Samsung And WPP: Tense From The Start

It was almost doomed from the beginning. Last fall, after Samsung awarded WPP Group the corporate-image piece of its $400 million global account, the two companies engaged in protracted compensation negotiations that dragged on for months and left the lead agencies unsatisfied. That tension, along with the agencies’ unwillingness to invest more resources in the business at that fee, lingered through the 11-month relationship, said sources.

In one sense, Samsung’s split last week with WPP’s JWT and the recently renamed Berlin Cameron United stemmed partly from classic relationship troubles, including client-management problems and squabbles over money, said sources. But the larger question is whether the holding-company-as-agency approach that WPP preaches is a viable and logistically sound solution.

“It’s a question,” said Arthur Anderson of Morgan Anderson Consulting in New York. “[The client will say,] do we want all our agency assets in one holding company, and are we going to get best-in-class that way?

“It comes down to people,” Anderson added. “It’s going to require someone who is the brand architect, the composer and then the conductor. There’s got to be some kind of conductor on the agency side.”

Sources said WPP did not meet its promise to Samsung of stellar creative and account service from Berlin and JWT, respectively, with the shops at times tussling over responsibilities and their share of the estimated $20 million revenue. “There were many issues,” said one executive. “The problem was [WPP] promised what it couldn’t deliver.”

In the end, the Seoul, South Korea-based client appeared to reject the dual-agency leadership model, shifting corporate-image ad duties to a single creative shop: Publicis Groupe’s Leo Burnett.

Burnett was part of a Publicis team in last year’s review, which also included an Interpublic Group team led by incumbent Foote Cone & Belding, and MDC Partners’ Kirshenbaum Bond + Partners. Publicis was believed to have finished a close second, and sources said Publicis Groupe CEO Maurice Lévy has been in constant touch with the client since the review ended. Lévy declined comment.

Another key player in Publicis’ ongoing pursuit of the electronics giant was Richard Pinder, Leo Burnett’s president of Europe, the Middle East and Africa, said sources. The agency declined comment.

A Samsung rep said Burnett’s first task is to create a campaign tied to the client’s sponsorship of the Winter Olympics in Turin, Italy, this February. The effort, which will include TV, print and outdoor ads, will run in select markets around the world and is expected to break early next year, the rep said.

For months, Berlin had tried unsuccessfully to sell an Olympic campaign and, within the past three weeks, JWT even stepped in to make a creative presentation to executives in Seoul, said sources. At that point, however, “it was clear … this was really about the account,” said one source. “The environment was so poisoned by this fee issue.”

In its winning pitch last year, WPP offered up not only Berlin and JWT but also Group M (media), Wunderman (direct marketing) and other units for research. Samsung retained the below-the-line units, but sources said WPP lost the bulk of the $20 million in revenue on the business. Berlin’s hit was $6-9 million, and JWT’s is likely to be $5-6 million, sources said. The agencies declined to discuss numbers.

Berlin Cameron chairman Andy Berlin attributed the loss to friction over compensation. “The relationship with Samsung was strained from the beginning because of compensation,” he said. “We were underpaid and undervalued. [Client executives] were upset that we said we were being underpaid.”

In a statement Wednesday, JWT CEO Bob Jeffrey said simply, “It’s always disappointing when things don’t go well, but we’re a big company and have a lot of good things happening.” Samsung global chief marketing officer Gregory Lee could not be reached.

Both shops are expected to cut staff, though the hit will likely be more significant to the smaller Berlin, which handled the business out of its single office in New York. The bulk of JWT’s duties were overseas and spread among offices in Europe, Asia and South America.

In the spring, JWT claimed to handle strategic and account duties. By last week, it was clear that Berlin owned both strategy and creative, while JWT’s role had been reduced to that of a distribution network. JWT’s top account exec on Samsung was Alex van Gestel, a global business director who kept an office at Berlin Cameron. His counterpart at Berlin was director of client services Simon Little. Berlin Cameron CEO Ewen Cameron, a planner by trade, was seen by the client as the overall leader on the global account.

Berlin’s high-profile creative assignment turned out to be smaller than expected, particularly in the U.S., where Cheil Communications, a quasi-house Samsung agency, picked up print assignments, said sources. Cheil also functioned as the client’s right hand, paying agencies and doling out assignments, said sources. Some sources cited this unusual dynamic as one reason for the split, even though Cheil’s role is long-standing and pre-dated the relationship with WPP. Cheil did not return calls.

After getting the client call Tuesday morning, Cameron met with staff. The message was somber, said sources, but staffers expressed pride in their work, including episodic TV spots with the theme, “With Samsung, it’s not that hard to imagine.”

The loss capped a brutal month for WPP in which Berlin also lost North American creative on Coke Classic and JWT lost its portion of Unilever’s Omo detergent overseas. The agencies also struck out in pitches for a global Coke assignment (Berlin Cameron) and British Airways (JWT). On the plus side, sister shop Ogilvy & Mather won global creative on Morgan Stanley’s estimated $80 million account.