PERSPECTIVE: Putting all your eggs into one basket was never a smart move

Long before the words "corporate governance" began to be heard in the corridors of power, doing business was a relatively straightforward and laid-back affair. Particularly in the way advertising was bought and sold.

Agency chief executives and company chairmen did their deals over dinner-time Remy Martins and hand-rolled Havanas.

But that was in the days when agency bosses didn't have to endure the relentless pressures from corporate headquarters to make the numbers.

And when larger-than-life clients such as British Airways' Lord King could follow their instincts without too many boardroom constraints.

Just how much the commercial world has evolved was underlined with this week's news that Ford has scuppered the decision of its president, Sir Nick Scheele, to consolidate all its global advertising and marketing into WPP.

With hindsight, the deal agreed at a meeting last month in New York between Scheele and a coterie of WPP executives led by their chief executive, Sir Martin Sorrell, was always likely to be a hostage to fortune.

The truth is that while the world's communication supergroups are growing ever more eager to conclude single deals with client organisations, the more sceptical clients are becoming about the wisdom of putting all their eggs in one basket.

The appeal of such deals to network holding companies is obvious. Forced by the global economic downturn to strip out every bit of unnecessary cost, they are fast running out of options for delivering shareholder value.

All well and good. The problem is that many clients aren't sold on the idea of hiring a holding company in its entirety. The involvement of purchasing departments has fuelled their misgivings that the supergroups can really provide the integrated offering they promise or the necessary consistency of service.

Moreover, any deal of the kind reached between Ford and WPP has to take the subtleties of client company politics into account. Failure to include all senior managers - as well as those not so senior - in the decision can be a recipe for disaster.

"Of course, one-to-one relationships at senior level are important and will remain so," one of the UK's most well-connected agency managers says.

"But companies are now less likely to impose decisions on their senior people. And, if they do, you can bet that those excluded from the decision-making will do everything they can to undermine you."

It will be interesting to see if Ford's change of heart turns out to be the precursor of a tactical change at WPP. More than any other supergroup, WPP has been heavily dependent on the driving force of its leader. Has the Ford affair exposed the limitations of such a policy?

- Claire Beale is away.


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