NEW YORK A day of celebration within WPP Group last week quickly gave way to the cold realities of housing new client HSBC at MindShare, which already works for another financial-services powerhouse, American Express.
MindShare, the lead media shop in WPP's winning nine-company pitch for HSBC's $600 million global account, now must find a way to resolve conflict concerns raised by AmEx.
London-based HSBC has no qualms about sharing MindShare, provided different executives work on each account. But some AmEx executives are uncomfortable with such an arrangement, according to sources.
That has prompted Martin Sorrell, CEO of WPP, and Irwin Gotlieb, CEO of Group M (WPP's media-agency holding company), to mull other options, such as creating a dedicated unit for one of the clients, said sources. Group M's second network, Mediaedge:cia, is conflicted with Citibank. "It's a problem, but I think we'll find our way around it," said one executive.
The conflict question was not an issue when HSBC launched its review, because AmEx was in the middle of its own review. MindShare, AmEx's agency for four decades, prevailed in that contest in March, and when HSBC chose WPP, it began to express its reservations.
The traditional media-spending portion of HSBC's account is estimated at $200 million; the rest goes to below-the-line tasks such as direct mail and collateral. AmEx's global media spend is about $375 million.
AmEx and MindShare declined comment. Peter Stringham, group general manager of marketing at HSBC, said the bank is amenable to sharing the agency with AmEx "as long as they have the proper Chinese walls up."
The situation underscores the increasing prospect of client conflicts for media companies, which, after a period of industry consolidation, may now have to perform the same juggling acts that agency networks have long faced. "As you crunch [companies] together, that issue becomes more visible and problematic," said Dick Roth, who runs New York consultancy Roth Associates. "I think Americans are much more conflict-sensitive. It's our personality. It's our competitiveness. It's our belief that only one person can grab the ring."
Others argue conflict worries are merely a power play. "Most clients won't admit that it's ego, not reality," said Robin Kent, president of Interpublic Group's Universal McCann. "Media people within agencies are fiercely competitive; our [Johnson & Johnson] people want to be better than our L'Oreal people, and vice versa. In the world we live in, there is no benefit to sharing information [about competing clients]. It's nonsense to think we'd do it."
In the HSBC pitch, WPP firms beat those put forth by IPG, whose Lowe unit was the incumbent lead creative agency, and Omnicom Group. MindShare teamed with sister network Maxus, whose footprint is primarily in Asia, in a group led by J. Walter Thompson that also included direct-marketing shops 141 and cmg:connect@jwt, corporate-identity specialist Landor Associates, and ad agencies Bates Asia, and Red Cell in the U.S., U.K. and Asia.
The review, which began in January and included client visits to contenders in 13 markets, aimed to reduce the number of agencies working on the brand. The client also sought a single holding-company solution, a la Bank of America and IPG.
HSBC chose WPP not only for its depth of resources, but also based on how executives from different units worked together, both during the market visits and the final presentations in late April, Stringham said. This was particularly evident in New York, where JWT worldwide CEO Bob Jeffrey and Red Cell chairman Andy Berlin greeted client executives at JWT, and in Hong Kong, where executives from a half-dozen WPP units "just seemed like one organization," Stringham said.
Several participants credited former Bates Europe chairman Toby Hoare, who coordinated WPP's effort and will manage the business as a WPP global client leader. "Toby was the team leader, no question," said a source. "He interpreted his role as being the glue between all the agency pieces."
WPP also pulled out the stops during its final presentation, a potpourri of agency honchos (including Sorrell, Hoare, Berlin, Jeffrey and JWT worldwide president Mike Madel), actors, percussionists and even a dancer, said sources. Sorrell doubled as an actor, playing a man stopping at a bank en route to a wedding in a skit, said a source.
WPP's acquisition of Cordiant Communications last year contributed to HSBC's decision to launch a review, since it resulted in most of HSBC shop Bates being folded into other networks, such as JWT and Red Cell, thereby turning a single roster shop into three.