There is ample evidence that Sir Martin Sorrell, chief executive of WPP, played a significant personal role in brokering a deal with Steve Russell, his opposite number at Boots, which resulted in &£80m of the retailer’s marketing budget being placed directly with the global marketing services group. All this without a pitch, indeed with little warning of any kind that such a momentous event was about to happen.
How was it that all the normal protocol and apparatus of decision making in these matters was bypassed by a fiat from above? It’s a worrying development for agencies, as well as marketing directors; especially if it marks the beginning of a trend.
Does it? Some will claim that the Boots deal is more a matter of style than substance. After all, there have always been agency chiefs (admittedly few in number) who have managed to secure business by forging boardroom contacts at the highest level. Maurice Saatchi was, and is, the outstanding example of this modus operandi. The strength of his personal relationship with first Lord King and then Lord Marshall is a major reason why the BA ad account has remained ‘in the family’ for so long.
Equally, chief executives on the client side are not unknown for meddling in advertising decisions, especially if they themselves have a marketing background. Marshall himself played a pivotal role in passing the BA account from Saatchi & Saatchi to M&C. And more recently, Peter Davis, chief executive at Sainsbury’s, was instrumental in putting the food retailer’s account back into AMV.BBDO.
All the same, there are grounds for believing the Boots deal with WPP is in a different category to these, and may well mark a more significant trend. To begin with, advertising is only a component, and probably not the driving one, in this deal. It purports to be an integrated marketing services package, including research, design and public relations – all of which are much higher margin businesses. What’s more, the appointment comes at a critical time for Boots, which is poised for major international expansion (Clearasil being the first of a number of mooted acquisitions). In other words, the subtext of this &£80m deal is that WPP has become not a supplier, but a strategic partner to Boots, with access to every level of the organisation from the boardroom downwards.
Clearly, other clients of similar or greater scale are likely to be thinking along the same lines; in WPP’s case Unilever and Ford spring to mind. The cost savings to be gained are enormously attractive in an environment increasingly under the cosh of globalisation. The danger is that clients may see cost saving as an objective in itself. They should resist this temptation, which may in any case be an illusion. The more important issues are whether such ‘package deals’ are truly revenue-driven, and whether the marketing services partner can actually deliver, as opposed to mouth a few platitudes about global integration.
Time alone will tell, though that may be small comfort for the average marketing or business development director.