While Procter & Gamble and Unilever have focused media agency minds in recent months, the German consumer products giant Henkel is also doing its bit to redraw the global media landscape.
Henkel, which spends &£300m on media globally, is considering slimming down its roster and has started a review in its biggest market, Germany, between roster agencies OMD, Carat and CIA Medianetwork.
Media in Germany was previously handled inhouse – the review being an example of the changes effected by international media director Ian Gallois. He is cagey about the exact nature of the agencies’ involvement, saying: “We are looking to see what help, if any, we can get from media partners.”
Any change in the German market will have more than a superficial effect on the global stage. Charles Courtier, European managing director of The Media Edge, owned by Young & Rubicam, comments: “The German market represents about 30 per cent of total European ad spend, so this is a big deal.
“If you’re ever going to have a springboard to more international business, then getting the German account is the best way to do it.”
Henkel is a huge company with a broad portfolio of products, including the Persil brand in its domestic market, as well as Schwartzkopf haircare and Fa toiletries. Last year, it recorded global sales worth &£7.3bn.
In the US, it has a joint venture with Dial to market laundry products, while in the UK it is best-known for adhesive products such as Loctite. Henkel is talking of developing these two markets, although it remains tight-lipped about which products it will focus on.
One agency source says: “This [the final decision on Germany] could be a huge opportunity for someone. But there are a lot of balls in the air at the moment.”
One of the balls Henkel is juggling is CIA. While CIA publicly maintains its independence, it has been open about “conversations” it is having with Y&R, as well as other networks. It is also being stalked by the WPP marketing services group.
If CIA is ever bought by WPP, Henkel may have to deal with a conflict of interest if WPP wins the Unilever media battle. WPP’s media operation, MindShare, is engaged in a battle with Initiative Media for the US business.
Highly rated for its international service, CIA is arguably the best media network in Europe. It has been handed some of Henkel’s UK business and shares Italian work with Carat. But uncertainty over its future may influence Henkel’s decision.
“I think it hurts the agency when there is so much uncertainty,” says James Walker, director of international marketing consultancy Edge Marketing and former worldwide chairman of WPP’s media consultancy ATG. “If, for example, CIA is bought by WPP, which may win the Unilever business, it will be in competition with Henkel. So, in that scenario, CIA would lose out.”
Meanwhile, Carat has received a fillip to its US business by winning some of the Henkel account there. Henkel has said it is targeting the US as a growth market.
OMD has little, or no, significant clashes to bar it from the Henkel business.
Gallois is playing his cards close to his chest: “We are waiting to see how the media landscape develops. But we could quite possibly bring our global roster down to two through a process of natural attrition.”
Gallois is a seasoned international player. A former executive at D’Arcy Masius Benton & Bowles, where he was media director on the Mars account in Europe, Gallois is known as an ambitious man and, by his own admission, was not appointed to the new role to “twiddle his thumbs”.
He will be aware that Henkel has been something of a laggard when it comes to media. Other global players, such as P&G and Unilever, have benefited from agency planning and research resources. By contrast, Henkel has not historically been overly interested in what agencies have to offer.
Gallois has other considerations, too. Managing the changeover from an inhouse media operation to an outsourced function will be a challenge. He will be working alongside Helmut Grosscurth, media director for Germany, who is a significant power broker within the company. It may be that the appointed agency – or agencies – will initially be given a limited role.
Consolidation naturally means there are fewer global media networks for the likes of P&G and Unilever to go to – a fact that has not gone unnoticed by Bernard Glock, P&G’s European media director, who recently relaxed the company’s position on client conflict.
The final decision in the German market will have a huge influence on the future shape of Henkel’s global media arrangements. It will also put pressure on Henkel’s roster agencies to give it a firm indication of what future allegiances they have planned.