CLOSE-UP: PERSPECTIVE - Y&R is running out of reasons to stop a takeover by WPP

Why is there at Young & Rubicam emotional resistance to a possible takeover by WPP that goes beyond the understandable desire to retain independence? On paper there is a certain logic to the deal.

Why is there at Young & Rubicam emotional resistance to a possible

takeover by WPP that goes beyond the understandable desire to retain

independence? On paper there is a certain logic to the deal.



Y&R is one of the great advertising brands that made the business what

it is. Ray Rubicam is in the pantheon of advertising business legends

alongside Leo Burnett and David Ogilvy. Like Ogilvy Y&R had a reputation

for doing things in a certain correct way. Then, having struck hard

times in the 90s, the recently retired chief executive, Peter Georgescu,

turned the agency’s fortunes round via an extraordinary run of new

business to achieve its initial public offering in 1998.



Since the IPO, of course, much of the focus on the company has centred

on the amounts of money executives have walked away with, and

preparations to float more of the company. Y&R has not pulled off the

dramatic coups of some rivals and there has been a sense of waiting to

see what it would do with all the money raised.



Nevertheless there are some within Y&R who will turn to stone at the

idea of being acquired by Sir Martin Sorrell. For younger readers this

may be surprising. WPP is currently motoring. It is growing fast and

recently its stock has outperformed its rivals. True, its agencies do

not have the world’s best creative reputations, but nor does Y&R. Older

readers will remember the dread with which the Ogilvy old guard viewed

the prospect of Sorrell acquiring them. But the network has flourished

since.



Although Sorrell’s reputation has improved dramatically and deservedly

since those far-off times, a few things have stuck. One is that he

doesn’t ’get’ creativity. Assuming this were true, this belongs to a

bygone age where ad agencies had to be run by admen. Today, we have

groups such as Omnicom, IPG and others where 40 per cent or more of

revenue comes from non-advertising sources. They are run by non-admen

such as John Wren and Sorrell. And why not? Have advertising people run

agency networks, but it is myopic to argue against ’suits’ running the

groups.



I’d argue against that implied definition of ’creative’. Sorrell has

demonstrated more creative thinking over the past five years than a

dozen old-school creative directors we could all name.



Which leaves us with his reputation for being miserly (something that

always makes him bristle). Is the resistance about a belief that Sorrell

is not a man who would over-pay - say, cough up dollars 2.1 billion for

Snyder Communications? If so, then the argument becomes about what the

right price is. In that case, Y&R needs to get its share price up if it

wants to resist WPP. Right now, there are not too many credible

arguments against the deal.



stefano.hatfield@haynet.com.



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