City Republic: Will WPP reinvent the agency-client relationship?

LONDON - WPP's Enfatico could prove the value of scale for agency and client and when it comes to pricing the iPhone, money matters for Steve Jobs, writes Stephen Foster.

Will Enfatico hit the right notes for WPP?
Just a few years ago, agencies used to moan and groan that they had been supplanted at the client top table by management consultants and the like, who were cursed as noxious blends of number cruncher and snake oil merchant (from an agency point of view, of course).

But one man is to be seen regularly popping up alongside the world's commercial elite and that's WPP's Sir Martin Sorrell.

The acquisitive knight has just about single-handedly got agencies back into the boardroom and key to this process has been to use WPP's huge scale to good effect.

So if clients aren't sure that JWT, Ogilvy or Y&R can offer them everything they need, Sorrell will put together a team drawing on people from all parts of the empire.

To date he's had two stabs at this, one with HSBC and one with Samsung.

HSBC's global deal for marketing just about everything via WPP seems to be trucking along, although this has much to do with HSBC's experienced global marketing director Peter Stringham, an old Y&R hand.

Its other deal with Samsung rapidly unravelled however, unsurprisingly because Samsung already has an in-house agency of its own.

And there's the rub. Can even Sorrell make "in-house" agencies work?

Industry convention has it that they don't, look at the eventual fate of Lintas (Lever International Advertising Services, as was).

But now Sorrell is trying to defy the odds once again with the newly-named Enfatico network ("emphatic" in Spanish) for computer giant Dell.

Enfatico is also a term used in music apparently, suggesting that you're hitting the right notes.

Estimates of how many notes of another ilk there are in the Dell deal vary but Enfatico is already employing 600 people around the world and is due to open a UK office shortly.

In a way the notes, $2.5bn in billings is one estimate, matter less than prestige.

If Sorrell can make this one work he may have set the template for major client relationships for the next few decades.

If it unravels, like Samsung did, then it will be a blow to WPP and people will start to question the benefits of WPP-type scale.

This could be Sorrell's most crucial deal to date.

We got it wrong, says Jobs
Apple's Steve Jobs is one of nature's optimists and not known for admitting defeat. But he said on Monday that, the number one reason people's didn't buy iPhones is because they just couldn't afford it.

So his new 3G 8GB iPhone is going to be priced at the same level in the UK as the States (almost unheard of anywhere in the technology sector) and will be free if you take out a juicy network contract.

Jobs seems to have woken up to the fact that corporate users are driving smart phone sales; those poor saps who need to use email and other services every minute of the day.

But it's hardly doom and gloom for Apple. Jobs wouldn't be doing this unless he had made lots of money on the five million or so iPhones he's sold already.

And the new stance underlines how serious Apple is about the corporate market, now buying lots more Apple computers too.

Now even Tesco's feeling the pinch
Tesco shares fell yesterday as it announced that sales growth had slipped back below 4%, suggesting that it's lagging the grocery market for the first time in decades.

The giant store group blamed the slowdown on sales of bigger ticket non-food items but it's also clearly feeling the heat from a revived Morrisons as well as Sainsbury's and Waitrose at the top end.

The people who are really adding sales are German discounters Aldi and Lidl, long viewed as an irrelevance in the UK market but now attracting hard-pressed shoppers from all social groups.

There are times (not many of them, to be sure) when a 30% share of a UK market clearly feeling the heat is not such a benefit after all.

It's tin hat time around the markets
Bank of England governor Mervyn King gave the banking fraternity a piece of his mind yesterday at the British Banking Association's annual conference.

Among other things, he told them they'd have put aside a few billions to act as a safety net in the event of another Northern Rock, rather than running to him to bail them out.

Mervyn is extremely cross with bankers like Barclays' John Varley and Sir Fred Goodwin from RBS for what he sees as their lax lending and investment policies.

He's also seething because these unrepentant sinners have persuaded Chancellor Alistair Darling to form a panel of bankers to advise him on monetary policy. Mervyn thinks this is his job.

He's got a point; the new panel is a bit like hiring a pyromaniac to advise the fire brigade.

Elsewhere those nasty Russian bears at Gazprom (in effect the Russian state energy company) have warned that oil may hit $250 a barrel and gas prices might treble.

They should know, they supply a huge chunk of UK gas.

Gazprom boss Alexei Miller also told a conference in France that he planned to develop Gazprom into the world's biggest company, the first one with a market value of $1 trillion.

This will have played pretty well in France, where they don't like the Americans much and generate most of their energy needs from nuclear power.

It will have prompted a few shivers in London and Houston though.

Stephen Foster is a former news editor of Campaign, former editor of Marketing Week and Evening Standard ad columnist. He is a partner in Editorial Partnership and writes the blog www.editco.net and Politics of the Media for Brand Republic.