Initiative: Plain unlucky or ill-equipped?

Initiative Media’s loss of the pan-European Johnson & Johnson business is yet another blow for the Interpublic Group-owned network, which lost General Motors – one of its biggest clients – last year and Credit Suisse earlier this summer.

Initiative Media’s loss of the pan-European Johnson & Johnson business is yet another blow for the Interpublic Group-owned network, which lost General Motors – one of its biggest clients – last year and Credit Suisse earlier this summer.

While the J&J decision was mixed for IPG as a whole – Universal McCann retained its North American business and will share Asia with OMD – it seems that the loss of the pan-European account is particularly painful for the London office.

The agency’s billings are down 17.7% for the period between June 2006 and May this year (MMS), a large majority of which is attributable to the loss of the £60m UK Vauxhall business and the £14m UK Saab account at the end of last year. The business was held by Universal globally but there is no doubt that the decision to move it into Aegis-owned Carat without a pitch hit the London agency especially hard.

However, industry observers agree that the local office has been “unlucky”. One senior industry source says: “The loss of GM had nothing to do with the UK. The UK has suffered because despite having great people, the network is killing it.” 

It is thought that the UK portion of the J&J account is worth about £40m. Another observer points out that it was a “multiple contract assignment” and that the client had made it clear it was keen to have more than one agency. He adds: “There was always a probability that IPG wouldn’t retain all of its share.” 

More ups than downs
Jerry Hill, Initiative’s joint chief operating officer for Europe and UK chief executive, remains stoic about the ramifications of its recent losses. He explains: “We increased our billings last year [across the European network] by more than what J&J was worth.” He points to the £50m pan-European Burger King account, the global Bang & Olufsen business and Iberian Airlines.

But some in the industry are questioning what Initiative has to offer its clients, in terms of price and its new business strategy. The senior industry source adds: “The growth of procurement means that price is still a factor and Initiative is significantly smaller so, frankly, it can’t keep up.” 

Other observers say that as a result of its network, Initiative does not have a defined offering. One source close to IPG adds: “I don’t think they know where they are going. The agency hasn’t done anything post-Unilever.” 

While Hill concedes that it is “fair” to raise some questions about Initiative and where it is in the market, he adds: “That relates to matters that are not reflective on our people or the work we do for our clients.” He also claims that despite being four times smaller than Carat, it can and does compete on price.

Hill points out that the European network has already undergone a restructure, which led to it becoming decentralised. It now focuses on planning, procurement, digital, new business and client services. The heads of each discipline sit across Europe rather than in one place because “Europe is not one market”.

He adds: “The digital environment is changing at different paces in different countries.“ Burger King, he says, is the first client the network has won by taking this approach.

Left out in the cold?
Yet the group’s reticence to talk about the drivers and implications of the restructure, its future digital plans and its work with flagship clients Tesco and Organge is perhaps key to the industry’s belief that the group has done little to evolve with the media landscape

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