The issue of conflicts is prominently in the news these days as the intense-and intensely paranoid-rivalry between Coca-Cola Co. and PepsiCo spills over to the agency holding companies that work for them. Even from a distance, the enmity is evident. At close range, it's an ugly soap opera, filled with bitter accusations about ethics, loyalty and business practices.
The background, for those just joining us: Interpublic Group of Cos.' acquisition of True North Communications put Pepsi and Coke under the same holding company roof. Interpublic tried to keep both clients, even committing to a penalty fee if it were to drop one. Pepsi ultimately decided it couldn't live with the conflict. It fired Interpublic and moved the business to Omnicom Group, which already handles the bulk of Pepsi's ad assignments. Coke will reward Interpublic with more work, even as it hedges its bet by adding WPP Group to its holding company roster. There was, briefly, a lawsuit, Interpublic v. Omnicom. Then it was gone. The rancor remains.
A valid argument has been made by some of the agency world's biggest names that conflicts don't-or, more accurately, can't-matter in a consolidated industry. The agency business is increasingly controlled by, generously, half-a-dozen companies-and, realistically, by just three. Marketers of scale that want to keep their options open need to be more flexible about conflicts.
Also working in favor of looser conflict policies is that one of the main arguments used by those who don't tolerate conflicts-that proprietary plans and information will be leaked across agencies in the same organization-is complete nonsense. Anyone who knows the agency business knows sibling agencies are usually more fiercely competitive with each other than they are with agencies outside the family. To the chagrin of their managers, most agencies find it hard enough merely to get their Chicago and New York offices to play nicely.
But emotion often trumps logic. And for certain clients in certain categories, conflicts still matter on an emotional level-which means they still matter, period. Whether a client makes a decision to move an account for a real reason or an imagined one, the end result is the same.
Interpublic was the first holding company, formed in 1961 by Marion Harper Jr., who was ranked by Advertising Age as the second most influential person in advertising in the 20th Century. (Bill Bernbach-who else?-was first.) Harper's goal was to skirt conflicts and widen growth opportunities ("a bold effort to clear this bottleneck," Ad Age said at the time). Two score years later, the "bottleneck" has been somewhat relieved but not cleared. And the role of the holding company is evolving in ways Harper wouldn't have envisioned. More global advertisers are consolidating their marketing assignments at one or two holding companies, taking advantage of the breadth of resources and the cost savings that come along with such moves.
Around the same time that Harper introduced the holding company, Kenneth Laird of Tatham-Laird predicted that "some advertising agencies will sell their stock to the investing public." That, he said, would be "disastrous" because agencies would become more concerned with making money than making ads. He also warned it would lead to consolidation of power at big agencies. Laird saw public ownership as inevitable, but his view was dismissed a few weeks later by a top industry accountant as "academic."
All of this has little to do with the desirability of admen as in-laws. But if you page through Ad Age issues from 1961, you'll find an industry obsessed with its public image-rightly so. According to a survey done at the time, suburban professionals didn't want "admen" as neighbors or in-laws. Ad execs, the survey found, were seen as "heavy drinkers, superficial, glib and opportunistic."
This has no connection to account conflicts. But it says a lot about how much the world has changed in 40 years, or how little.