Close-Up: Live Issue - Mars flexes its muscles in the pursuit of creativity

Mars earned a reputation for ruthlessness in its handling of agencies, John Tylee says. Having Mars on your client list is like keeping a gorilla in your lounge. It is constantly restless, always demanding and you dare not take your eyes off it for a moment, lest it turn nasty.

Just ask Grey Global Group. No sooner had it negotiated the $1.5 billion deal bringing it under the wing of Sir Martin Sorrell's WPP, than the confectionery-to-catfood giant was thumping its chest and dumping its long-time ad supplier.

Instead of taking the lead on famous brands such as Twix, Galaxy, Milky Way, Starburst, Mars bar and Kitekat catfood, Grey has to content itself with some direct mail and sales promotion work. Industry sources say even this crumb of comfort remains only to ensure continuity.

From now on, the assignments accumulated by Grey during an 18-year relationship will be shared between the Omnicom-owned TBWA\Worldwide and BBDO, both perceived as more creative.

At TBWA, the extra business will be seen as a pay-off for its gamble two years ago when it ditched its pan-European Cadbury business to take on Mars assignments.

At Grey, the news was a bolt from the blue and prompted some industry analysts to speculate whether it would cause the WPP deal to unravel and put Grey back in play.

Nowhere was the shock more profound than at Grey London, where Sorrell met staff on Friday morning in an attempt to allay some of their fears.

The UK workforce, which last week thought its period of catharsis was over, must now brace itself for further job losses in the wake of an £18 million billings drop.

"Sorrell has to boost his margins at Grey," a mergers and acquisitions specialist comments. "The only way he can do that is to lose people and turn Grey into a sweatshop, at least in the short term."

"Just when it was all starting to go well, the rug gets pulled out from under us," a crestfallen senior manager in London laments.

A less emotional and more measured analysis, however, suggests that this wasn't a fit of pique by Mars. Indeed, its spokesman was at pains to stress that the advantages of consolidating its business within a single holding company, rather than Grey's acquisition by WPP, was the main reason for the realignment.

A more likely explanation, according to onlookers, is what had become a flawed relationship between agency and client. The consensus is the split was inevitable and Grey's change in ownership merely accelerated the process.

Moreover, some of Grey's work has yielded less than stellar results.

Twix sales in the UK dropped by almost 12 per cent last year, while the Mars bar remains in steady decline, its position eroded by changing eating habits.

Certainly, the threat of Grey being turfed off the Mars roster is not new. Campaign first floated the possibility five years ago. Since then, the danger seemed to become increasingly acute as John and Forrest Mars, the brothers who controlled the company, moved upstairs.

Ken Rogers, the former Mars vice-president of marketing and no great fan of Grey, was convinced the multinational needed to improve the bloodstock of its roster networks. "Mars realised its advertising was just too predictable," a TBWA source says. "It liked the idea of having creative people come up with ideas that don't work just in pure advertising terms. It's an area in which we had been doing quite a lot of work."

Moreover, Mars was boasting a new breed of managers determined to shed its reputation for rule-book advertising and become more sensitive to the changing communication landscape.

Some believe Grey fell victim because it failed to understand what was going on within Mars and to react accordingly. "The network was operating the kind of old-fashioned systems it believed multinational clients such as Mars were happy with," an industry source says. "Nobody worried about creativity because they didn't think Mars was looking for it."

Certainly, Mars has a proven track record of ruthlessness if it feels slighted. When the Saatchi & Saatchi group kicked out Maurice Saatchi in February 1995, the company vented its wrath by ripping £260 million-worth of global business out of Bates, pushing it to the brink of extinction.

Seven years later, Mars chiefs were so angered by D'Arcy's failure to consult with them over the closure of the network's St Louis office and a lacklustre performance on a number of brands, that it brought down the curtain on a 52-year relationship.

What's more, Mars does not take kindly to anybody it perceives as growing rich at its expense. It was furious when Bob Jacoby, the diminutive, cigar-chomping chief executive of its then roster agency, Ted Bates, walked away with a $110 million pay-off after selling out to the Saatchis group in 1986.

And it seems doubtful the company will have taken a charitable view of the $286 million being trousered by Ed Meyer, Grey's chairman, chief executive and controlling shareholder.

Not that it has been a picnic working on the Mars business for Grey.

Former account people talk of being made to feel constantly subservient, of a client blowing hot and cold over creativity and of having to deal with a particularly abrasive breed of procurement specialists introduced by Mars almost a decade before they became regular features at agency fee negotiations.

"We were probably the most argumentative of the Mars networks and the least creative," a former Grey agency boss says. "We were always going to be vulnerable."

Nevertheless, there has been a lingering scepticism within Grey that Mars is really the creative convert it purports to be and whether the corporate leopard has really changed its spots.

"Is Mars really serious about creativity?" a former senior staffer asks. "Possibly. But I think it's more a function of the company's restlessness.

One year, its people would be asking you why you thought they should be spending a single penny on advertising; the next, they would want to you to justify the spending of all available funding on it. It was an indication of the volatility coming out of company headquarters."

Sources close to WPP say the group was aware Grey was having problems with Mars before the takeover, but were reassured by Paul Michaels, the president of the Mars subsidiary Masterfoods, the network would be given a chance to turn things around. "We don't know why Mars changed its mind," a WPP insider says.

One former agency senior executive who has worked with Mars suggests it was because the company was not willing to be tied down. "Mars doesn't like being forced to declare its intentions," he says. "It wants to keep its options open."

Mars' action immediately raised the prospect that Sorrell would either use it to renegotiate or abandon the deal with Grey. Associates insist he has no such intention and believes that the Mars loss, while a blow, is not hugely significant in revenue terms. Nor will he break up Grey and subsume it into other WPP operating companies.

Bob Willott, the editor of Marketing Services Financial Intelligence, argues that dismantling Grey is not an option because of the risk of losing key staff and unsettling other big clients. More pressing is Sorrell's need to raise Grey's margins from 5.8 per cent to 10.5 per cent by 2005.

"That's going to be very difficult," Willott declares. "And the loss of such a big client will not help."