Consolidation of Ad Accounts With WPP at Issue

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DETROIT ( -- The chief operating officer of the Ford Motor Co. is under investigation by his own company for recent
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advertising agency-related purchasing decisions.

Nicholas Scheele has come under fire following his efforts to further consolidate the auto giant's advertising business with the London-headquartered WPP Group.

Purchasing policies
WPP agencies already handle the bulk of the Ford's global advertising, and Ford is WPP's biggest client. The internal investigation is aimed at determining if Mr. Scheele acted improperly in attempting to shift even more of the automotive giant's work to units of WPP in violation of company purchasing policies.

Ford Motor spent $1.16 billion in measured media on its U.S. brands handled by WPP in the first 11 months of 2002, according to Taylor Nelson Sofre's CMR. The figure doesn't include WPP's regional dealer ad accounts or overseas spending.

The Detroit News, which originally reported the existence of the internal probe, also reported that Mr. Scheele's son James is an account manager at WPP's Y&R Advertising in New York -- a fact which the Ford COO had previously reported to his employer.

Sole-source contract
At a wintertime meeting on Long Island, New York, with WPP executives, Mr. Scheele's team successfully sought a single WPP contract for its business and offered "to do what we can to give" WPP more business, according to a company spokesman who attended the sessions.

In February, Mr. Scheele reportedly sent a memo to his marketing and sales managers informing them of his decision that WPP be the sole-source provider of the company's marketing and advertising services.

A Ford spokesman said Mr. Scheele and his associates "may have not followed procedures when they arrived at the conclusion that we need [WPP as] a single-source supplier," the Ford spokesman said.

Any Ford vice president or higher can champion a single-source supplier, according to insiders, but the deal must meet three criteria: provide a competitive advantage, provide a technological advantage and bring significant cost advantages.

Cost cutting cited
Ford's new agreement with WPP was initially characterized as part of the automaker's cost-cutting initiatives, which it dubs Team Value Management, or TVM.

The spokesman said he doesn't believe Mr. Scheele means to move advertising accounts held by non-WPP shops.

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