Dealing with agency giants

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The wpp group/young & rubicam deal is a fine merger on paper. It's so wonderfully efficient, for example, for Ford Motor Co. to park all its cars inside WPP's garage. Just think how WPP's Martin Sorrell will jump when Ford CEO Jacques Nasser calls.

Just think of the (brace yourself) synergies. Yet we come away with two conclusions: For marketers with multiple agencies, it may not be in their interest to bed down with one global agency holding company. And it may make sense to loosen the definition of account conflict.

Look at the parallel example of computer chips. Dominant player Intel Corp. has convinced a generation of PC buyers they need to trade up to the latest, fastest machine (good news for PC sellers). Yet most major PC marketers also sell machines with chips from rival Advanced Micro Devices because competition helps keep Intel on its toes.

Heresy to compare an agency/client "partnership" to a PC maker's relationship with a "vendor"? Hardly. With the merger of WPP and Y&R, Ford loses a bargaining chip: the constant possibility Ford business could shift between the rival holding companies. Sears, Roebuck & Co. has prodded Y&R and WPP's Ogilvy & Mather to work together. But a few years ago, a Sears spokeswoman noted how "both sides" were vying for a project; competition is clearer when both sides aren't on the same side.

Clients can get great work from a single global agency, of course; IBM/O&M comes to mind. But for clients with multiple shops, there's something appealing about having more than one agency holding company on board; it gives the customer more clout. Competition is good, even among your partners. But there are fewer agency holding companies than clients. What to do? Rethink the issue of conflict.

Holding companies can and do manage rival brands: Omnicom Group handles Dodge, Infiniti, Isuzu, Mercedes-Benz, Nissan and, elsewhere in the world, Volkswagen. WPP is capable of managing both Unilever (O&M, JWT) and Colgate-Palmolive (Y&R). But we're waiting to hear Colgate's vote.

In this season of agency (and client) mergers, a sister agency "conflict" needn't be a conflict. And a merger of a client's agencies isn't necessarily in a client's interest. Marketers must proceed with caution to figure out the truth in advertising.

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