EDITORIAL: A watershed time for supergroups?

When the world's agency networks began consolidating under a single holding company, a senior Procter & Gamble executive posed the question: "What's in these mega mergers for clients?" Almost two decades on, with Interpublic mired in financial scandal, those same multinational advertisers are entitled to claim that they still haven't had a satisfactory answer.

For many clients, the global communications supergroups have always seemed to serve the interests of those who set them up better than the advertisers.

One wonders what those clients are to make of the goings-on at Interpublic.

Investigations into allegations that bosses put improper pressure on managers to meet budgets. A Securities and Exchange Commission probe. Boardroom oustings and demotion for the chairman.

The Interpublic affair will serve to confirm to clients how self-obsessed the groups have become. Cynics will argue that such groups have never really justified themselves beyond the major reason for their birth - to hang on to profitable accounts that previously had to be cut loose because of conflict. Since then, the supergroups have benefited from economies of scale but have often shown a greater preoccupation in appeasing shareholders than in delivering commercial benefits to clients.

The big question now is whether events at Interpublic will mark a watershed in relations between clients and the communication leviathans. David Hearn, a client of long experience before his recent appointment as Cordiant's chief executive, has talked of what he sees as a growing disenchantment of some major advertisers with their treatment within the conglomerates.

And how long will it be before some of Interpublic's big-spending clients begin questioning whether or not they wish to continue being associated with a group whose business conduct is under such close scrutiny?

With immediate economic prospects so gloomy and competition so intense, the supergroups will be hoping that a line can be drawn under the Interpublic affair and the fall-out will be limited. Meanwhile they must continue making their case that clients remain the primary focus and that their claims to offer efficiency and value are more than just empty promises. Failure to do this will give the P&G man his long-awaited answer - that the supergroups fail to deliver enough added value either to their operating companies or their clients and that they might as well be broken up.


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