New realism for ad world: Too many global networks?

By Published on .

With Interpublic Group of Cos. beleaguered, Omnicom Group chastened and Publicis Groupe and Havas having spent heavily; with Cordiant Communications Group in a debt crisis and Grey still gray, there's been an understandable paucity of deal-making in the advertising marketplace. What happened to the 100-plus deals a year of the Omnicom and Interpublic heydays?

There are a few deals afoot. They reveal an unrecognizably altered landscape: Interpublic is looking to sell its NFO WorldGroup research arm and merge its Lowe Worldwide and Bozell agencies in the U.S.; Cordiant is in talks to sell George Patterson Bates in Australia and perhaps Scholz and Friends Group in Europe.

Each deal speaks volumes. Interpublic paid $673 million for NFO in 2000. It may get between the $400 million tops that WPP Group has typically low-balled and perhaps $550 million from United Business Media. Interpublic must sell to be able to pay a dividend again. But that fixes only part of its problems. What of the strategy that led to buying a market-research concern in the first place?

At Cordiant, new boss David Hearn, free from emotional entanglement, is able to clinically sell off the crown jewels knowing no other network wants the entire Cordiant collection. But, after selling Scholz, too, how much else is there worth buying?

As for Lowe and Bozell, Interpublic's Deutsch, as ever, is the winner as Bozell's Bank of America client falls into its lap, and there is irony in the reuniting of Bozell's Verizon Wireless client with Lowe, the former agency for Verizon Communications.

It's the Lowe/Bozell deal that really speaks to the changed environment. It may appear another sign of the realism that's been forced upon the sector. But it may also be a sign the ad industry still has its head in the sand.

Is there any need for the holding company setup at all? Would it not be better if Interpublic spun off Lowe and Foote, Cone & Belding Worldwide, or if WPP disposed of Young & Rubicam? Who needs three or four networks in one agency group anyway? Many harbor the same clients. Interpublic's McCann-Erickson Worldwide and Lowe share Nestle, General Motors Corp. and Unilever; WPP's Young & Rubicam, Ogilvy & Mather Worldwide and J. Walter Thompson all work for Ford.

We all accept the need for at least one multi-office network with local ability everywhere. But why replicate these expensive structures globally? Coca-Cola Co. and PepsiCo, Unilever and Procter & Gamble Co., Ford Motor Co. and GM are not taking advantage of the multiple offer. They are sticking to different holding companies.

Why not, then, turn Deutsch's failure to grow internationally into an advantage and just capitalize on McCann-Erickson's strength in that regard? The same goes for Berlin Cameron/Red Cell within WPP. Why not just use Ogilvy for distribution?

While these deals may appear to be a sign that the ad sector is getting real, in truth there still is a lot more real to get. Publicis' dramatic dismantling of D'Arcy Masius Benton & Bowles may yet prove to be a major turning point in advertising history.

Stefano Hatfield is contributing editor to Advertising Age and Creativity

Most Popular
In this article: