London-headquartered WPP Group, the world’s largest advertising and marketing conglomerate, will next week announce plans to add a fourth global network to its existing trio: Ogilvy & Mather Worldwide, J Walter Thompson and Young & Rubicam.
Details of the new network will be revealed at a London news conference next Thursday at which WPP chief executive Sir Martin Sorrell will be accompanied by Luca Lindner, chief executive of WPP’s Conquest agency group which has fourteen offices across Europe. Lindner’s presence is seen by industry onlookers as signalling his senior role in the new venture.
However, it is thought unlikely that the project will carry the Conquest branding, Lindner having indicated in an interview last September that the name might be seen as “too aggressive”.
The fourth network will specialize in servicing multinational clients with “smaller” budgets ($50-$100 million) and is expected to comprise a number of existing WPP shops, among them Conquest, Singapore-headquartered Batey Advertising and O&M subsidiary Cole & Weber based in Portland, Oregon, and Seattle.
Agog with speculation, Wall Street believes the rationale for WPP’s move is to build a further ‘Chinese wall’ against client conflict. According to UBS Warburg senior analyst Leland A Westerfield: "Parallel global networks make sense, The potential for client conflict is abated and the ability to serve brands around the world is facilitated."
Michael J Russell Jr of Morgan Stanley Dean Witter sees the move as a neat strategic maneuver: "We've come to accept the magic number is three," he said, referring to WPP and its main global rivals Interpublic and Omnicom, each of which currently operates three worldwide networks. “But,” opines Russell, “the more complex your organizational chart, the more likely you as a chess master can have a higher capacity utilization of your services."
However, Russell queries whether the multinational sector can support a fourth network: "Are there that many clients for four of them?" he asks. Also, he is "not sure someone would pick a fourth agency network owned by WPP that isn't as big as the others."
News source: New York Times