Worldwide market coverage
We've written about the doctrine that "Only the big serve the big." Global companies need global services. They also want standardization, thought with national variations. Furthermore, they want not to have to deal with a large number of service suppliers.
That's what happening with Dell, the global computer giant, which this week announced that it will award all its worldwide advertising and PR to super-agency WPP. The contract is for around $1.5 billion.
WPP beats out rival Interpublic Group for the contract. The Wall Street Journal ("Dell Brings Account to WPP", 12/3/07) lists the other losers.
Some 800 large and small companies around the globe that had had a piece of Dell's ad and marketing business will be losing that revenue source. That list includes Omnicom Group, whose units handled some ad work and media work; Mother, an independent boutique that has created Dell's consumer ads; Aegis Group's Carat; and Havas's Euro RSCG.
As part of the contract, WPP has to create a deviated, multi-skilled division in its company dedicated to Dell's account. Dell wants the TV guys talking to the print guys. Companies like WPP and Interpublic are made up of various smaller agencies that don't necessarily play nice with each other.
The WSJ article explains the problem:
The computer-maker joins a growing list of big-name advertisers such as Procter & Gamble, Johnson & Johnson and Unilever that have expressed frustration with the way the ad and marketing firms are structured. Many marketers say that getting different companies to work together -- even ones owned by the same ad holding company -- is tough. They say ad executives too often push agendas that will most help their own bottom lines and tend to favor certain types of media, such as TV.
By coincidence, the next day saw a similar move by Korean-based LG Electronics, the maker of TVs, cellphones, even washing machines. LG has hired a single worldwide ad agency, UK-based Bartle Bogle Hegarty. The losers are Young & Rubicam in the US (a division of WPP) and Euro RSCG in Europe. LG is looking to transfer itself into a high quality brand with a strong marketing message, lust as Korean rival Samsung has done. (This case is a little different, as LG is planning to hire another agency to do media buys.)
The only countercurrent is the eventual frustration of almost all companies with almost all agencies. Will the idea of consolidating agency support make them get more tired more quickly? In any case, the concentration of such services into fewer firms is a growing trend.
