WPP: one step from one-stop

These days it has become fashionable to debunk Professor Ted Levitt’s theories about the growing homogenisation of global markets, encapsulated in his snappy dictum, ‘Think global, act global’.

The standard critique is that too many multinational brands took him at his word, centralised their marketing and began treating their customers as clones. The travails of Coca-Cola, Colgate-Palmolive and Procter & Gamble in the Nineties were an awful object lesson in the fallacy of this theory.

One area where Levitt is being proved increasingly prescient, however, is in the consolidation of marketing services companies. This world is dominated – whether we look at the size of brands retained, proportion of global spend, or (to a lesser extent, for the moment) vertical integration of services – by a small group of powerful holding companies. At the moment there are six, with a super league of three; in five years’ time there will be – who knows? – fewer than five; it’s a near certainty.

Critics have drawn attention to the mechanistic nature of this trend: they portray it as the creation of a few powerful men (no women so far), who have used the growing concentration of global media as an excuse to project their outsize egos on the worldwide business stage by forging marketing services empires to match the changing media template. Corroboration of this argument may be found by looking at the way in which these empires have been constructed: not by organic growth so much as corporate acquisition. Where, in all this, is the benefit to that ultimate paymaster, the client, they ask?

The classic example of the corporate predator model is the WPP Group. It, after all, created the precedent for the hostile takeover in marketing services with the acquisition of J Walter Thompson in 1987; it has since successfully starred in five other major bid battles, many of them equally acrimonious. Yet, it is this self-same WPP which, over the past year or two, has also begun demonstrating the organic justification for the global marketing services holding company. Although observers may differ as to where the momentum for integrated account growth came from, the WPP examples of Boots and Ford have, in their different ways, certainly grabbed the headlines. Vodafone seems to be heading in the same direction, but it is 2004 that has proved annus mirabilis, with the HSBC and Samsung wins a triumphant vindication of the trend. We might add the successful Nestlé and Unilever media pitches, though these are an example of WPP’s geographical, rather than vertical, reach.

But reach, range and economies of scale are by no means everything in winning a business pitch. The personality of Sir Martin Sorrell has evidently been a key ingredient in the recent round of successes, whether as a world-class networker or global deal-maker. For the moment (with the exception of Publicis Groupe) other marketing services groups have apparently failed to play this card. They risk losing out as a result.

The strength and weakness of WPP’s strategy is precisely that it relies so much on one man. We do not know how successful the company will be, medium term, in retaining the business (remember Boots). Nor does Sir Martin Sorrell’s organisation have any monopoly of creative talent, which clients tells us, time and time again, is the most important thing.

Stuart Smith, Editor

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