Procter & Gamble has rocked the GGT group by pulling its business
out of the group’s flagship New York agency, Wells BDDP.
The dollars 125 million body blow will wipe 6 per cent off worldwide
revenues for the network and will slash income for Wells by 26 per cent
in the coming year.
Confirmation of P&G’s move sent GGT shares crashing 37 per cent to
pounds 1.28 on the UK stock exchange on Wednesday, and completely
overshadowed a set of positive half-yearly financial results for the
P&G’s senior vice-president of advertising, Robert Wehling, said he had
pulled out of Wells because of the departure of key managers there.
Paula Forman, who had run Wells’ P&G business for several years, left
the agency in July after policy differences with its chief executive,
Following her out the door were the executive creative director, Linda
Kaplan Thaler, and the executive vice-president director of planning,
’We no longer felt the agency could bring the continuity and experience
needed at a critical time for key global brands like Olay and Pringles,’
Of the three brands lost by Wells, Saatchi & Saatchi will pick up Oil of
Olay, which it already handles in Europe, Asia and Canada; Grey will
handle Pringles crisps; and Leo Burnett the detergent, Gain.
Michael Greenlees, chairman and chief executive of GGT, forecast that
the blow would ’significantly’ affect the group’s results next financial
year, but promised ’increased revenues and improving margins’ for the
financial year ending April 1998.
The results are the first since GGT fully incorporated the BDDP network
last April, a move first reported in Campaign (20 September 1996). It
showed a 10 per cent growth in revenues to pounds 101.2 million and a
healthy 29 per cent rise in operating profit before restructuring
Nevertheless, analysts said GGT shares were likely to remain depressed,
since Wells’ P&G business was considered the jewel in the crown of the
It is also likely to heighten predatory interest in the GGT group,
especially from the former suitors of BDDP, who considered its initial
selling price too high. The P&G presence was a major barrier to Martin
Sorrell’s WPP Group, which has Unilever as a client; Grey and Omnicom
could also be interested in an acquisition.