FORUM: Will JWT’s dedicated Kellogg’s operation work? - Last week, J. Walter Thompson consolidated its hold on Kellogg’s media business by winning the entire pan-European account. But this is no ordinary media centralisation. JWT i

It’s not hard to see how it happened. If you’re a multinational brand you deserve multinational-style treatment. And if one agency - an agency with which you have had a long and illustrious relationship - is offering to create your own dedicated media operation, it’s hard to turn it down. And so, of course, Kellogg didn’t.

It’s not hard to see how it happened. If you’re a multinational

brand you deserve multinational-style treatment. And if one agency - an

agency with which you have had a long and illustrious relationship - is

offering to create your own dedicated media operation, it’s hard to turn

it down. And so, of course, Kellogg didn’t.



It was decided that Kellogg Europe Media had a suitably nice ring to it

and, within the next couple of months, this new J. Walter Thomson

subsidiary will handle media buying for the cereals giant across Europe

(Campaign, last week). Not strategic media planning, though, which will

continue to be managed at country level by Kellogg’s two European

creative agencies, JWT and Leo Burnett.



This decision to hive off the media into its own operation is an option

JWT and other agencies have practised successfully in the US. The

question now is whether it’s an option that can really deliver in the

UK.



The problem is that there are certain key differences between the two

markets. ’The reason this has happened in the US is that media is a huge

resource there, and so has the bulk to support a truly dedicated media

operation,’ John Perriss, the chairman of Zenith Media Worldwide,

explains. ’Procter and Gamble spends dollars 1 billion in the US on TV

alone, Kellogg dollars 360 million and Ford dollars 335 million, so

these are companies that have the resource to support a great deal of

in-house media expenditure.



The result has been that we’ve seen General Motors set up its own unit

and Warner Lambert and Ford both do similar deals with JWT.



’In Europe, the financial logic is not as compelling. The disadvantages

of such a system are that it removes the flexibility and freshness of

the people working on the business. You have to find ways to refresh and

renew people if they are working for one client, and there is likely to

be more churn, because it gets boring working for the same client and

buying the same spots every year. There is also the problem of cost

inefficiency - it’s unlikely the client will be spending the same every

month, and so what is likely to happen is that either your team is

overstretched, or it is not working at full capacity.’



For Michael Quilty, the chief executive officer at the Network Europe,

the attractions of such a set-up are only apparent when the planning and

strategic functions are added to the buying muscle. ’It’s about the

focus and dedication of resources and making your team into specialists

in that client’s field. On IBM, we have a group of nine people who

specialise on different IBM brands underneath an IBM media director. The

downside is just as apparent - the team, especially the junior members,

are removed from what is going on elsewhere in media.



And it’s true that junior staff, in particular, need a range of

experience.



’It’s at the higher end,’ he continues, ’that clients can get real value

out of this kind of dedicated team. But, while spend levels may

fluctuate, there is a constant need for quality strategic and planning

advice. It could be argued that as spend declines, so the need for

planning and strategy increases, and that’s when having people who know

your business inside and out can make a real difference.’



For Simon Lloyd, the chairman of Optimedia International, while the

creation of a dedicated team makes perfect sense in theory, in practice

the operation smacks of a better way of winning new business rather than

running it.



’This isn’t a new idea, even here in Europe. It could, for example, be

argued that Initiative Media was spawned out of a similar sort of

operation, when Lintas was the wholly-owned dedicated media team for

Unilever. And it’s true that the idea has had a certain currency in the

US,’ he concedes.



’But there are clear disadvantages too. The first of these is how to

sustain interest among your team. Not just that, but if you don’t have

the opportunity to work with other client businesses, it is difficult to

broaden your own skills.



’On paper, though, it can’t be denied that having your own dedicated

team appeals. You would know the costs and have total transparency, on

paper at least. But is that really happening here? To say Ron de Pear

(JWT’s European media director) is heading up your dedicated team is a

powerful tool in the pitch process, but, in reality, he’s got to look

after the rest of JWT Europe as well. It’s doubtful whether European

business is big enough to justify tying up the top talent in the way it

is in the US.’



Lloyd thinks that, in a couple of years, this supposedly dedicated unit

will be just another part of JWT. ’For JWT, the fact that the business

has been won as a consolidation has to give more ammunition to Martin

Sorrell’s ridiculous scheme to merge the WPP media outfits,’ he

argues.



’I say ’ridiculous’ because media has to be about creativity as well as

size. If we become bean counters, clients will look at us and think,

justifiably, that they could do it just as well.’



But as Paul Woolmington, the head of Worldwide Media at Ammirati Puris

Lintas, points out, the JWT set-up does have one crucial advantage - it

is popular with the client. ’Very large clients often feel their volume

is being used to benefit other clients and this is one way of avoiding

that. And, certainly for the top 30 advertisers, it would be possible to

make a case that the idea of a bespoke team is very compelling.



Here in the US it has become almost commonplace since General Motors

teamed up with Interpublic to create GM Media Works, which provided a

hugely successful model to others.



’Concerns would come on the planning rather than the buying side. Often

when these kinds of units are set up, buying is the absolute criterion

and planning is mentioned just to fudge the issue. The question has to

be whether these units will miss out on really great planning. And, as

markets become more mature, so the importance of planning grows and

buying diminishes. But can teams that are just working on one client

have the breadth to come up with really great planning? That would have

to be my main concern.’