PepsiCo-FCB fight underscores need for initiative by ad industry

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This past week we have seen the ugly future of the global advertising business. And, no, I don't mean the extraordinary scenario in London, where Sir Martin Sorrell's WPP Group has had to agree, grudgingly, to acquire Tempus Group, for which it so cockily outbid Havas Advertising just two short months ago.

No, much worse occurred closer to home-in Chicago and New York. That the PepsiCo/Foote, Cone & Belding Worldwide legal dispute is being played out in this most capitalist of industries in the home of the free market is both sad and ironic.

It is worth bearing in mind as we proceed that it was Pepsi-Co's acquisition of Quaker Oats Co., Interpublic Group of Cos.' acquisition of FCB, and Pepsi-Co's subsequent decision to fire the now Interpublic-owned FCB in favor of Omnicom Group agencies, that actually precipitated this affair.

PepsiCo's behavior is breathtaking. It at the very least accepted the luring away of FCB staff with experience on Quaker and PepsiCo brands to Omnicom, and then tried to bully the agency it fired because FCB had the audacity to replace its missing PepsiCo millions with Coca-Cola Co. business. However, it's what the affair says about advertising's professional standing that is cause for concern.

I'm sorry to return to the subject, but the unhappy mess demonstrates once again the pressing need for an industrywide advertiser and agency initiative to resolve the issue of conflict.

As advertiser corporations continue to consolidate through deals such as Pepsi-Quaker, the ad industry's major holding companies will likely continue to react by acquiring other networks in order to offer multiple-choice global solutions to conflict issues.

The idea, as the agency holding companies see it, is that potentially conflicting clients can be handled in sibling agency networks. This was how Interpublic imagined that its FCB could handle PepsiCo business while its McCann-Erickson and Lowe Lintas networks worked for Coca-Cola. Clearly, Interpublic imagined wrongly.

Having been fired, however, FCB might be forgiven for thinking it would be at liberty to replace the account and the lost income as it saw fit.

PepsiCo happily will work with some of FCB's experienced former agency employees, only at a different home inside Omnicom. Working on the same principle, Coca-Cola clearly saw the attraction of working with some of FCB's experienced-and available-former beverage account employees. Wrong again.

Imagine for a moment that PepsiCo wins its legal battle. FCB is left with senior employees experienced in the water/juice/sports-drink categories who are banned from using their experience for a PepsiCo rival-even though their agency no longer handles PepsiCo brands. Meanwhile, PepsiCo is taking advantage of experienced former FCB people at rival Omnicom. When it's put like that, it all seems simple, doesn't it?

The whole affair demonstrates once more that advertising is not regarded as a profession by the corporations that employ ad agencies.

In a profession such as the law or accountancy, experience in any given sector is not just a competitive advantage, it is a prerequisite if you wish to win new business. All clients of these professions know and accept this-more, they value and need it. They often happily sit on the same client lists as several of their deadly rivals, but not at ad agencies. Why?

I don't know that there is a satisfactory answer to this question. Marketing strategy is not more sensitive than legal or financial information. But advertising is a peculiarly emotive subject, and quintessentially public. Its end product works on an irrational level, and its creative process is shrouded in mystique, often deliberately so.

Now is a time for a rational, businesslike solution to this emotional problem. It is vital that addressing the issue is taken seriously, because we can be sure this will not be the last such damaging legal spat if marketers and their agencies cannot reach a new and mature accord.

Stefano Hatfield is editorial director of Ad Age Global and Creativity.

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