Winning a handsome chunk of Samsung's global advertising business from arch-rival WPP Group last week looks like a coup for Publicis Groupe. But for Leo Burnett Worldwide, the agency that will manage the account, Samsung promises political challenges of a kind that can cut the legs out from under even the most seasoned ad executives.
Samsung moved a portion of its $200 million global branding assignment out of WPP agencies JWT and Berlin Cameron last week, only a year after WPP vied with Publicis and incumbent Foote Cone & Belding, part of Interpublic Group of Cos., in a tortuous, months-long review. At the end of that process, WPP won narrowly over Publicis, according to knowledgeable executives.
Samsung approached Leo Burnett about one month ago, and the agency's worldwide CEO, Tom Bernardin, assembled a team from various offices, including Chicago, Hong Kong, London and Madrid, to pitch the business. "We review our agency situation from time to time," said Mac Jeffery, senior VP-public relations for Cheil Communications, the advertising agency that handles much of Samsung's marketing.
The reality is more complicated, and it has little to do with advertising-and a lot to do with history, internal politics and, in particular, a structure that forces an outside agency to work through Cheil.
"Their marketing has been hitting on all cylinders for the last four or five years," said Jim Nail, principal analyst, Forrester Research, Cambridge, Mass. "What's happening now, he said, "feels like the triumph of politics over success."
Eric Kim, until last September Samsung's global marketing officer and one of the forces behind the company's brand turnaround, consolidated advertising and marketing under his turf and hired a single global network, FCB. Prior to that, Samsung worked with Omnicom's Arnell Group for many years.
The shift to a global network, one executive said, bothered some within Samsung who felt it enabled Mr. Kim to take an un-Korean-like amount of credit for the company's international branding success. When he left, those who didn't want so much power given to a single leader, and a single network, gained more influence. Gregory Lee, Samsung's chief marketing officer, replaced Mr. Kim, but in a more junior role, and the company started to shift away from centralized power once more.
As it did so, Cheil, which is owned by Samsung, one of a handful of Korea's chaebols, gained more influence. Cheil is an issue for any global network hired by Samsung. It is Korea's largest ad agency, and it is both the client interface for Samsung's network as well as a rival. "Cheil hated WPP when they came on board because Cheil wanted a weaker counterpart," the executive said. "If Cheil is acting like the client, they can make any agency look pretty bad. They ... try to be between the Samsung client and the agency."
Berlin Cameron's beef with Samsung focused on Cheil and money. "We weren't being paid fairly," said Andy Berlin, agency chairman. Other agency executives familiar with Samsung also said this was often a struggle.
Cheil has said openly that before the end of this decade it will get all Samsung's advertising worldwide, one executive added. Mr. Jeffery said, "On the horizon, anything is possible. But until then, we do not undermine the relationship. Our job is to maintain and nurture it."
Contributing: Ad Age Staff