LIVE ISSUE/THE RESURGENCE OF THE US: Why Europe succumbed to US multinational might - The US now offers creative clout alongside financial acumen

There was a time in the early 1980s when Rupert Murdoch was one recalcitrant banker away from meltdown; when Time Warner wasn’t even a twinkle in the merger maker’s eye; when even Walt Disney was under pressure after a string of film flops; and when UK and European media operations were the stocks to be seen with.

There was a time in the early 1980s when Rupert Murdoch was one

recalcitrant banker away from meltdown; when Time Warner wasn’t even a

twinkle in the merger maker’s eye; when even Walt Disney was under

pressure after a string of film flops; and when UK and European media

operations were the stocks to be seen with.



The likes of Elsevier, Pearson and the privately owned Fininvest and

Bertelsmann were, for a brief, glorious moment, considered the media

companies most likely to succeed. They temporarily helped create a new

pecking order in global media’s Premier League, before the US

powerhouses asserted their global dominance.



Back then, though, this intense New World/Old World media rivalry was

not a fact of advertising agency life. Because in advertising agency

terms, there was no comparison between the operations on either side of

the pond.



Saatchi & Saatchi, WPP and Publicis had all shown the lead in creating

early incarnations of the global advertising agency networks. It didn’t

even matter that when Maurice Saatchi bought Bates Advertising in the

US, a staggering 30 per cent of its billings walked out of the door in

the first two weeks. They walked, muttering darkly about what the Brits

knew about advertising. It didn’t matter because the clients soon came

back when they saw what they were missing.



When WPP finally acquired J. Walter Thompson - that living, breathing

embodiment of effortless Madison Avenue elegance - the transformation

was complete. It was no less miraculous a transformation than the one

which turned a Bristol lad named Archibald Leach into the Hollywood

legend, Cary Grant.



UK and European ad agencies were the style leaders and it seemed that

there was nothing they couldn’t do. They employed the best creative

talent, the most dynamic management, and they were the ones embarked on

strategies of globalisation that would surely see the world’s

advertising marching to the beat of British and European drums. Yet, it

hasn’t worked out quite like that.



Somewhere between then and now, and largely without commentators

noticing, UK and European agencies have surrendered this apparently

unassailable position. At least they have if WPP’s chief executive,

Martin Sorrell, is to be believed.



Sorrell chose an off-the-cuff address to the Incorporated Society of

British Advertisers, interrupted only by the tinkling of cutlery and the

polite rattle of wine glasses, to give voice to what he regards as one

of the toughest tasks facing UK and European ad agencies in the coming

years - the increasingly unequal struggle with their US-based

counterparts.



Speaking as the Dow Jones Index soared past 10,000 points, Sorrell’s

points seem to have renewed force. US groups have higher ratings on Wall

Street, he argued, and as a consequence enjoy easier access to the

institutional money that fuels international expansion.



’While it is true that US advertising groups like ourselves and Omnicom

trade on higher profits per earning ratios than the likes of WPP, that

is simply because we have a longer term history of consistently

delivering added value to shareholders,’ IPG’s chief executive officer,

Phil Geier, counters.



’WPP does not have that record. But I don’t think it’s the result of any

in-built structural advantage that the US financial system has over

Europe. There are plenty of companies in Europe that trade at very high

multiples, after all.’



Sorrell also noted that because more global business was being

co-ordinated from North America, the problem of a widening gap between

US and Europe-based agencies was not just related to the 50 per cent of

worldwide advertising expenditure that originates in the US, but to the

two-thirds of the world’s adspend that is directly influenced by the

world’s most powerful economy.



And there was more bad news. Non-US companies, Sorrell pointed out, had

traditionally been able to recruit the cream of the world’s creative

talent because these free spirits were unwilling to work for the more

rigorously structured US multinationals. Unfortunately that is no longer

the case.



’I don’t necessarily agree that the communications business is becoming

more Americanised, but then I don’t really see Omnicom as an American

communications giant. We are the purely financial holding company for a

global brand which does roughly half its business inside the US and half

outside,’ Omnicom’s chief executive officer, John Wren, says.



’If you look at our nine most senior executives, two are British, three

are French and four are American.



And that helps with attracting the creative talent because they work for

the agencies concerned. They work for TBWA, for example, not for some

huge American multinational.’



Even Interpublic, whose worldwide expansion was fuelled by the ambitions

of its US clients and whose rigid structures swiftly passed into legend

in the loucher advertising capitals of London and Paris, believes that

the creative culture is changing.



’Talented creatives want to work for companies that make creative ads,’

Geier says.



’For a long while, London was seen as the creative capital. But US

creativity has improved or at least been seen to have improved in recent

years.



’One problem is that there is so much advertising over here that the

good stuff can just disappear or get lost. But there has been more

attention paid to awards over recent years and a much better standard of

work.’



Agency                       Ratio

Grey Communications             48

Omnicom                         48

Interpublic Group               36

True North Communications       36

WPP                             28

Young & Rubicam                n/a

Source: Financial Times/Wall Street Journal



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