Close-Up: Live Issue - Complex politics bedevil WPP's Samsung 'win'

WPP's appointment by the Korean giant ends a convoluted pitch, but still leaves much unresolved. John Tylee reports.

Samsung's appointment of WPP as its global communications partner brings a protracted pitch to a messy end, leaving big questions unanswered.

For a start, what is it that Sir Martin Sorrell's supergroup has actually won? Sources suggest the global brand marketing assignment is a prelude to WPP winning the entire Samsung business worldwide. Not so, the South Korean electronics giant says. Existing local and regional agency arrangements will remain in place, it insists. Others report that Samsung will also consider hiring new, non-roster agencies.

And what of Cheil Communications, whose position as Samsung's in-house agency and brand steward prevents any agency network from getting a firm grip on the entire Samsung business? BBDO is said to have pulled out of the global brand pitch because of concerns over Cheil's role.

As if Samsung's situation isn't complex enough, it is said to be exacerbated by internal power struggles. On one side are those who want to push ahead with brand-building. On the other are the product groups, which prefer tactical campaigns but which must cough up if one of their products is to be promoted globally.

With Cheil running all Samsung's advertising and marketing spend, as well as sometimes pitching for Samsung business itself, it's little wonder other agencies are incredulous. "Nobody who has never done it can possibly imagine how hard Samsung is to work for," a network senior manager says.

Equally hard is fathoming how much WPP's assignment is worth. The quoted figure is $200 million, but Samsung has no history of big above-the-line global campaigns, relying instead on sponsorship.

Behind all this has been Samsung's determination to become a global leader in the digital convergence revolution and to rid itself of its reputation as a cheap copier of other companies' products. It was this philosophy which led to the announcement, in November 2000, that FCB would take on Samsung's global account. FCB welcomed the chance to do some significant global brand advertising but found itself facing baffling arrangements.

The network's contract for the global work was with Samsung. But local work was subcontracted to it by Cheil, which shares the fee. "You feel like you're in a constant pitch," an agency source says.

In the UK, FCB London's role was restricted to adapting international TV work for local use.

Cultural differences didn't help. "Koreans work 12 hours a day, six days a week and expect you to do the same," an agency manager who has worked on Samsung says. "God help you if you don't manage to do the work in half the usual time."

Persistent speculation that FCB was having trouble cracking the global brief culminated in Eric Kim, then Samsung's head of global marketing, calling a pitch between holding companies in February this year.

Four contenders were shortlisted - Interpublic's FCB, Omnicom's BBDO, WPP and Publicis Groupe. WPP paired its J. Walter Thompson and Red Cell operations to pitch, while Publicis fielded a combined team from Leo Burnett and Saatchi & Saatchi.

The process, which ended with WPP and Publicis going head to head, proved frustrating and laborious. After weeks of delay as reports of the presentations were relayed to Samsung executives around the world, Kim quit to join Intel, raising fears the result would be delayed until the arrival of his successor, Gregory Lee, in January.

Kim's departure upset the balance of power within Samsung. Agencies became increasingly dismayed at Samsung's prevarication and there was much behind-the scenes scrambling as executives looked for others in Samsung and Cheil to influence. To make matters worse, shops were becoming increasingly unsure about what revenue the account would generate. At Publicis, senior executives scaled down their estimate from $35 million to $10 million.

Meanwhile, concern lingers over the omnipresent Cheil. Insiders think South Korea's largest agency has global ambitions and that it wants total control of Samsung's marketing spend worldwide, which has estimated revenues of $60 million. For the moment, though, Cheil must bide its time. Its network is patchy and it is forced to outsource in some markets until it can get its act together. Some believe Cheil would rather the global business had remained with FCB. "The last thing Cheil wants is to get into bed with another agency and for that agency not to realise the rules," a source says.

Now the saga is over comes the biggest question of all. Can Sorrell hold and grow one of the world's most political pieces of business? Some think that, having forced Samsung to make a decision on WPP, he is in a strong position. Taking a stake in Cheil - or even buying it - could be Sorrell's answer.

- Leader, p24

SAMSUNG'S PITCH SAGA

November 2000: Samsung appoints FCB to global account. Creates campaign

under "DigitAll" theme.

February 2004: Campaign reveals that the business is to be reviewed.

April 2004: FCB, WPP, Publicis Groupe and BBDO selected to pitch.

May 2004: BBDO withdraws because of concerns over role of Cheil.

July 2004: Pitch becomes two-horse race between Publicis and WPP.

September 2004: Eric Kim, Samsung's marketing chief, resigns.

Speculation that pitch result will be delayed until January.

November 2004: WPP confirmed as winner of the global branding account.

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