Well, what do you know? No sooner has Niall Fitzgerald, chairman of Unilever, fired a raking broadside against the complacency of ad agencies – his own included – than WPP Group, his principal marketing services supplier, takes him at his word and provides an ‘agile’ solution.
That, at least, is what chief executive Martin Sorrell would have us believe about his prospective three-way deal with Chime’s Sir Tim Bell and HHCL’s Rupert Howell. In reality, the timing of the deal can be no more than coincidental. But Fitzgerald’s concerns, broached during a recent EAAA speech in Dublin, certainly give an insight into Sorrell’s thinking – and some of his recent, enigmatic, deal-making.
One of the difficulties facing established networks, according to Fitzgerald, is that ‘scale makes sensitivity difficult… if size makes agencies less inventive… then we shall continue to worry that our agency alignment policy denies us access to some of the better, brighter brains around the world.’ And more specifically still: ‘The agencies that best understand national and regional characteristics… are the smaller, national ones.’ Quite. He adds that big agencies, with their idée fixe of TV advertising, aren’t very good at adapting to the brave new world of interactivity.
Step forward HHCL, which has had fair success at addressing all these issues over the past ten years, but is now hitting the buffers of natural expansion. WPP, which will stake just a tad under 30 per cent in the soon-to-be-enlarged Chime, is effectively bankrolling HHCL’s expansion. Not only will it supply HHCL with its first, credible, international network support, it has also sweetened what would otherwise be a colourless shares deal with real money.
Howell must be very pleased at the way things are going. He is getting public company status at a knock-down price. He is expanding his remit into financial PR, through a respected agency, Lowe Bell. And he is moving into the merged company as joint chief executive – a form of words which should deceive no one for very long. Advertising’s most gifted publicist is already being seen as heir apparent to Bell; a suggestion Howell surely won’t try too hard to combat.
But will the chemistry work in practice? Neither Howell, Bell nor Sorrell are exactly understated personalities. Bell will be hoping that HHCL’s presumed dynamism will add lustre to his share price – and may become vocally disillusioned if it does not. Sorrell may not be playing an executive role in the deal, but he will want his pound of flesh.
On this last point, the relationship with CIA Group, in which WPP recently took a hostile 14 per cent, could offer a useful clue. If Sorrell can bring round Chris Ingram, chief executive of CIA, to his way of thinking, it will prove WPP is capable of the constructive kind of minority deals that brought AMV to Omnicom. But it’s a big if. The jury may be out for a long time.
News, page 12