Clearing the bar with inches, even feet, to spare is clearly not
going to be enough for ad agencies to safeguard the regional portion of
a prized global brand account anymore.
In recent months, we have seen no less than four established brands
shake up their agency arrangements, putting their global advertising
business into the hands of just one, at most two, agencies.
Motorola, Philips, Guinness and now Coca-Cola have been leading the
charge to discard superfluous agency arrangements and parcel out their
global advertising business into fewer baskets.
Coke's decision was the most attention-grabbing because it wasn't very
long ago when new CEO Doug Daft instituted a new "think local, act
local" policy.
The realignment with IPG agencies appears to have undone a policy, which
was then seen as an attempt to restore consistency in its brand image
globally.
But are realignments with one or two agencies the way forward?
Regionally, Ogilvy & Mather Singapore and Euro RSCG had done some
excellent work on the Guinness and Philips accounts respectively. But
both will lose these accounts because of a corporate directive to
realign the business, a decision made thousands of miles away.
Certainly, there are plenty of arguments in favour of such
alignments.
Corporations argue that alignments allow them to bring a high level of
consistency to their brand communications across the world, while
allowing them to extract maximum impact from limited budgets.
Yes, it's all about value, but can alignments also deliver the quality
and consistency payback as well?
In today's unforgiving stock market, no one is arguing against the
corporate drive to ramp up incremental value for shareholders.
Returns that kept investors happy a mere five years ago don't cut it
anymore.
Just look at how Dell, Nokia, Apple and a host of other blue-chip
powerhouses have been punished lately. And CEOs who fail to deliver on a
quarter or two are painfully aware that they will go the way of Mattel's
Jill Barad, Procter & Gamble's Dirk Jager and Coca-Cola's Doug Ivester.
All were discarded like yesterday's newspaper.
Indeed, the lifespan of CEOs at publicly listed companies is today
measured in months rather than the years that GE's Jack Welch or IBM's
Louis Gerstner have enjoyed.
For hard-pressed CEOs looking to extract every ounce of value from
across the operation, the company's ad agency arrangement is apparently
ripe for a hard squeeze.
But is this really the ideal way for a company to extract the best it
can for its brands from its agency partner across huge swathes of
territory thousands of miles away?
Yes, if we were living in a perfect world, where the quality, depth of
experience and skills of a network's talent pool is pretty much the
same, from San Francisco to Shanghai, or New York to Moscow.
For all their global coverage, networks still have a skills gap
somewhere in their system. We only need to look at the huge Asian
markets like China and India, where skills are still at a developing
stage and could impact realignment objectives.
Why, for instance, is Volkswagen, which is globally aligned with another
agency network, using Grey Beijing as its strategic brand development
agency partner?
Dare we surmise that Volkswagen's non-compliance with its HQ directive
may have something to do with the depth of local market knowledge that
Grey has, but the automaker's globally aligned agency partner lacks?
Dig a little deeper and we're sure that Volkswagen is not alone in doing
so.
Which then leaves us to wonder why companies are still insisting on a
one-size-fits-all approach.
