VIEWPOINT: Will global realignments pay back in markets lacking skills?

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.

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