WORLDWIDE ADVERTISING: Life on the other side - Jim Stengel, Procter & Gamble's global marketing officer, gives his view of industry consolidation and explains the advantages and disadvantages for a client

When large global advertising agencies merge, what does it mean for their global clients? This is certainly a question I am actively discussing with Maurice Levy and Roger Haupt. Now more than ever, all three of us, and indeed all of our people, must focus on the key question: can we be guided by the "Consumer as our boss"? Can we continue to do the important work that consumers not only respond to, but increasingly require to develop strong relationships with brands?

Our point of view is that our agencies can do it and are doing it.

We're fortunate to work with a diverse group of agency partners, both networked agencies and independents. Whichever direction our partners choose for organising their own businesses, agencies and clients of all kinds agree on something fundamental to the work we do together: it's not getting any easier.

It's more challenging because consumers expect more. They expect more value. They expect better quality information and greater insight into their needs. They expect products to be widely and consistently available.

They increasingly choose if and when they view advertising. In exchange for their loyalty, they expect a richer overall relationship with the brands they choose.

At Procter & Gamble we have learned that a demanding and dynamic consumer gives us the opportunity to showcase the competitive advantage of our brands. But it also means that our agencies have to make more of an impact; they must be more consumer-centric, more creative and more strategic than agencies have ever been before.

Our experience suggests that our networked agency partners have a credible, compelling strategy for meeting those challenges. They tell us the strength of their newly combined companies creates a new kind of playing field that makes them better able to foster creativity, move faster, create great strategy and build better relationships ... not just with the companies that are their clients, but ultimately with their clients' consumers.

Our independent agency partners have their own set of compelling strategies for developing people, relationships, strategic thinking and creative freedom. They tell us that their independence gives them agility. They tell us that they find creative freedom in their ability to chart their own courses. Their independence makes them more successful at developing the breakthrough insights that help us connect with consumers.

But in the end, whether an advertising partner of ours is networked or independent, it will be measured by the same yardstick. That yardstick is the ability to create and recreate brands that mean more to our consumers tomorrow than they do today.

From our perspective, there are some obvious advantages and disadvantages to consolidation. Among the disadvantages, when agencies merge, we must redouble our efforts to ensure we get the best from our agency partners while working with them to manage enormous organisational change. Among the advantages is the fact that we can eliminate duplication in many areas. An obvious one is knowledge creation, where we can use the power of the network to focus research and extract knowledge across businesses that have the same basic target consumer.

These advantages and challenges are only theoretical until they actually impact on our business. As with everything, it's performance that counts.

And we're finding that the performance of our agency partners doesn't seem to have much to do with consolidation.

So the question becomes: do networked agencies do better work than their independent competition? Sometimes they do. Sometimes they don't. There is no hard and fast rule. Ultimately, strong brands are about relationships and strong relationships are as diverse and multidimensional as the people who build them. As our chairman, John Pepper, has frequently said: "Great advertising and great marketing come down to something quite simple: partners who trust each other, and who are relentless in their focus on making a difference in consumers' lives."

There's no question this new "consolidated

environment is presenting challenges to our business and the business of all global advertising clients. When agencies adapt to develop their businesses, that means we have to adapt too ... but that's a good thing, not a bad thing. The enemy of great marketing is complacency.

How do we step up to these challenges? We believe in operating in a partnership to win with all our agencies. This requires us to communicate openly, share risks, demand high expectations of each other, develop trust and challenge behaviours that put the trust at risk. We must also align on common goals and measures and hold each other accountable.

As many large companies have learned the hard way, major business shifts driven only by the goal of achieving financial mass or performance are problematic because they suggest such companies have lost sight of their reasons for being. They have lost sight of their ultimate audience and what they're good at.

On the other hand, companies that reorganise around a vision of strengthening not just their financial performance, but their relationships with customers, tend to do very well for obvious reasons. They do well because, ultimately, financial performance is a trailing indicator of more basic kinds of success.

Like delighted consumers who cannot imagine living without your brand.

In other words, in the business of brand marketing, the bottom, bottom line is something you never find on a financial statement. You find it in the homes, hearts and minds of consumers.