know he would never contemplate doing anything that might compromise the company."
Following reports of the debate, Mr. Scheele rescinded his agreement with WPP and said he had formed a new team made up of senior representatives from marketing, finance and purchasing to revisit the issue of WPP as a single-source supplier.
Any Ford VP or higher can champion a single-source supplier, said insiders, but the deal must meet three criteria: provide a competitive advantage, provide a technological advantage; and bring significant cost advantages.
Ford security officials are investigating the leaking of two internal memos concerning the debate. If found, "the person will be dealt with severely," a spokesman said.
He also said he didn't believe Mr. Scheele originally intended to move ad accounts held by non-WPP shops. That includes Havas' Euro RSCG MVBMS, New York, for Volvo and independent Doner, Southfield, Mich., for Mazda North American Operations.
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