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

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