Lowe and JWT reel after knockout Unilever blow
An advertising agency’s firepower is measured by its new business wins but, for an industry that runs in the fast lane, it is often long-term client relationships that guarantee a place in the super league.
Unilever’s decision to hand its â¬200m (&£140m) Omo detergent business to Bartle Bogle Hegarty last week dealt a hammer-blow to the incumbents, WPP-owned JWT and Interpublic Group’s Lowe. Marketing Services Intelligence editor Bob Willott estimates Lowe’s share to be almost two-thirds of this spend.
JWT lost its long-term hold on the &£25m UK and Ireland account and, while Lowe will continue to handle the brand in Asia, Africa, Brazil, Bolivia, Paraguay and the Caribbean, it has lost one of its biggest markets – North America, worth an estimated $25m (&£14m).
A spokesman for Unilever says Lowe will take care of execution and delivery and that BBH will handle the “creative stewardship”. BBH will, however, continue to develop the “Dirt is Good” strategy, created by Lowe Brazil.
One industry insider says that following the well-documented woes of IPG, the decision to keep Lowe on the books is only to “smooth the pain”. He adds: “The continuing relationship with Lowe is just window-dressing. The appointment of BBH is likely to lead to the loss of the entire business for IPG.”
BBH will be the lead global creative and strategic agency and will handle Persil and Skip in Europe, Wisk and Sunlight in North America and Omo in Argentina, Uruguay, Chile, Ecuador and Central America.
Willott says: “Unilever’s decision is a blow for both JWT and Lowe, but it is unlikely to have a lasting impact on JWT. For Lowe, however, it is the bad news IPG did not want.”
IPG recently dropped more than $500m (&£290m) of earnings in a restatement after a six-month investigation of its books. And while a new turnaround plan is being devised, the group has other pressing problems: Lowe Worldwide has of late lost the global HSBC account to WPP Group and the European Flora brief to BBH, and seen the global Braun business consolidated into BBDO.
Earlier this year, Lowe chief executive Tony Wright restructured the agency around 12 global hubs, or “lighthouse” agencies, each offering clients a full array of marketing services. However, rumours of a Lowe management buyout led by Sir Frank Lowe refuse to go away. One advertising executive says that for an agency already struggling with its morale, the Unilever decision could mean an “enormous bashing” in the long term.
Nor has JWT been without its troubles. Although the agency has managed to muscle its way on to all the top shortlists of the year, including the &£47m Sainsbury’s review, the &£10m SwitchCo business and more recently the &£60m British Airways list, it has failed to translate any of these pitches into wins. It also lost the advertising business for insurance giant Axa and, last month, had to make 13 redundancies across several departments in order to hit its financial targets. Insiders suggest that the agency will make further job cuts as a result of the Persil loss.
One insider suspects that the decision to take JWT off the Omo roster could have been affected by the recent arrival of Grey – a Procter & Gamble agency – in the WPP portfolio. P&G has worked with Grey for over 40 years, and the WPP-Grey deal resulted in the “unthinkable” situation of arch-rivals Unilever and P&G sharing the same advertising group.
Willott says that the Unilever decision is a wake-up call for JWT, because it will force the agency to reassess its status as a traditional global network and to realise big budgets do not always require a giant network presence.
The award of Omo/Persil to micro-network BBH could once again force the industry to look at the successful ingredients that make up a long-term client-agency relationship.
