IBM GIVES O&M CONFLICT BLUES

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Last month's huge IBM Corp. win for Ogilvy & Mather isn't looking like quite the windfall it appeared to be.

In exchange for accepting Big Blue's $500 million worldwide account, O&M has lost no fewer than four clients.

The latest and largest was AT&T, as the marketer gradually shifts more than $100 million in U.S. and overseas billings to other core agencies because of what it calls "inevitable" future IBM conflicts (AA, June 13).

Earlier, O&M was forced to resign $70 million in worldwide Microsoft Corp. billings; Compaq Computer Corp.'s $40 million European account; and direct marketing projects for Hewlett-Packard Co.

O&M also dropped out as a finalist in pitches for Digital Equipment Corp.'s $90 million worldwide account and a new $40 million Microsoft image assignment.

O&M executives said they were prepared for the fallout.

"It would've been improper for us as management not to have understood there was a risk," said Rod Wright, president-CEO of O&M Direct North America, hit hardest because it won no U.S. IBM assignments.

All told, the losses represent nearly half of the new IBM billings, and mark a new phase in conflict policies as industries converge.

"The nature of the work Ogilvy was doing for us was in the area that represents the integration of computing and communications," said Dick Martin, VP-corporate advertising at AT&T. "At some point down the road, there was clearly going to be a conflict" with IBM.

IBM doesn't have a blanket policy covering agency conflicts but instead looks at each situation, a spokeswoman said.

O&M's AT&T assignments ranged from business services to international corporate ads.

AT&T will shift the assignments to its other agencies: FCB/Leber Katz Partners, N W Ayer, Young & Rubicam and McCann-Erickson Worldwide, all New York, on the ad side; and Bronner Slosberg Humphrey, Boston, and Wunderman Cato Johnson, New York, in direct marketing.

AT&T's agency contracts specifically state work for IBM or regional Bells is "grounds for dismissal," agency executives said.

But some of AT&T's other shops continue to juggle those assignments, and Mr. Martin said no hard and fast rule exists.

Bradley Johnson contributed to this story.

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