The sharks are circling around the coveted Nestle roster, waiting
for the waters to clear so they can see for certain what opportunities
have been created by last week's news of a $2 billion global
shake-up.
At first glance the implications of the review are unclear. Some of
advertising's biggest fish have lost out, while others have got fatter.
And some, in terms of working on coveted Nestle accounts, could be
mortally wounded.
However, it could be those lower down the food chain that are most at
risk. The word is that the days of the local shops on the Nestle agency
list could be numbered. If the worst happens, they could find themselves
in the midst of a feeding frenzy.
The massive overhaul of its network arrangements means that Nestle has
consolidated five major global categories into five of its roster
networks.
McCann-Erickson will be in charge of coffee, Publicis will look after
culinary products, Ogilvy & Mather has picked up the chilled dairy
business, Lowe Lintas has been given sugar confectionary, while J.
Walter Thompson will look after the chocolate and ice-cream brands.
Interestingly, Dentsu, the food giant's remaining roster network, is
conspicuous by its absence from the list of confirmed appointments.
Nestle is eager to point out that lead network status doesn't mean that
all tasks in that category will be awarded automatically to that agency,
but the absence of the Japanese suggests to observers that there will be
more prizes for the others to gobble up.
Pet food is the one category on which Nestle has yet to make a
decision.
All networks profess to having no clue as to who will snap it up. Nestle
bought the US pet food company Ralston-Purina at the start of the year
and any agency would surely welcome the global billings of more than
£100 million, which the division represents.
Nestle explains the changes by insisting that it looks at its agency
arrangements constantly. The company claims it has been running trials
on these current changes for the past two years and has decided that it
wants to make them official.
It also says that this will not mean a drop in advertising budgets -
just an increase in the quality of communications. However, the
consolidation, coupled with the switch to payment by results announced
during the summer, seems to point to a multinational looking for
efficiencies.
On the surface, Lowe, JWT and McCann seem likely to come through the
review about even.
The allocation of lead agency on chilled diary should, eventually, up
O&M's international workload, while Publicis appears to gain from the
award of lead agency status on culinary products.
However, as is so often the case with Nestle, it's not necessarily as
cut and dried as that.
The most potentially confusing aspect is the different status levels
that agencies have been awarded on the roster.
First of all, there are lead networks. Cue the Nestle spokesman: "The
lead agency will, of course, work closely with the marketers within our
various strategy business units and within our geographic zones to
define together and to help to realise a single business vision for the
brand or category."
All of this boils down to lead agencies being empowered by the concept
of global brand unity. They are in charge. Then we have the aligned
networks. They may not be the lead agency for the brands that they work
on, but insiders say they are unlikely to lose accounts as a result.
Hence, aligned status could prove an equally crucial prize in some
cases.
Publicis appears to be the biggest winner here, taking the aligned role
for ice-cream, Nescafe, Nesquik and, it is said, the chilled dairy
category as a whole. McCann's hold on Nesquik, therefore, appears under
serious threat, but it is compensated by becoming the aligned agency on
culinary, safeguarding Crosse & Blackwell. Quality Street in likely to
remain at Lowe after the agency received aligned status on
chocolate.
The problems come if you are an agency with neither lead nor aligned
status. Then the word round the campfire is that you're in trouble.
This is where local agencies will have to watch out. Sources say that if
you haven't been given the "lead" or "aligned" shield, then your
business is destined to be moved to the lead network.
All of this will take time and, as yet, specific brand movements between
roster agencies are not clear. Nestle has been likened to a
brontosaurus: the head makes a decision but it takes a long time for the
body to move.
It is generally considered that it will take a year for the true
ramifications to become obvious.
But nonetheless, the sharks can smell the blood. It is thought that
local agencies have not been given a status and their Nestle business is
therefore vulnerable in the eyes of the networks.
Nestle vehemently denies this will be the case. "We have brands that
exist only in a few markets, and such brands will remain outside the
scope of this new development," the spokesman insisted. The official
line is that the company will not be firing any agencies.
This will be some comfort to Roose & Partners, the agency which, some
predict, will lose its grip on Nestle next year to either JWT or
Lowe.
Right now it handles the Maverick, Toffee Crisp and Willy Wonka brands
in the UK, but you can bet your life that both networks have an eye on
the business.
Roose & Partners' managing partner, Angus Fear, isn't afraid. "They kept
us in touch with the implications of the review," he says. "We are
assured that the situation remains the same. We're confident with our
relationship with Nestle both in Croydon and in York. We are a local
agency, not a network. This affects the networks and not us."
And Fear knows his client well. Before his three-and-a-half years at
Roose, he spent six years looking after the business at JWT.
Nestle's system of "matrix management" would seem to back him up. This
basically consists of two overlapping power bases: SBUs (strategic
business units) and jurisdiction market heads.
Sources close to the review say the market heads asserted their rights
to stop certain brands moving, protecting some local agencies, even when
the review appears to have painted a large bullseye on their sections of
the business.
But it remains to be seen how long they can fend off the attentions of
the big fish.
HOW THE REALIGNMENT AFFECTS THE UK
CATEGORY/BRAND INCUMBENT LEAD ALIGNED AGENCY
CULINARY
Crosse & Blackwell McCann Publicis McCann
COFFEE
Nescafe McCann McCann Publicis
CHILLED DAIRY
Nesquik Chocolate Drink McCann Ogilvy &
Mather Publicis
CHOCOLATE AND ICE-CREAM
Aero, Milky Bar, Quality
Street Lowe Lintas J. Walter
Thompson Lowe/Publicis
After Eight, Rolo,
Kit Kat, Smarties,
Lion Bar JWT
Toffee Crisp, Willy Wonka Roose &
Partners
Rowntree Collection McCann, Roose
Nestle Ice-cream JWT
SUGAR CONFECTIONARY
Polo JWT Lowe Lintas J. Walter
Thompson
Fruit Pastilles, Squash Lowe Lintas
PET FOODS
Felix BMP DDB, To Be To Be
McCann Decided Decided
Friskies BMP DDB
Friskies Go Cat McCann
Friskies Vital Balance McCann
