Nigel Bogle, co-founder of Bartle Bogle Hegarty, famously summed up the precarious nature of advertising with the truism that every ad agency, no matter how successful, is only ever three phone calls from disaster.
When a local or regional client relationship breaks down, agencies typically see the bullet coming before the trigger is officially pulled. However, in the case of global pitches, autocratic decisions are often delivered from a company HQ that have surprised, angered and ruptured successful client-agency relationships in subsidiary markets.
"Clients make huge mistakes with central hirings, they get gouged on price and their subsidiaries are often unhappy," says one regional agency chief. "The reality is that wins may or may not see the light of day. The guys making these global edicts often have no line responsibilities, they are head office functionaries not the people involved in determining profit and loss on the ground. It is the local guys that decide to move or stay where they are. You might not think it, but the worst line I hear as regional president is 'we've just had a global win'."
Samsung is a case in point. Outwardly, WPP won a US$200 million global creative assignment. But what the win really means, given that Samsung's brand steward, former in-house agency Cheil Communications has always handled a large amount of the work, is unclear.
According to sources, Samsung offices in markets such as India, Thailand and Hong Kong are, at the very least, extremely unhappy with the upheaval, with no intention of changing their existing agency arrangements. For example, Leo Burnett continues to work with Samsung in markets including Indonesia and the Philippines.
Admittedly, the protracted and messy review was not helped by the departure of the man behind the pitch, executive vice-president of global marketing Eric Kim, to Intel midway through the process. Still, the blurred outcome is disappointing, given that Samsung, as an Asian multinational, was apparently unusually diligent in local consultation with agencies and clients.
"I was at the tip of the Samsung pitch," says TBWA\Group Hong Kong chief executive Ian Thubron, who was seconded to WPP to co-ordinate the pitch while working at Ogilvy & Mather. "There were eight key market meetings globally, including New York, Seoul, Beijing, Dubai, Delhi and Singapore. In all cases, they wanted to meet the consortium of agencies that would be involved."
Equally frustrating is losing the global business of one of your biggest clients and subsequently finding that pretty much nothing has changed. Just ask Lowe & Partners. HSBC dealt the network a critical blow last year by announcing a mammoth global review, yet little has changed in the eyes of consumers, with new agency of record JWT told to continue the highly successful 'world's local bank' campaign. Insiders say that the pitch was held because of concerns about the network's global strength, precipitating a holding company-level review pushed by the US operation.
The reality of global agency of record relationships is that often companies show a degree of flexibility in local markets where it makes business sense. Take the recent $300 million Intel pitch. Upon his arrival, Kim called another global holding company pitch, which ultimately resulted in the realignment of the account from Euro RSCG to McCann Erickson. Well, almost. It made sense for Intel to keep the Japanese business in the hands of Dentsu, because of its local muscle.
The rise of number-crunching procurement departments has influenced the frequency of global pitches because of theoretically greater economies of scale in cost savings by sourcing from one group. This phenomenon has resulted in a sea-change in the type of company that is picking up the phone and calling a global review.
"The interesting development is that, in the past, it was smaller local advertisers with centralised managed client companies that were pitched at a global level -- such as a fashion brand like Ferragamo -- or where there is one significant home market and international markets were bought in line, such as an airline or tourist board accounts," says the chief executive of one media agency. "Now, there are more companies such as McDonald's and Nestlé that are top 10 local advertisers in their own right, which are de-centralised clients that are moving into global accounts."
Nestlé, eager to cut its media agency roster, dropped Universal McCann, Initiative and Starcom from its review at the outset, regardless of local market preferences. Group M and ZenithOptimedia are left battling it out. And despite a 25-year relationship, politics eliminated roster agency ZenithOptimedia at the starting line in Kraft's US$542 million global media review. It didn't want two Publicis agencies competing -- Starcom MediaVest was given the nod -- in its market-by-market battle against WPP's Mindshare.
"Today it is political, not about the independent quality of the work," says one ad agency chief. "The bottom line is the bottom line and, in a lot of cases, the US doesn't have a clue where Asia is and tars everyone with the same brush. Life today is about share price value."
On the other side of the ledger, global decisions often open the door for a new way of thinking. For example, Nitro, the Shanghai-based micro-network, has significantly profited from Masterfoods' decision to drop Grey Advertising from its global creative roster.
Often, a review of a global relationship is called with individual markets told they are free to run autonomous pitches to decide the best agency for their needs. However, as is the case with the current L'Oréal media review, a major decision in a heavyweight market such as Europe or the US subsequently pressurises smaller regions to follow suit.
At the end of June, it was tipped that ZenithOptimedia was to pick up the cosmetic giant's $1.5 billion global media business, despite the fact a series of local market pitches was yet to run its course. In July, L'Oréal chiefs in Paris decided that ZenithOptimedia would handle the $100 million pan-European business and rumours abound that this decision is being foisted on other regions.
Thubron says the steadily growing importance of regions such as Asia means that the idea of global pitches being decided in far-off boardrooms is fast becoming anachronistic. "Twenty to 30 years ago, a strong London or New York office could win globally and, in Asia, only Hong Kong and Singapore mattered, with places like China and Japan just chucked on," he argues. "Not now. No one can win on the strength of one office. You must have strength and capability everywhere."
When a local or regional client relationship breaks down, agencies typically see the bullet coming before the trigger is officially pulled. However, in the case of global pitches, autocratic decisions are often delivered from a company HQ that have surprised, angered and ruptured successful client-agency relationships in subsidiary markets.
"Clients make huge mistakes with central hirings, they get gouged on price and their subsidiaries are often unhappy," says one regional agency chief. "The reality is that wins may or may not see the light of day. The guys making these global edicts often have no line responsibilities, they are head office functionaries not the people involved in determining profit and loss on the ground. It is the local guys that decide to move or stay where they are. You might not think it, but the worst line I hear as regional president is 'we've just had a global win'."
Samsung is a case in point. Outwardly, WPP won a US$200 million global creative assignment. But what the win really means, given that Samsung's brand steward, former in-house agency Cheil Communications has always handled a large amount of the work, is unclear.
According to sources, Samsung offices in markets such as India, Thailand and Hong Kong are, at the very least, extremely unhappy with the upheaval, with no intention of changing their existing agency arrangements. For example, Leo Burnett continues to work with Samsung in markets including Indonesia and the Philippines.
Admittedly, the protracted and messy review was not helped by the departure of the man behind the pitch, executive vice-president of global marketing Eric Kim, to Intel midway through the process. Still, the blurred outcome is disappointing, given that Samsung, as an Asian multinational, was apparently unusually diligent in local consultation with agencies and clients.
"I was at the tip of the Samsung pitch," says TBWA\Group Hong Kong chief executive Ian Thubron, who was seconded to WPP to co-ordinate the pitch while working at Ogilvy & Mather. "There were eight key market meetings globally, including New York, Seoul, Beijing, Dubai, Delhi and Singapore. In all cases, they wanted to meet the consortium of agencies that would be involved."
Equally frustrating is losing the global business of one of your biggest clients and subsequently finding that pretty much nothing has changed. Just ask Lowe & Partners. HSBC dealt the network a critical blow last year by announcing a mammoth global review, yet little has changed in the eyes of consumers, with new agency of record JWT told to continue the highly successful 'world's local bank' campaign. Insiders say that the pitch was held because of concerns about the network's global strength, precipitating a holding company-level review pushed by the US operation.
The reality of global agency of record relationships is that often companies show a degree of flexibility in local markets where it makes business sense. Take the recent $300 million Intel pitch. Upon his arrival, Kim called another global holding company pitch, which ultimately resulted in the realignment of the account from Euro RSCG to McCann Erickson. Well, almost. It made sense for Intel to keep the Japanese business in the hands of Dentsu, because of its local muscle.
The rise of number-crunching procurement departments has influenced the frequency of global pitches because of theoretically greater economies of scale in cost savings by sourcing from one group. This phenomenon has resulted in a sea-change in the type of company that is picking up the phone and calling a global review.
"The interesting development is that, in the past, it was smaller local advertisers with centralised managed client companies that were pitched at a global level -- such as a fashion brand like Ferragamo -- or where there is one significant home market and international markets were bought in line, such as an airline or tourist board accounts," says the chief executive of one media agency. "Now, there are more companies such as McDonald's and Nestlé that are top 10 local advertisers in their own right, which are de-centralised clients that are moving into global accounts."
Nestlé, eager to cut its media agency roster, dropped Universal McCann, Initiative and Starcom from its review at the outset, regardless of local market preferences. Group M and ZenithOptimedia are left battling it out. And despite a 25-year relationship, politics eliminated roster agency ZenithOptimedia at the starting line in Kraft's US$542 million global media review. It didn't want two Publicis agencies competing -- Starcom MediaVest was given the nod -- in its market-by-market battle against WPP's Mindshare.
"Today it is political, not about the independent quality of the work," says one ad agency chief. "The bottom line is the bottom line and, in a lot of cases, the US doesn't have a clue where Asia is and tars everyone with the same brush. Life today is about share price value."
On the other side of the ledger, global decisions often open the door for a new way of thinking. For example, Nitro, the Shanghai-based micro-network, has significantly profited from Masterfoods' decision to drop Grey Advertising from its global creative roster.
Often, a review of a global relationship is called with individual markets told they are free to run autonomous pitches to decide the best agency for their needs. However, as is the case with the current L'Oréal media review, a major decision in a heavyweight market such as Europe or the US subsequently pressurises smaller regions to follow suit.
At the end of June, it was tipped that ZenithOptimedia was to pick up the cosmetic giant's $1.5 billion global media business, despite the fact a series of local market pitches was yet to run its course. In July, L'Oréal chiefs in Paris decided that ZenithOptimedia would handle the $100 million pan-European business and rumours abound that this decision is being foisted on other regions.
Thubron says the steadily growing importance of regions such as Asia means that the idea of global pitches being decided in far-off boardrooms is fast becoming anachronistic. "Twenty to 30 years ago, a strong London or New York office could win globally and, in Asia, only Hong Kong and Singapore mattered, with places like China and Japan just chucked on," he argues. "Not now. No one can win on the strength of one office. You must have strength and capability everywhere."
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