Editorial: Global business can be trouble - just ask WPP

There's no escaping it: the loss of Samsung's global creative account after less than a year has been humiliating for WPP. Claims about the worth of the business, split between WPP's JWT and Red Cell networks, have been exposed as either disingenuous or self-delusional. JWT, which put the value of the brief at $400 million when it was won, has been forced to admit the spend was nowhere near such a figure.

Whether WPP failed to grasp the realities of running such a complex and political account or chose to ignore them, only it knows. Whatever the truth, the Samsung fiasco asks serious questions about the wisdom of communications holding companies abandoning their original raison d'etre and letting clients cherry-pick from their services.

Insiders suggest the Samsung account caused internal stress and tension, with neither JWT nor Red Cell wanting the other in pole position. There are also suggestions that a tension with Samsung was exacerbated by what its Korean bosses saw as WPP's disdainful attitude toward them.

What's clear from all this is that there are dangers when holding companies depart from the model established by Marion Harper at Interpublic in 1961.

Under Harper, IPG agency networks retained their separateness in order that competing accounts could be accommodated. Sir Martin Sorrell has abandoned this idea, creating what he claims is the modern take on the old full-service agency. But there are drawbacks. Taking an account and dividing it up among a number of your operating companies can close you off to significant amounts of rival business. By putting Samsung into its Leo Burnett subsidiary, Publicis Groupe has fenced it off from HP, which is handled by the Publicis network.

There are lessons holding groups can learn from this: for one thing, there is always the danger such accounts cause destructive rivalries.

They also show what can happen if one part of a group feels less favourably treated than another.

Holding companies must continually prove their value to their people and their investors. The cruel irony that IPG - which pioneered the concept - is now under shareholder pressure to be broken up should be a timely reminder.


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