Close-Up: Live Issue - Holding companies get ready for the age of the super pitch

Is Samsung's £300m pitch the way global advertising will go, Emma Barns asks.

One of the biggest pitches ever to take place concluded last week with HSBC falling for the charms of WPP. Ongoing is the £300 million Samsung global, through-the-line pitch, which also involves thousands of people.

But how do these logistically nightmarish pitches work and are we likely to see them become the way of the future?

The HSBC marketing rethink initially kicked off in a bid to streamline the company's below-the-line and media functions, in part motivated by Draft's decision in the US to resign the account in favour of Bank of America. The strength of Lowe's creative work only temporarily staved off an above-the-line review and by the end of 2003, it became clear that the pitch would be held at holding company level.

Peter Stringham, HSBC's group general manager for marketing, explains: "We wanted to deliver a cohesive brand strategy and to drive better branding synergies. Having studied the idea of putting everything in one holding company, it looked to be an advantageous move. While we gave the companies latitude on how to fulfil our brief, there was a proviso that if you are looking for through-the-line synergies you would need more than one network could give."

The big four holding companies lined up in various levels of incumbency: Interpublic (held the bulk of creative in its Lowe network); Publicis Groupe (most of the media through ZenithOptimedia); WPP (HSBC's creative and media incumbent in its home market of Asia-Pacific after acquiring Cordiant last year) and Omnicom (no significant roster role with HSBC).

The first-round presentations took place in February at HSBC's Canary Wharf building. They were led by the holding company chiefs: WPP's Sir Martin Sorrell, Omnicom's John Wren, Publicis' Maurice Levy and IPG's David Bell. Stringham confirmed that the Publicis pitch team arrived late, reportedly owing to a delay on Levy's flight, although he was quick to add that this was not why it was knocked out in the first round.

What followed was two months of meetings and presentations taking teams from London to Hong Kong and from India to Sydney. WPP rallied about 700 people for the undertaking, involving experts from every aspect of the industry and from every corner of the world.

HSBC appointed WPP because of the way it tied everything together. Stringham says: "It came in with all its resources and demonstrated it had really worked out how to get them all working together."

However, WPP couldn't explain the exact logistics to Campaign as the 25 agencies that will be deployed on the account are still not finalised.

Essentially, though, there are three lead agencies: J. Walter Thompson is responsible for the creative task, supported by Red Cell in some areas.

Media will be handled by WPP's consolidated media buying operation, Group M, with MindShare taking lead status, and marketing services responsibility will be shared by rmg:connect (for direct expertise) and 141 Worldwide (for sales promotion). Additionally, Landor picks up HSBC's branding assignment while other resources, including an ethnic minority-focused agency, will be brought in when necessary.

The HSBC pitch may have been big, but Samsung's is more complicated.

The Korean company's brief will see "dream teams" pitching from WPP, IPG and Publicis. Presenting in Seoul in June, they will pluck executives from different agencies in different markets (Ogilvy & Mather and Berlin Cameron/Red Cell in WPP's case).

HSBC and Samsung clearly perceive logistical or fiscal efficiencies in hiring a holding company rather than relying on a single network.

As Toby Hoare, the WPP global client leader on HSBC, explains: "From a strategic and creative point of view, having one marketing partner comes into its own when providing consistency and a common voice to a global brand.

"There are also practical advantages, as there are fewer people to deal with, and scale efficiencies for the client in such an arrangement."

Stringham believes it is the "momentum of the business". David Muir, the group development director at O&M, agrees there could be more of it: "Clients want to simplify their operations, and this includes how they communicate with consumers. If large agency groups can provide more order and structure to global operations then the business will continue this way."

It is an exciting prospect for holding companies, enabling them to secure income from all the marketing services they provide. But it also replaces one of the raisons d'etre of the holding companies: preventing client conflict. As one source puts it: "It could be perceived as not being very far-sighted as it closes you off to so much business."

Hoare argues this isn't the case if the holding company is big enough and points out that WPP is able to retain AmEx, Citibank and Merrill Lynch, despite the HSBC win. However, sources say that AmEx has voiced concern to WPP over sharing MindShare with HSBC.

Michael Baulk, the chairman of Abbott Mead Vickers BBDO, does not see the shift as inevitable: "There's a trend developing but there are not that many advertisers on this scale and they don't move that often," he says.

Holding company solutions are not viable for all clients, not even the biggest global ones. It's hard to imagine a multi-brand business such as Unilever or Procter & Gamble consolidating into one holding company.

And it didn't work for Boots, which consolidated into WPP in 2000 before abandoning the deal last year when it opted for a looser consortium led by Mother.

The message that seems to be emerging is that, while there will be more pitches of this type, one shoe does not fit all and that not all clients will be following in the footsteps of HSBC and Samsung.

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus