Slimlined groups are sexier, but can they thrive on a global diet?

With WPP Group announcing a 33% leap in profits, Omnicom continuing its consis-tent growth rate and Publicis also enjoying rude health, the role of global networks in the marketing services industry seems securely established. But is that so?

A trend towards fewer offices around the world has emerged. But can this model challenge the global networks bent on inexorable growth to satisfy shareholders at the detriment of creative flair and entrepreneurial spirit? Asks Bob Willott

With WPP Group announcing a 33% leap in profits, Omnicom continuing its consis-tent growth rate and Publicis also enjoying rude health, the role of global networks in the marketing services industry seems securely established. But is that so?

Could global networks be heading for a fall? Do they sacrifice enterprise, entrepreneurial flair and exceptional creative work on the altar of volume (and revenue) growth? Will they slide inexorably into delivering global services at lower prices and of lower quality? Is Interpublic’s decision to axe a number of its international offices in the Lowe network a recognition that global clients can be efficiently serviced with a more focused approach instead of carpeting the world with branch offices? Or was that move prompted by financial necessity and then cloaked in a spurious strategic justification? In essence, the only tested alternative to the global model has been dubbed the “micro network”. It involves setting up a limited number of offices (often one per continent) that seek to acquire locally based but globally active clients as well as to help service clients of other offices.

Examples include Bartle Bogle Hegarty, Fallon, Mother and, soon perhaps, Lowe. Media delivery is left to separate specialist agencies, although the strategy needs to be developed in close conjunction with the client and its “home” agency office. The existence of continental offices also helps the agency accommodate varying marketing strategies where they are necessary to reflect local conditions.

In its favour, such a slimline structure helps focus on the brand’s marketing strategy within a tightly knit group – drawing on the agency’s core creative talent – and enables the implementation to be managed with minimal network overheads. Once a network creates a series of local offices, it soon finds itself building layers of regional management above it that tend not to be geared to client service, but to the control of agency processes and finances. Instead of releasing creative energies, the structure is likely to constrain them.

Against a slimline global structure is the risk that some local nuances of consumer perception may be overlooked and that local client management may feel inadequately involved (assuming the client has already carpeted the globe with offices of its own). WPP chief executive Sir Martin Sorrell argues that the need for close local relationships with clients is perhaps greater than ever, but he acknowledges that a cumbersome regional infrastructure may not always be a great asset.

If the quality of work is the ultimate determinant of client loyalty, there are questions to be asked about whether the global networks attract – or make best use of – the best talent. They tend to breed two types of individual – those who seek recognition from obeying the system and those who seek personal gain by exploiting or evading the system (as occurred at Interpublic). You are either a good guy or a bad guy, but never a great guy.

Perhaps there are too many career managers in today’s networks – grey men and women who are nice, reliable and safe. Perhaps too many preside over gradually declining intellectual and creative standards that leave clients wondering whether they could get a better solution from a younger and smaller shop. Do these people drive out the irreverent, the troublesome rebels, the very people whose forbears breathed life into the founding agencies of today’s institutionalised global networks?

And what about the impact on global networks of the companies they acquire to fill geographical gaps and feed the demands of shareholders? In the traditional sectors of marketing services, global groups prefer to acquire well-established earners that are in the process of management succession from entrepreneurial risk taking to service delivery. The focus turns towards delivering financial growth targets for the parent, so fuelling risk aversion and the exploitation of existing relationships – by selling more services to clients and offering staff profit-related incentives. Whatever happened to entrepreneurial flair and enterprise?

Even if global networks were able to acquire and retain the best in class of every skill and discipline, the very act of offering clients global delivery as a distinctive benefit risks driving that proposition down the pathway towards more intensive price compe-tition. It turns the service into a global commodity – as media buyers know only too well – and plays into the hands of the procurement people. More importantly, it distracts clients and agencies from focusing on the quality and effectiveness of creative solutions.

It may be too soon to argue that a serious trend has started or that it is likely to lead to the early destruction of the global networks. But the networks will surely find it harder to please clients and to command healthy profit margins. That will lead to less well motivated staff and a further exit of talented non-conformists, while the hot seats in the global networks will be changing occupants ever more frequently.

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